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New Pew Report on Economic Security

by Scott Winship

So, my intent with this post was to emphasize that I really was playing devil's advocate in my last post on the middle class. I received an email from the Pew Research Center with the following plug:

Americans See Less Progress on Their Ladder of Life In the past four years, some of the edge has come off good old American optimism. As economists and politicians debate whether there is less mobility in the United States now than in the past, a new Pew Social Trends survey finds that many among the public are seeing less progress in their own lives.

I thought that I'd highlight this study [pdf] and thereby provide counter-evidence against my devil's advocacy. Well, you're just going to have to believe me that I'm agnostic on the question of middle-class insecurity because it turns out that my read of this study is that things ain't that bad.

The report begins by noting that the number of Americans saying that they'd be better off in 5 years declined from 61 percent in 2002 to 49 percent today -- less than half the population. Sounds kind of ominous on first glance. But only 12 percent think that the in 5 years they will be worse off. It turns out that 74 percent think they will be at least as well off as they currently are (14% don't know). And while the report doesn't give the information necessary to say for sure, I'm willing to bet that the 2006 figure isn't statistically different from the figures Pew found for the years 1964 to 1979. Much of this period was actually economically a pretty lousy era, but the second half of the 1960s were robust years.

Similarly, while the number of people saying that they are better off today than 5 years ago has declined, it stands at 48 percent, versus 21 percent saying they are worse off. That's no worse than from 1976 to 1996, which again includes good years and bad years.

Next is the finding that the average rating for how respondents will be doing in 5 years is down from 1999. True enough, but it is still 15% higher than the average for how they say they are currently doing, and nearly 30 percent higher than the average for how they say they did 5 years ago. And the 5-years-from-now figure is no worse than any year between 1964 and 1997.

Young people are even more optimistic about the future, with those 18-49 much significantly more optimistic than older adults. That could be due to the fact that people earn more as they age. However, blacks and Latinos are more optimistic than whites. Optimism declines as family income increases, but 48 percent of those with less than $30,000 in income are optimistic, compared with 14 percent who think they'll do worse in 5 years.

Americans are more optimistic than their counterparts in nearly every European country.

Finally, the report indicates that Americans' predicted rating of how they'll be doing in 5 years is always higher than how Americans 5 years later rate the present. Aha!! The poor naifs are simply mistaken in their optimism! Maybe a bit, but Americans in 2006 ranked the present higher than respondents in any year from 1964 to 1996 did, so compared with the past, they feel they're actually doing better than people in those years.

The patterns shown in the report tend to confirm that people who are more disadvantaged tend to be more likely to think they were better off in the past and that they'll be better off in the future, but that's what we'd expect if most of these folks are currently at their low point economically. They probably were better off in the past and will be better off in the future.

Oh, one more finding: Republicans and conservatives are more optimistic than Democrats and liberals....