Consider a broad central spectrum of the middle class - say the middle 60% of the people, or from the 20th to 80th percentile. According to census data for 2011, these are families with annual household income from $20,262 to $101,582.
My wife and I base our observations of the middle class on the people we meet in our travels around the United States. We seldom meet the rich or the poor; our contacts are generally with middle America. To us it seems as if there are some very strong political trends among these middle class people.
They are enormous advocates of economic freedom. Whenever their family arrived in America, they came primarily for the economic opportunity, which was so much better than the country they left. They are certain that they can prosper in America by virtue of hard work.
At the same time, they are worried about their security in old age. They understand that these household income levels - roughly $20,000 to $100,000 a year - are insufficient to allow them to save for retirement. They know they will live a long time, they know that social security will not pay them enough to retire, and so they must rely on some retirement plan or package, and they know that they won't make as much in retirement as they do while working.
So this central middle class in America is motivated by both income opportunity and income insecurity. They want to do it themselves, but they are worried about being able to afford to retire.
As a result, this middle class strongly favors lower taxes, to enable them to stretch their current income and to save for retirement. And they are strongly opposed to public welfare, which they see as taking away their hard-earned money and giving it to the lower 20%. They believe they can advance their position economically and grow into the upper 20% through hard work and savings, so they are not opposed to getting rich - in fact they hope for that to happen. In short, the American middle class tend to be quite conservative economically.
In many Western European countries, on the other hand, there is a strong economic safety net for retirement; there the central middle class feels that public pensions are adequate, and that they only need to accumulate modest savings to have an enjoyable retirement. In other words, there is much less income insecurity than in America. As a result, the middle class in Western Europe is more liberal.
In the 1960s and 1970s American politicians made an effort to provide greater economic security for the middle class: the Employee Retirement Income Security Act (ERISA) was conceived during the Kennedy and Johnson administrations and passed into law during the Nixon and Ford administrations. The intent was to provide a reliable network of private pensions which would adequately fund the retirement of the middle class.
But we all know that the promise of private pension plans in America is illusory. Towards the lower end of the economic spectrum, many employers simply do not offer private pension plans. Also, many Americans in the lower middle class rely on part time jobs with no fringe benefits. ERISA did not require companies to use independent financial firms to finance their retirement plans, so when a company fails, the retirement plan may also fail. ERISA did not require companies to contribute significant amounts to 401(k) plans, so the amounts accumulated towards retirement are usually insufficient. Finally, ERISA did not prevent Americans from withdrawing funds from their retirement plans, so frequently the retirement package never grows large enough to support a secure retirement. As a result, the retirement insecurity persists in the new millenium.
Social Security is frequently an unloved program for no other reason than its social insecurity - it fails to provide an adequate retirement for the middle class.
The simple economic realities described above, namely the strong motivation in favor of economic freedom and opportunity, coupled with the feeling of economic insecurity as retirement age approaches, leads to an American middle class that will continue to support a conservative economic political agenda, with low taxes and low welfare payments.
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