Programme Investigation

U.S. Middle Class:
Strains of an Uncertain Future

Revolutionary Worker #1131, December 16, 2001, posted at http://rwor.org

The following was written by a team that helped investigate the magnitude, composition, and conditions of the petty bourgeois class in the United States.

Although the petty bourgeoisie, or the "middle class" as it is commonly referred to, in the U.S. is not as big as many people are led to think, it is a very significant part of the population in the U.S. And as the Draft Programme of the Revolutionary Communist Party (RCP) states: "A critical question for the proletarian revolution is winning over or at least neutralizing as much of the petty bourgeoisie as possible."

Who makes up the petty bourgeoisie? How much of the population in the U.S. are in these strata? What conditions are middle class people in the U.S. facing? And why does the RCP think there is a basis to win over these strata to proletarian revolution?

In doing investigation to develop the Draft Programme, we found that:

• The petty bourgeoisie makes up about 35 percent of the U.S. labor force.

• There are significant numbers of women and oppressed nationalities within the petty bourgeoisie, more so than 20 years ago.

• The petty bourgeoisie is very diverse, facing a wide range of conditions. This class includes many different groups of small business owners, professionals, managers and technicians, intellectuals and artists, and small farmers who employ little or no wage labor, with different people facing a wide range of conditions. Rising levels of inequality within the middle class are "pulling apart" and fracturing the middle class.

• While a portion (roughly a fourth to a third) of the middle class have done well in the last 20 years or so, most have been struggling to maintain a "middle class" standard of living.

• Strains, fragility, and a deep level of insecurity characterizes the lives of most people in the middle class. Many are working longer hours, and it is now mainly the case that in a typical middle class family, both spouses (and sometimes other family members as well) have to work. Many are facing mounting levels of debt, rising insurance and child care costs, and lower levels of job security.

The investigation team used detailed data from the U.S. government's Bureau of Labor Statistics, the Bureau of the Census, and several other data sources to analyze the size and composition of the petty bourgeoisie in the U.S., and how this has changed in the last 20 years. In contrast to most mainstream analyses that define the middle class simply in terms of income, we mainly looked at the types of occupations that place someone in the petty bourgeoisie--that is, we looked at middle class occupations to help understand how people fit into the capitalist relations of production. Secondarily, we also considered income and wealth as a factor that can influence someone's overall class position in society.

What are the characteristics of petty bourgeois occupations? Many in this class are finding their jobs more routinized, standardized and socialized. But for the most part these positions are not "manual labor" or "production" jobs, nor are they routine service or lower-level white-collar jobs. In classifying petty bourgeois strata, there is both a "traditional" and a "new" middle class. Petty bourgeois positions typically have a number of the following characteristics:

• they may have ownership or control of some means of production or a small business--like a small business owner or a contractor who employs a small number of workers (this is the traditional petty-bourgeoisie);

• they may be highly skilled and may require a significant amount of training--like an airline pilot, a doctor, or a lawyer;

• they may have a significant degree of "autonomy" in their conditions of work--like a research scientist or a highly skilled technician working in a research lab or a government economist;

• they may have authority over other workers--like a supervisor, office manager, or ship captain;

• they may be involved primarily in specialized, intellectual, athletic, or artistic pursuits--like a college professor or teacher, an author, a professional musician, or a professional athlete.

There is a commonly promoted myth that just about everyone in the U.S. is in the "middle class," except for a handful of poor people and a tiny fraction of rich people. But we found that of the people employed in the official labor force, just over a third were in positions that could be characterized as petty bourgeois jobs.

The petty bourgeoisie is concentrated in the following types of occupations:

• managers, administrators, and supervisors;

• professionals (including lawyers, doctors, scientists, financial analysts, professors, engineers, writers, artists, and teachers);

• "para" professionals, and high-level technicians;

• certain types of sales people (like real estate agents and high volume sales people, but not lower-level retail sales clerks or cashiers who are lucky to make $10 an hour);

• small business owners and self-employed people;

• farmers; and

• many government workers.

(As discussed elsewhere in the Draft Programme, a large portion of the population in the U.S. is in the working class, and only a small fraction of the population is in the capitalist class.)

In a small number of other job categories, it wasn't so clear whether certain people were in the petty bourgeoisie or the working class. For example, certain technicians or para-professional clerks may not require a college degree, but may require a certain amount of skill training for specialized work, and may even achieve a degree of autonomy in their work. They may also be paid fairly well. About 5% to 7% of the labor force fit into these job categories.

So, it is fairly clear that about 35-40% of the labor force are in petty bourgeois jobs--an increase in the size of the petty bourgeoisie from about 20 years ago.

The portion of the middle strata represented by women and oppressed nationalities is also higher than 20 years ago. For example, women made up close to half of the managerial and professional category in 1998, while in 1983, they made up about 40% of that category. Black and "Hispanic" people make up 7.6% and 5% of this category based on the 1998 data, while in 1983, they represented 5.6% and 2.8%, respectively. (Note: So-called managerial jobs can be very low-paying, such as a manager in a fast-food franchise.)

The Draft Programme points out on page 67: "Today, there are significant numbers of people from the oppressed nationalities in the middle class. There are also large numbers of women in the professions. All this is a result both of changes in the U.S. and the world economy and of powerful struggles against discrimination and oppression. While in various ways this 'middle class status' has a conservatizing influence, the continuing discrimination and abuses to which these oppressed groups are continually subjected propels many, even in the middle class, into resistance. This is overall an important positive factor for the proletariat in terms of realigning forces in society, including among the middle strata, in a way more favorable for the proletarian revolution."

We found that most in the petty bourgeoisie are having a hard time maintaining a middle class lifestyle, putting in more hours, and in a typical family, both spouses have to work. Even so, most people in the middle class have seen their incomes stagnate. There are rising childcare and health insurance costs, household debt and heightened fears about job security. With the downturn in the stock market, many are seeing their pensions evaporate.

Those in the petty bourgeoisie generally have a higher standard of living and income than the working class. But there is a wide range of living standards and income within the petty bourgeois class. Most have not greatly benefited from the economic "boom" during the second half of the 1990s and the degree of inequality within the middle class (in terms of wealth and income) has grown.

For example, roughly 30% of the petty bourgeoisie had an income of less than $35,000 in 1998, and only the top 20% had incomes exceeding $55,000. About 25% of elementary school teachers made under $29,000, while on average an attorney or a doctor would expect to make over $80,000-$90,000. Over a fourth of financial managers make over $84,000 a year, but a fourth of food service and lodging managers have annual incomes under $21,000.

There have been numerous books about the profound changes taking place in the U.S. middle class. And many analysts have expressed concern about the possibility of "social unrest" due to the strains on this section of the population.

For example, a 1999 book, The Coming Class War: Rebuilding the Middle Class, worries, "The potential for class warfare, including more inner-city disturbances, is now far greater than at any time since the Depression of the 1930's and the riots of the late 1960's." Another 1999 title, Income Inequality in America, says, "The rise of income inequality, by various measures, invokes an image of a society divided between 'haves' and 'have-nots.' In turn, that image suggests the possibility of eventual political repercussions and, perhaps, social unrest."

The most recent downturn in the economy is undoubtedly having a significant influence on the middle class, especially among those associated with the "high tech" industry, and now, after 9-11, the airline and tourism industries. For example, in the San Francisco Bay Area and the Silicon Valley, some people who made $100,000 last year on paper (working over 60 hours a week) are now working as waiters and hoping the restaurant won't go out of business. People who bought houses for $500,000 last year are suddenly finding themselves out of work, their stock holdings have crashed, and they can't afford their mortgage.

Even before the downturn in the economy, only about one-fourth to one-third of those in the petty bourgeoisie had done well in the 1990s, increasing their incomes faster than the rate of inflation. Several studies of income and wealth trends indicate that while the more affluent sections of the population (roughly 20%) have benefited from the economic boom of the 1990s, the economic situation of everyone else has either stagnated or gone down.

Statistics show that from 1977 to 1999, average, real (inflation-adjusted) after-tax household incomes went down for those making lower and moderate incomes and only slightly increased for those making above average incomes. Meanwhile the average real household income of the top 1% of the population increased by 93% during this time period! In addition, most people's wages have not kept up with inflation over the last 20 years. And people are being forced to work longer hours to maintain their level of income.

In addition, the inflation-adjusted median income for managerial and professional people was actually lower in 1998 than in 1989. (The median income is the income at which 50% of the people make less than that amount, while 50% make more than that amount. The average income is simple the average of all incomes.)

The inflation-adjusted median income of managerial and professional people in 1989 was $43,212 while in 1998 it was $42,436. However, during this same period, the average incomes increased by almost 7%. This suggests that while a small number of people making higher incomes were doing well--causing an increase in average incomes--most people have seen their incomes stagnate relative to inflation. This trend has been confirmed in study after study.

Many in the petty bourgeoisie are able to live a fairly comfortable life, but most do not own a significant amount of wealth beyond the equity in their house. Two-thirds of the net worth of the bottom 80% of wealth-holders is in housing equity. Only 12.5% of privately held financial assets are owned by the bottom 90% of the population. Wealth holdings by the bottom 60% amount to less than 5% of total wealth in the U.S. The top 10% own 87.5% of privately held financial assets.

Mounting household debt has also become a significant strain on middle class families. Faced with stagnating incomes and rising housing costs, many are going deeply into debt trying to maintain a "middle class lifestyle." Overall, household debt levels reached historic highs in 1999. For the first time in at least 60 years, total household debt exceeded annual disposable personal income, largely as a result of increased mortgage debt due to rising housing prices and refinancing of mortgage loans. On average, in 1999, debt amounted to 103% of disposable household annual income (up from 65% in 1973 and 85% in 1989.)

Debt and debt payments dramatically increased in the 1990s, and for many people, a big component of this was mortgage payments. Meanwhile, rising home prices and falling interest rates spurred a huge flurry of borrowing activity by homeowners in the 1990s, in the form of "home equity" or refinanced loans.

According to The State of the Nation's Housing, "Borrowing was so heavy over the 1990s that home equity as a share of home value dropped 10 percentage points even as home prices rose sharply." This means that more people may own a home than before, but the portion of equity they hold in their home is now at historically low levels. Not surprisingly, the rate of personal bankruptcies has more than tripled in the last 20 years, from just under 2 per 1000 adults in 1980 to over 6 per 1000 adults in the late 1990s.

Health insurance and pension coverage are also growing concerns, including for those in the petty bourgeoisie. From 1979 to 1998, all income groups saw a decline in the number of employees covered by health insurance coverage. As might be expected, the poor experienced the biggest decline in employer-provided health coverage. But even those in upper income levels experienced a decline of about 7% in the number of employees covered.

In terms of pensions, there has been a big increase in "defined-contribution" plans like 401(k)s. Rather than providing a guaranteed fixed payment as a pension, under these plans a retirement income depends on an individual's success or failure in investing these funds.

Many in the middle class have invested their 401(k) retirement pension plans in stocks or mutual funds and, in many cases, the values of these funds have crashed. The SF Chronicle reported that, in 2000, the average balance in a 401(k) plan dropped for the first time in their 20-year history from a value of about $46,700 in 1999 to about $41,900 in 2000, a decline of over 10%. "The stock market fall, combined with increasing debt, has meant the largest absolute decline in household wealth since World War II, even after correcting for inflation..." Meanwhile, the U.S. Commerce Department estimates that personal savings rates in 2001 continues to be only about 1%.

Even before the downturn in the economy, many in the middle class expressed serious concerns about job security. This was related to "downsizings" associated with the merger and acquisition frenzy in the 1990s; corporate relocations; a fear (especially among older workers) that their job skills weren't needed in the "new economy"; and the growing portion of the workforce being employed in "nonstandard," "contingent," part-time, temporary, or contracted jobs.

In 1998-99, when the "boom" was still going strong, over 30% of those surveyed in a poll indicated they were frequently concerned about being laid off, as mergers more than quadrupled in the late 1990s to about 8,000 a year. Corporate relocations roughly doubled in the latter half of the 1990s, adding to job security fears.

We talked to several people in the "40+ Club," a kind of hiring hall for older managers and professionals who have been "downsized" out of a job. One person in L.A. complained bitterly of being discriminated against because of ageism, as her job skills were no longer in tune with the high-tech economy. She also characterized the "recent overall job market as being transitional and fluid--very volatile, unstable, and cut-throat." A 40+ Club member in New York was very bitter, saying their members were unemployed on average for a year before finding a "permanent" job. He himself had not had a "day-to-day job" in two years, and said that the "reality is that the average job has a life of less than three-and-a-half years."

According to The State of Working America: "Underlying job security fell markedly between the 1970's and the 1990s. One important reason that workers may have felt less secure in their jobs in the middle of the 1990s than they did in earlier periods with comparable or even higher unemployment rates is that a large and growing part of the workforce holds 'nonstandard' or 'contingent' jobs." It appears that roughly a fourth of the U.S. labor force are now in these types of jobs (regular part-time, temporary, on-call, or contracted). One 40+ Club member we interviewed commented that a whole generation is growing up to only know or expect a contingent work environment, and that employers won't hire people with a long history at one job or company as it is seen as "a lack of job experiences."

Commenting on these changes faced by the middle class, and especially those who are "downwardly mobile," Katherine Newman, in Falling from Grace, concluded: "It is so profound a reversal of middle class expectations that it calls into question the assumptions upon which their lives have been predicated. If the approved program of higher education, professional credentialism, craftmanship, or devotion to home and hearth does not provide security and access to a life of fulfillment, then what does?"

The Draft Programme points out:

Capitalism offers an uncertain and very bleak present and future to most middle class people in the United States. And as many in the petty bourgeoisie are driven down, stressed out, and demoralized by the workings of this system, there is, increasingly, a material basis for the revolutionary proletariat to struggle and win over huge sections of the petty bourgeoisie.

This article is posted in English and Spanish on Revolutionary Worker Online
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