The squeezed middle is real
by Max Wind-Cowie
This week has seen Labour’s latest soundbite demographic come under fresh scrutiny. Raising living standards of the ‘squeezed middle’ is the focus of the Resolution Foundation’s cross-party commission launched yesterday. Today the term was dismissed by the Chancellor who pointed out that, by Ed Miliband’s definition, it covers 90 per cent of the population.
The squeezed middle may well be vague, as George Osborne pointed out, but that doesn’t make it meaningless nonsense. Just as David Cameron’s phrase de jour – the Big Society – has been derided despite its intellectual strength, so the squeezed middle deserves our attention even as it is mocked from the sidelines. For who can argue that standards of living for the middle classes have not fallen during the recession? Or that deficit reduction will not place fresh burdens on middle earners who are already both financially stretched and suffering withdrawal from the once cheap credit to which access is now, firmly, denied? Britain’s middle class will have to get used to life trimmed of the little luxuries once taken for granted – from the child benefit they used as an income supplement to the almost free higher education their offspring enjoyed. This will be a wrench and, whilst many of the measures affecting the middle classes are necessary and desirable, it will have political consequences. It is surely then right that, as Liam Byrne and Ed Miliband have been trying to do, politicians identify and engage with fresh problems that are facing many more people than before.
Tony Blair famously expressed his belief that we ‘are all middle class’. If George Osborne’s diagnosis of the issues with the Labour ‘squeezed middle’ definition is accurate, then, to some extent, it goes to show how right our former PM was. People who earn well and work hard expect to be rewarded for their effort – increasingly a toxic combination of increased living costs and stagnant real wages means that they are simply treading water. This problem may be widespread but that does not make it less pertinent or less dangerous. Of course, a more precise definition of this middle would be useful– so that the varied starting points of £11,000 a year, £16,000 a year and more can be harmonised – but equally vital is an honest and open discussion of what can be done to either manage, or meet, the expectations of a large body of people who feel let down and down-trodden by our new economic reality. Dismissing attempts to do so, as if this giant and troubled group is too large to deal with or too diverse to answer to, is politically foolish and intellectually weak. The squeezed middle is real – its membership deserves answers about what their future will hold rather than glib partisan jibes.
Will Davies
Miliband is picking up a trope that leftist Democrats in the States, led by Robert Reich, have been using since the Reagan era (the EPI's annual State of Working America report is the empirical underpinning). It resonates in the States because a) everyone believes themselves to be middle class (so Osborne's retort that it includes 90% of people would be entirely to the point) b) Americans worked ever longer hours over the 1980s and 90s, to compensate for stagnating real wages. This latter issue represented a rupture in the basic contract of American society, that reward is proportionate to effort. So it has good political traction in the US.
Our situation is a bit politically different, and economically more severe. Politically, I'm not sure we have any clear vision of who is the middle, either empirically or symbolically. 'Hard-working families' was more a phrase used to duck difficult questions than an attempt to speak to anyone in particular. Economically, the squeezed middle may indeed include 90% of the population, but that would be because we're in the grip of economic stagflation, from which we have no obvious means of escaping (loading ever more responsibility on the Bank of England smacks of desperation). If all Osborne can imagine is an economy that is "a bit like it was before 2008", then we will remain stuck for even longer. In this instance, the 'squeezed middle' will be a very polite way of referring to 'depression' and long-term, inter-generational downward mobility for everyone other than financial elites and property-owners in the South East. Maybe Miliband is being too timid in his attacks...
Matt Grist
I think Miliband is right to point to the problem, but as Will says, it's a long-term trend that runs across countries and is due to all sorts of global changes and pressures. That means if you really want to 'tackle' it you have a massive job on your hands rejigging post-1980s capitalism. I don't think there is any pain-free way to do this, but an honest discussion about the depth of the problems would be a good start. Neither simple redistribution measures nor tax cuts will fix this, so left and right are stuck in terms of their standard policy tools. Unless there is some major technological breakthrough the problem will not go away because its main cause is low (real) growth everywhere in the economy apart from financial services. Consequently we have to learn to live with low growth when our entire economy and polity is based on high growth - is Miliband really up for the telling the hard truths and making the hard changes required to accommodate this new state of affairs? I doubt it.
By the way, I think the Big Society idea could morph into a general movement towards spending less, doing more free stuff with other people and being less materialistic - not because we are virtuous, but because we'll have no money to do anything else!
David Vinter
There are two significant points , to define this middle class, it very much depends on where you live [most journalists have their views
derived from inside the M25 ]. But more of us live outside of it. A schoolteacher living in a small country market town, lives well, and has 'kudos' in the local community. Simple existence is hardly possible in London. So who is the --'middle class' ?
Definition is important, many talk of a ' living wage', but who and where? Do they expect to smoke, drink, gamble, etc. Those that refrain can easily be £50 per week better off. Some will invest it monthly. Does not the farm labourer that can catch a trout or two, do a few hours at a weekend for cash, shooting pidgeons,and k eep a dozen chickens. Not only watch instant worldwide TV just like a city dweller, but maybe have a more comfortable life. After all his family can see the stars every night for free! His children picked up every morning by the local school bus.Have a garden ful of cheap vegetables. Comparisons are odious.