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The Middle Class is Alive and Well

If a young couple with a combined income of $21,000 can still manage to buy themselves a cozy, comfortable home, it’s premature to proclaim the death of the middle class dream.

Despite the painful setbacks of the Great Recession, nearly all Americans who find jobs and work hard will avoid poverty and climb the economic ladder. It’s simply not true that minimum wage jobs lock people into hopelessness and destitution. The president and his allies may insist that struggling families can’t rise without government assistance but the everyday experience of ordinary Americans, as well as statistics provided by Barack Obama’s own government, tell a very different story.

A recent trip to Arizona highlighted the durability of middle class aspirations with special force. Before my scheduled lecture to a group of young business leaders, I spoke with a mortgage banker who proudly described his work helping families purchase their first homes. He stressed his particular pleasure in assisting young people in the earliest stages of their careers who nevertheless managed to acquire real-estate. When I asked about the lowest-income household he could remember that had recently secured a mortgage, he proudly described a twenty-something guy and his girlfriend who earned just $21,000 a year, but nonetheless qualified for the loan they needed to buy a three bedroom, one bath home in an outer suburb of Phoenix. The purchase price of $130,000 gave them monthly payments less than $450 which they could handle even with their limited income.

In Arizona, the 2013 median sales price for existing homes amounted to $172,000, even with a recovering real estate market. This means, of course, that half of all homes sold in the state went for less than that figure – and some of them for much less, like the house that I heard about. Across the country the National Association of Realtors reported that the median price among 4.5 million existing homes sold in 2013 came to $196,900; in other words, a clear majority of the purchased real estate went for less than $200,000, which generally means payments well below $1,000 per month. Of course, some privileged enclaves featured far more expensive real estate: in San Francisco, the median price came to $682,000 and in Honolulu, it registered at $629,000. Other corners of the country offered relative bargains: houses in the state of Michigan sold at a median price of just $121,110 and West Virginia was even more affordable at $108,000. Not surprisingly, the states with less expensive real estate attained the highest rates of home ownership, including a stunning 76 percent in West Virginia, and 75 percent in both Michigan and New Hampshire.

These numbers offer slight comfort to frustrated strivers in California or Massachusetts, where most homes seem simply out of reach for ordinary earners. But nationwide, with the majority of home prices still below $200,000, and median household income above $50,000, the dream of property ownership remains surprisingly attainable in most regions of the country.

And what about the minimum wage workers who have become such an obsessive focus for the president and his party? If they receive the federal minimum wage (of just $7.25 an hour) must they give up all hope of ever buying property?

Actually, no; even the tiny number of laborers who earn the federal minimum – barely 1 percent of the US workforce — would rightly count as middle class if they worked full-time. With a 40 hour work week, and at the rate of $7.25 per hour, the federal minimum wage currently produces payment of $290 per week. Allowing for two weeks a year of unpaid vacation, that comes to a yearly salary of $14,500; hardly a princely sum, but well over the official federal poverty line of $11,670 for a single individual. For a family of four, with two parents and two kids, the poverty line comes to $23,850, so that even if both husband and wife received only minimum wage but both worked full-time, they would earn $5,150 more than the definition of poverty. That additional $5,150 would provide monthly payments of $429 –almost exactly what such a family would need to purchase a modest home like the one in Arizona described to me.

These calculations hardly suggest that minimum wage workers are rolling in dough, but it’s worth recalling that 19 states, covering the big majority of the national population, already require minimum payments that exceed the national rules. In my home state of Washington, employers must pay $9.34 an hour, or $2.09 above the federal minimum wage. Meanwhile, a recent tweet by the White House remains profoundly misleading, with the administration declaring: “It’s time to raise the minimum wage because nobody who works full-time should live in poverty.” Actually, both individuals and couples who work 40 hours a week will earn well above the poverty level – even without overtime, bonuses, incentives, or tips – and with that two weeks of unpaid vacation.

The problem of persistent poverty in the United States doesn’t flow from scandalously low wages, or even from outrageously high housing prices. It comes from the difficulty in finding a job, not the remuneration you receive once you get one. That problem also relates to a long series of self-destructive behaviors commonly associated with the most impoverished and dysfunctional neighborhoods, including dropping out of high school, compiling a criminal record, producing children out of wedlock, and investing in booze, drugs, cigarettes, lottery tickets, video games and flat-screen TVs rather than saving money to accumulate the small down payment necessary to buy a starter home. The fact is that two-thirds of all American adults – and an amazing 77 percent of all those over 55 — have managed to make the necessary sacrifices and plans to facilitate such a purchase, and currently reside in a home they own themselves. That doesn’t mean that most Americans live in luxury, but since property ownership represents the very essence of bourgeois status, it does indicate that the middle class remains alive, well and statistically dominant from sea to shining sea.

This column originally appeared at TruthRevolt.org on February 17, 2014.

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    Michael Medved
  • Michael Medved specializes in talking about pop culture and politics on a daily basis. Michael’s columns on politics and media appear regularly in the Wall Street Journal, The Daily Beast and USA Today, where he is a member of the Board of Contributors.

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