The middle classes died a long time ago

“The death of America’s middle class.” It is a headline that has popped up on several magazines over the last few weeks, the idea being that with unemployment rising fast, real incomes falling and foreclosures gathering speed, the American dream is all but dead. Note that, despite the apparent rise in prosperity over the last few decades, the annual incomes of the bottom 90% of Americans has risen by only 10% in real terms in the last 30 years.

It is a good time to think about all this – what with the double dip – but reading the pieces I wonder if the middle class, as we once defined it, didn’t die long ago – both here and in the US. Being middle class is about all sorts of things. But some of its main characteristics I would think, would be a sense of autonomy in the work place, a reasonable amount of leisure and a sense of security.

But how many of us really have the leisure we associate with middle classness? “We used to sit around the dinner table every night when I was growing up,” Connie Freeman, an apparently middle class American, told the FT magazine, “Nowadays that’s soooo rare.” We work day and night, said her husband “but we are never more than a paycheck or two from the street.”

Think about how ordinary people survive in the UK and you’ll know that many so-called middle class people aren’t that different. How many women do you know who work all day and then fit in more email-answering after their children are in bed? Or men who don’t get home until long, long after their children are in bed? In The Times last week, Camilla Cavendish pointed to the new prevalence of “extreme working, ” jobs that entail “at least ten hours a day at work, plus breakfasts and lunches, plus being available to clients and bosses at weekends and holidays. There is no switch off.”

It used to be only bankers, CEOs and politicians who worked like this. No more. An American study in 2006 found that 21% of “high echelon workers” had extreme jobs, rising to 45% at multinational companies. Half were “clocking more than 70 hours a week” and 42% said they were working an average of over 16 hours more than five years before. The internet, the iPhone and the Blackberry have obliterated any line there once was between work and leisure. The point? Even those members of the middle class who might be making money often aren’t getting a good life out of it.
 
Which brings us to autonomy. A middle manager in a bank used to make decisions. Today he does not. He types things into a computer and waits for an answer. He might work a ten or 11-hour day, but he is hemmed in at every turn by bureaucracy, rules and technology. It might not be quite as dismal as working in a cotton factory a century ago, but it probably isn’t offering much more in the way of job satisfaction either.

And security, who has that any more? Being middle class used to mean owning, or having a good chance of owning and continuing to own your own home. The property bubble had done for that long before the banks imploded. And the credit crunch is doing for it now. It also used to mean not having to worry about retirement – middle class jobs used to come with nice final salary pensions and those were long supplemented by equity bull markets and rising property prices. That certainly isn’t the case now.

There is still a strata of the one-time middle class that is doing well – the bankers, consultants and media men circling the globe with international pay packages and multiple properties – but the vast majority are no longer what we used to think of as middle class. With their long hours, controlled workloads, blurred leisure time and insecure finances, many of them may have morphed into a new working class long ago.

  • Dave O’Carroll Romford

    Yes, yes all true Merryn, but once we get through the cultural change, or revolution if you prefer, in the UK, we’ll be much better positioned to enjoy the bespoke denim outerwear that will be the must have accessory of the day.

    And who knows, maybe in time we’ll regain our position as a major superpower, where clever and super educated slick city traders will coin an instantly identifiable acronym for all those foreign funds desperately seeking a home for their investment monies. What about “BRIT” that could work, certainly the indigenous tribe living in the Peoples Republic of Britain would probably appreciate the irony, unlike their more Easterly located brothers in the US!

    Middle classes, pah. Who needs them?

  • ezra t fernydew

    Very sad, very true. There are a lot of people out there who feel betrayed and dispossesed. Nobody wants their vote and they have by and large stopped voting. Perhaps they will find a voice one day.

  • Duncan

    It’s 22:46. Have just written some dull work emails after helping put the kids to bed. Then read this article.

    Would be interested to read a money week article listing well-paying 37 hour a week jobs (and how to retrain perhaps…)

  • Stephen B

    This kind of thinking isn’t a million miles away from Marx: dying middle-class, enslaved by work, whilst our political and economic masters buy up all the property and influence.
    An economist who is rarely mentioned, even though he predicted the economic crash, is Robert Brenner, who similarly argued that the middle classes were reverting to a new type of working class, except now without the institutions that offered that class some protection earlier in the 20thC. Profitability rates and wages have been contracting since the 1970s, due to global overcapacity.
    For my part, I am hopeful that global rebalancing as emerging economies turn into consumer societies will solve the issue of overcapacity, and give the British middle classes the opportunity to bat a new innings, so to speak.

  • Elvis Presley

    Comment edited:

    Pushing on a string – “Judith, if you go out to work we’ll be able to get a bigger house or a Buy-to-Let”. “Good idea Fergus” Since this conversation has been going on all over the UK, house prices go up and this couple end up with their BTL, but at a much higher price and with a terrible rental return. Result, they are no better off, but now Judith is working as well. LOL.

  • Mark H

    The workers work longer and harder and pay taxes to keep family’s in the style to which they have become accustomed whilst on benefit ( £2000 spent on Xmas presents whilst on the dole per News Night report ).Most workers will retire on very little more than those who have never worked. I earn a very high salary in the City and no one should feel sorry for me but a worker on an average salary must weep at the benefit culture which has developed in this country.Many even in my office would be better off to knock out a few more children, go on benefit,live the life of a ‘retired’ person and enjoy their life instead of being wage slaves and spending over 3 hours a day travelling to/from work.Gordon’s heart was in the right place when he tried to rid us of child poverty but he got it all wrong.Let us hope that IDS has more understanding of the working poor ( which I think he does) and that he gets his own way in the hagle with George.

  • steven

    Another to add to the “strata of the one-time middle class that is doing well” would be civil servants. Excellent salaries but most of all its the pension they get that most of us ordinary ‘middle class’ (ie worked to the bone) cannot dream of.

  • StevieG

    The original article reminds me of a TV doucmenetary I saw 10-15 years on the infamous and original BTL landlord, Nicholas Hoogstraten. In it was the following immortal quote from the man himself: “The middle classes. Or whatever the poor are calling themselves these days”.

    As for the comments made to date, a few resonate well and I would paraphrase thus:

    1. House prices have been driven up by dual income couples to the point where twice the work is required to pay for the same home. No socio-comment intended, merely a fiscal observation.
    2. Benefit levels for many now exceed the average current workers expected retirement benefits. That’s not fairness!
    3. There is a grotesque inequity between public and private sector pension provision. We all know this now, but it’s still there ..

  • StevieG

    I missed one. There are a couple of refernces to slavery: Stephen B “dying middle-class, enslaved by work”; Mark H “wage slaves”.

    I would contend that the middle classes face a pincer movement of slave masters, with each leg of the pincer implied by the above contributors. One is the employer, via ‘voluntary’ long hours.

    But the real slavemaster is the government: we are slaves to the state. If someone takes more than half your income, are you not their slave?

    For many middle class people, the combined effect of taxes appropriates more than 50% of their income. Consider:

    Income tax; NICs; VAT; Council Tax; Council parking charges to park in your own street (not with you yet?); Excise Duties (Fuel, Road Fund, Booze, Fags); CGT; IHT; IPT; Aviation Tax. And probably a few more that I’ve missed.

  • Tony Green

    Merryn, your contributions are the main reason I read MW and you are precise in your analysis. In my experience the middle classes in the UK withered away with the recession of the early 1990s. It was about that time also that middle ranking bankers lost their autonomy, and computers enabled remote working (during all hours). It is even worse for our children.

  • JamesD

    I was interested in Marks comments re IDS. IDS has a VITAL role herefor the future of the UK, not just the coalition. He strikes me that he has really done his best to prepare for this job, he has a firmer grip and more importantly a real desire to understand this serious problem. It will be tough for him and of course for those who are weaned off benefits. If he handles it successfully it will be one of the saviours of the UK. In this economic climate it will be tricky finding the new jobs for those weaned off benefit, but the next generation of non-unemployed will look back in amazemant!

  • Duncan S

    MSW hits the nail on the head again! Clearly we have a wery small proportion of the UK population who actually work in a job which adds to the national GNP, while the rest are working hard in “servicie industries” which move it all about, or not working atall and expecting to live off the wealth generted by the few.

    I’m a retired manufacturer, having sold out, and thank my lucky stars that I’m out of the ra race now. I think that the UK is now an extremely bad place to initiate a GNP generating business for so many reasons that will be very difficult to overturn that I cannot see how we can avoid a continuing slide in our standardof living, as describedi in the article.

  • Jimbo

    As corporations enhance their efficiency by making former decision makers defer to computer algorithms and reducing managers to fillers in of spreadsheets, the economy will develop fewer entrepreneurial skills. There will still be innovation in products and processes but it will be increasingly within the framework of the corporation as employees aren’t confident they have the skills or character to go it alone. The rewards will be distributed unevenly between powerful CEOs and powerless innovators and we will have a less equal and less diverse economic landscape.

    Has MoneyWeek ever looked at the relationship between dividends and executive pay over time? Why have company owners chosen to give themselves a 5% pay rise for the last 3 decades when they gave their top employees 20%? It wasn’t a choice. The control of the economy increasingly lies with the few at the expense of the many.

  • Robert2

    The west and a part of it UK is not longer providing a enviriment for the middle class to contribute their knowlage and work ecperience to the dociety. The middle class sees that the ever incresding power of the central goverment which groes day after day with the help of new technology does not leave any room for profit for their activity. Most of the income from investments are sucked up by different type of tax or hugely overblows beraucracy. If you are enough smart to escape from high taxes you can not scape the giant burden of civil obligations that society impose on you.

  • Elvis Presley

    Robert2 – someone has to pay for all those people in the UK doing nothing!

    We now have to pay these people even more money to come off their benefits otherwise they won’t bother to work. But what will they do if we reduce their benefits as an incentive to work? Oh yes, they’ll vote for someone who’ll maintain their benefits.
    How about we strip voting rights from those on benefits – that would solve that problem.

  • Peter B

    Very good article. No-one’s even mentioned the demographic implications, where middle classes can’t afford children until late in life and often can only afford 1 or 2.
    I genuinely know someone who lives in a council flat and is having a 3rd child so that they are eligible to get a house.

    Rightly or wrongly, there needs to be financial penalties and a social stigma to being long term unemployed. Likewise there needs to be better tax breaks for middle class working families with children – especially those using private schooling and private healthcare that reduces their take from the state.

    I pay tax to use the NHS, and then pay a benefit in kind tax of £900 for my work provided private health care – how by any stretch of the imagination is that a good idea, let alone fair?

  • Angela

    Completely agree. I’m 35, single white female, no kids, working hard… nothing I get is free. Don’t think there is anyone looking after our interests. Not only am a worker but I am a saver, a member of the public and a Civil Servant. I loose on all counts…

    Not all Civil Servants get paid hundreds of thousands of pounds. I just love that we (the lower strata of the Civil Service) are being made the scapegoat for the mess that MPs and Bankers have made of managing the economy through the excesses they have approved.

  • Beta Adjusted

    Spot on Merryn, I’ve been wondering about this for a long time myself. Is it really worth working in the city unless you make >>100k+? given the huge risk I suspect not. If you are a primary school teacher you will start on 25k and be on 30 – 35k within 5 years. Not much perhaps and the hours are long, but you do get 12 week holidays and a 70k ‘loan’ to your first house as a key worker; how long would it take the *average* 50k/year city worker to save 70k in ‘real’ terms? more than 10 years is my guess. Then you have pretty much absolute job security, apparently still a final salary pension, and a strong lobby with the NUT. Not to mention a bit of job satisfaction and more reasonable colleagues and a less stressful job.

  • Beta Adjusted

    Is this sustainable? What about barristers, GPs etc.? Outside corporate I believe the legal profession are still doing rather well. This would definitely be worth a piece on and perhaps you can do more with my sums above. What happened to city headcount in the 70s? and equity market volumes? etc.
    how much have artists been making giving government grants etc., have we seen a compression of relative salaries between ‘careers’? nowadays an extra 20k/year which is 10k/year doesn’t really buy you much in real terms. And is this likely to get worse? are we being ‘enslaved’? might global protectionism be a good thing (for us?) etc.

  • yoda

    “There is still a strata of the one-time middle class that is doing well – the bankers, consultants and media men circling the globe with international pay packages and multiple properties – but the vast majority are no longer what we used to think of as middle class. “

    … this defines “middle class”?? Sounds like an elite.

  • Sea-Bass

    Human nature, being ‘self’ inclined, will always have people looking after their own interests. The government / big business are likewise no different (why should we expect them to be… they are human after all). It is to their benifit that the middle and working classes are milked for everything we have….. slowly and consistently. More taxes…. bigger loans…. 2 or 3 jobs just to break even at the end of the day. This has only two possible outcomes; a) We all end up as indentured serfs to big corporations / banks; b) Revolution. (neither will be pleasant)

    Anyone for option b?

  • Will Richardson
  • Will Richardson

    Oops, here’s the other interesting link…

    http://www.youtube.com/watch?v=akVL7QY0S8A

  • peter hobday

    Our dinner guests got very upset when I told them most of us are working class! My definition of working class is those who must work for a living. So those living on un-earned income are not ‘working class’. Sounds very simple. But that definition upsets a lot of people it seems! But it is part and parcel of becoming realistic about our place in the world and what we need to do to protect our lives from downturns etc.

Merryn

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