Paul Ryan, Barack Obama, the middle class and how older and younger Americans are shaping the debate

by Ryan Streeter on August 30, 2012. Follow Ryan on Twitter.

The presidential contest is rhetorically a battle about either the middle class, seniors, or young college students/graduates – or all three. They all come up in the speeches and counter-speeches with regularity. Obama especially likes to talk about saving the middle class, even if taxing the rich is his only real policy idea. The middle class, we know, is shrinking and suffering under stagnating incomes.

A little more political commentary follows below, but first, the issues: is the middle class shrinking because it’s “under siege” or being “hollowed out” or subject to some other dangerous-sounding metaphor, or is the real problem that demographics are making our lower and upper classes larger?

That’s an interesting question Mark Perry raises today, based on the recent Pew study on the middle class that has gotten quite a bit of attention. And when you look at the following, it really does shine a light on the problems to which Paul Ryan in particular is trying to shift the public debate.

Perry highlights this chart from Pew’s study…

…to point out that since 1970, the populations of immigrants, college students, and seniors have all grown substantially, which in turn has expanded the share of lower income Americans.

But here’s the other thing that’s interesting about the Pew study. While incomes took a beating across the board, seniors’ incomes rose the most. Also, the wealth of upper income people grew at much more impressive rates over the past quarter century. You can bet that a sizable share of people in that group are older and possess more non-house assets. The following 3 charts bear this out.

First, the incomes-took-a-beating part:

Next, even though in net terms all income groups lost income in the past decade, look at which demographic groups actually saw their incomes rise:

Lastly, here’s how wealth accumulation has looked since 1983:

For some time, Paul Ryan has been shifting the debate away from the middle class to the generational conflict that exists in America – namely, how an increasingly debt-saddled younger generation is footing the bills for an increasingly larger, better-off older population. He hasn’t said it exactly that way, but that’s been the underlying point of his efforts to reform entitlements.

The Pew data suggests that aside from the debt-and-deficit rationale that Ryan typically employs, there is perhaps a more demographic-and-economic rationale that reformers could get more mileage out of. Obama, on the other hand, will continue to argue that we need to raise taxes on the upper class, even if there’s no real evidence that doing so will do anything about the shrinking middle class.

The real problem in America these days is driven very much by the older and younger generations on both ends of the income spectrum.

  • Nate Cooper

    Being a part of that younger demographic I find this very interesting! I especially find that last graphic interesting.

    The upper and middle classes reached their highest net worth under the Bush #2 administration with lower class holding essentially constant from the Clinton administration.

    All categories have taken a hit under Obama, but by percentages the people hurt the most are the one’s he promised to save.

    Here’s some numbers I put together on our debt as a country:
    http://thewinnowing.wordpress.com/2012/09/03/playing-the-budget-game/