Wednesday, August 11, 2010

Caught in the Middle

I don't buy the 'end/death/collapse of the middle class' thesis. Not for now, anyway. Firstly there is the problem of definition: it used to be tied to occupation, but now it seems to be tied to housing tenure and/or the employment status of married women. At least it is in those analyses that tie the ongoing/coming demise of the middle class to either falling house prices (David McWilliams) or to fewer two-income households (Mack).

I think both factors are exaggerated because both are relatively new phenomena and relate to a relatively small minority of the 'middle class' itself. Take house prices: most middle class people didn't move home or buy additional properties during the boom. The value of their properties may be down on paper - but they were also only up on paper. The net change in their wealth is moot. As for two-income households, it was only as recently as 2005 that the majority of married women of working age were categorised as being in paid employment. Well behind the trend (and levels) in other countries. I doubt therefore that house prices or dual income patterns either truly define the middle class or herald its demise.

Furthermore, anxiety about future status (and financial wellbeing) has probably been the hallmark of the middle classes everywhere and throughout history. That's why they save so much, buy so much insurance, and insist on future-proofing their children by getting them into university etc. They have more to lose, and therefore are more anxious and more vocal about what they might lose. As no doubt are their middle class offspring working in the media, journalism and so on.

Yes, some groups in society are disproportionately affected by the recession - the middle aged in general, and young men in particular. Perhaps 'middle class' is being confused with 'middle age' - after all, the latter tends to correlate with peak borrowings, incomes, and expenses over the course of the lifecycle. All the things that are sources of major financial stress in a downturn. But I don't see the middle aged disappearing any time soon... And as the recent AON report on the retirement intentions of European workers points out: Irish workers have responded to their recent pension losses by simply assuming they'll work longer and retire later. 'Middle age' looks likely to be extended into the 60s age group.

The global outlook for the middle classes is, if anything, very bright - given developments in the BRIC economies, for instance. That's no consolation to someone in Ireland wondering where their next pay check or mortgage payment is going to come from, but the same factors driving the global expansion of the middle classes - economic growth, educational investment and growing demand for professional services - will return and do the same for Ireland's middle class.

In the meantime, they'll do what they've done before (in far tougher times than these): muddle through to better times. That has always been the way of the coping classes.

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