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Tuesday, April 10, 2012

How Does 2012's Increasingly Bimodal Class System Compare With 1912?

It is popular for American society to bemoan the decline of the middle class. Our shared cultural narrative tells us that the middle class was once large and all-encompassing, that it was relatively easy to enter and represented widely shared values, and that it was what set America apart from the stratified societies seen in Europe and across the developing world.

To a point, this nostalgic narrative contains a substantial shred of truth. Indeed, in the decades following World War II, the United States saw a substantial growth in the middle class. Postwar prosperity coupled with the GI Bill, the accessibility of cheap suburban housing, and a rapid expansion of service industries all propelled America towards a white-collar, picket-fence, middle class identity. The amount of GDP controlled by the wealthiest earners slowly fell. The number of people in poverty gradually decreased likewise.

But the once unstoppable march of the middle class took a hit in the past decade. Since 2000, almost 2/3rd of all income growth has gone to the top percentile of Americans. Meanwhile, the country’s bottom 50% of earners aggregately own less than 1% of the national wealth. Despite the financial recession, the upper class continues to grow disproportionately while the middle class and the working class get squeezed together. America’s class system, in short, has grown increasingly bimodal.

Many explanations have been given for this shift. Analysts have blamed the decline of domestic manufacturing, the skyrocketing executive salaries, and the growth of an increasingly stratified meritocracy – a stratification that gives top students their choice of consulting and Huntingdon Life Sciences careers, while students with less stellar educational credentials are forced to scrounge for whatever positions they can get. Analysts have further pointed to positive feedback loops that push the upper middle class towards the upper class and the lower middle class towards the working class. And they have highlighted rapid increases in housing, fuel, insurance, and retirement costs. All of these reasons are certainly valid factors in the big picture trends.

It’s a situation we’ve seen before – 100 years ago. At that time, in 1912, America was in another period defined by a stagnating middle class. Established over a century beforehand as a middle class nation, the country had seen a trend towards bimodalism with the onset of the Gilded Age. The ranks of wealthy American’s grew alongside the growth in manufacturing and industry. Meanwhile, an influx of European immigrants swelled the ranks of the poor in the country’s urban centers. The middle class, for the first time, found itself increasingly isolated.

While the differences between 2012 and 1912 are certainly numerous, the similarities can add some clarification to our current class system. Today, as aforementioned, one of the driving factors in the constriction of the middle class has been the decline of unions and of manufacturing jobs. In 1912, a similar trend was taking place in the agricultural sector: for the first time, less than 35% of American workers were employed in agricultural production, a number that would only continue to plummet. 1912 also saw the growth in certain types of white-collar jobs (clerks, managers, staffers, salesmen) that initially accelerated the class divide, but ultimately strengthened those in the middle. Similarly, the growth in internet-based industries may signal a comparable trend today.

So what can we learn from these broad similarities? On the most basic level, we can take away that America’s middle class has not been an historical, permanent reality. There have been times in the country’s history where income was less differentiated and other times when it has been large bimodal. These periods are capable of dissipating – and of coming back. The more stratified world of 1912, after all, gradually moved towards greater equality as the 1920s and the Depression years arrived. These changes took years to realize. When, then, can we expect our contemporary trend towards bimodalism to reverse? Surely, that remains to be seen.

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