A Storied History of the American Middle Class
“The middle-class is the heart and backbone of this country”: an idea that has been a central position for many a presidential candidate, and for a long time it was a true statement. The middle class became the bedrock that sustained the country in times of volatility, ensuring continued success with better-paying jobs and a steady-stream of happy consumers. This strong declaration of the importance of the middle-class was even used during the 2016 election, although the upper-class had taken over an almost 50% share of the United States’ aggregate income as of 2014.
The middle class has been slowly changing for years. There was a steady decline beginning from 1971 to 2015, where the middle-class began at a 61% share and ended at a 50% share. The changing middle class could simply reflect the change in times, including changes in economic and demographic trends that might change the composition of the middle-income population.
Background and Introduction:
The stock market crash in 1929 caused the Great Depression, and thereafter the United States experienced the longest and most severe economic downturn the Western World had seen since industrialization. By 1935, the unemployment rate was at a staggering 20%. Franklin D. Roosevelt created the Works Progress Administration (WPA) by executive order on May 6, 1935 as part of his New Deal to get the country out of trouble. The WPA developed public works infrastructure projects to build hospitals, sewer lines, highways and more, employing 3.3 million Americans by 1938. The Great Depression ended in 1939, just as events were beginning to point a more complicated future internationally.
Part I: The American Middle Class 1950’s-80’s, The Standard
World War II preparation became a serious source of employment for Americans, and although a terrible turn on the road of international cooperation, it was a boost to the future of US economics, nonetheless. By 1943 most working adults were employed by or for the war effort, pushing the jobs rate down to 2% (https://www.history.com/topics/great-depression/works-progress-administration).
Post WWII Programs also had a huge impact on economic growth and wealth building in the United States. After serving in the war, American veterans were rightly rewarded for their sacrifices with the 1944 GI Bill—a package of financial assistance to help veterans adapt to civilian life. This Bill provided money for college, businesses and even the ability to afford to own homes for the first time. The demand for homes increased the need for residential construction, which soared to 1.7 million new homes built in 1950, up from the hundred-thousand mark in the 1940’s.
The GI Bill helped create a new professional suburban population, encouraging housing construction in suburban areas outside of the traditional downtown city where many jobs were located. Also funded by the bill were the new Highway System, erected to make access efficient and inexpensive. The sprawling suburbs–large backyards, barbeques, black-and-white televisions–drove demand for more automobiles to conveniently get from to work. It seemed at this point a good number of adult Americans had money and were happy to spend it. This was a generation establishing a strong American middle class.
In the 1950’s and 1960’s the economy was such that you could live as a single-earner household, with one person in the couple staying at home to take care of the house and the other going out to work to earn income. At the end of the 1960’s, most adults in America were in the middle class (www.pri.org).
The strength of the middle class in the 1950’s and 1960’s became part of an overall narrative for the political direction of the United States at the time. The wealth building opportunities were bountiful, and consumerism was at an all-time high. Projecting out to the world, the United States was asserting its place as the post-world war global hegemon by bolstering its middle class.
Credit cards became popular in the early 1960’s, creating a new avenue for Americans to spend their income and further boost the economy. In 1958, Bank of America—later taking the name Visa—tested out 60,000 credit cards in California and 10 years later, adult Americans had fallen in love with credit and signed up for over 100 million of them. American adults were beginning to seriously contemplate personal finance. The businesses and corporations could now take advantage of the new, disposable income that the “middle-class” life was affording so many Americans and began tailoring their campaigns and products according to the former’s tastes (https://journals.openedition.org/ejas/10458).
The peak of the middle-class was the 1960’s, but behind the security in the economy, social undercurrents and unrest were causing major shifts in American thought. Vietnam was on the horizon and controversial, the Civil Rights movement challenged people’s traditional ideas of race in society, and the Kennedy assassination shook the nation to its core. The birth of the young, defiant groups of youth in the United States developed from counterculture movements that shared the same general theme: rejecting the older generation’s principles of middle class upward mobility, education, and acceptance of the established social and economic hierarchy. In other words, we might say that the birth of the “teenager” can be attributed to the reaction against the accepted social norms at the time, a rebuff of the middle-class “American Dream.”
Then came the slow burn of the American economy, and its social and political power in the 1970’s and 1980’s. In 1970, the middle-class share of household income in the US was 62%; today that number is only 43% (https://nypost.com/2015/12/27/the-rise-and-fall-of-middle-class-america/).
There were two recessions in the 1970’s that were driven by OPEC-imposed increases in oil export prices: the first being from 1974 to 1975 and the second being from 1979 to 1982. In the 1980’s, experts began to worry about the shrinking middle class and the economic extremes at either end of the spectrum—be it wealth or poverty.