The Middle Class: An Endangered Species?

It is ridiculed by poets and libertines; idolized by moralists; the target of speeches by politicians, popes and all others who climb into the pulpit to recruit voters or followers; evasive of revolutions; the pillar of families and communities; the lifeblood of public treasuries and guarantor of the welfare state. The middle class is the true face of Western society. In a globalized world, where even in the poorest country you can always find someone with enough money to go for a ride in a space shuttle, only the pre-eminence of the middle classes distinguishes so-called developed nations from the rest. Countries cease to be poor not because of the positions their millionaires occupy on the ranking of the world's largest fortunes -if this were true, Mexico and India would be at the top of the list- but because of the size of their middle class.

It seems, however, that the middle class is in danger, or at least, in freefall. This is what sociologists, economists, journalists think, and, moreover, what more and more statistics confirm. Like the dinosaurs, this social class still dominates, but the current recession could wipe it off the face of the earth. The process will be gradual, not instantaneous, but inevitable all the same. The new dominant class that will replace it may well be the fast-growing group of mileuristas -a term coined by the student Carolina Alguacil, who wrote a letter to EL PAÍS in August 2005 complaining of her work situation- those who earn no more than 1,000 euros a month. Just as when mammals substituted their giant ancestors, these individuals are better-equipped to adapt to difficult circumstances. The poor also adapt, but they are excluded, while 1,000 euros-earners are part of the social fabric.

The mileurista phenomenon not only affects young, recent university graduates who must accept low salaries to build their resume. In recent years, it has grown to include qualified manual workers, immigrants, employees and middle-aged professionals who have been forced out of the job market and even into early retirement. In Spain, it is estimated that as many as 12 million people earn 1,000 euros a month.

Even politicians are starting to take notice. The measures announced by the prime minister, José Luis Rodríguez Zapatero, during the state of the nation debate (though they were later toned down) seem to be the first specifically designed for this group: an increase in aid to those who rent, to remove the housing deduction for middle incomes, deductable transportation passes and in particular, an unlimited number of free masters degree courses for out-of-work graduates. Masters degrees, postgraduate studies, PhDs, languages -the hallmark of this "Peter Pan" generation, which is said to be the best-trained in history but does not move out of the family home until an average age of nearly 30.

Statistics clearly show that 1,000 euros-earners are gaining more and more ground on the middle class. One of the most revealing figures comes from the Wage Structure Survey carried out by the National Statistics Institute (INE): the average salary in Spain in 2006 (the last time the study was done) was 19,680 euros a year. Four years earlier, in 2002, it was 19,802 euros. That is, during the period of greatest prosperity in the Spanish economy, not only did salaries not grow, they fell, even more if you allow for inflation. Earnings plummeted even during the boom years, regardless of the political party in power (since 1995, the Socialists have governed, followed by the conservative Popular Party and the Socialists once again). The wealth generated during all this time has mainly served to increase capital gains. As a result, today half of all Spaniards earn under 15,670 euros a year: they are mileuristas.

Trends like these have led some, like the journalist Massimo Gaggi and the economist Eduardo Narduzzi, to assert that the middle class is on the verge of extinction. In their book El fin de la clase media y el nacimiento de la sociedad de bajo coste (The End of the Middle Class and the Birth of the Low-Cost Society), they predict the appearance of a new, polarized social system, with a small, increasingly wealthy class of technocrats on the one hand, and a declassed mass that would include the former middle and lower classes. The latter would be defined by very limited purchasing power, the target of products and services offered by low-cost companies such as IKEA, McDonald's and Zara.

Gaggi and Narduzzi go on to argue that "the disappearance of the middle class implies the collapse of the welfare state, because the class of the masses is no longer interested in paying high taxes as a political compensation to the working class, which has been largely absorbed by the class of the masses. The resulting society is less stable [...] and potentially more drawn to reactionary political alarms capable of trading more welfare for less democracy. It's also a society without a clear identity of shared values, which makes it opportunist and consumption-oriented, without any long-term projects."

The middle class is shrinking all around the developed world. In Germany, for instance, a McKinsey report from May of last year, when the worst of the crisis was yet to come, showed that the middle class had gone from representing 62 percent of the population in 2000 to 54 percent. By 2020, the report estimates that it will fall way under 50 percent. In France, where mileuristas are known as "baby losers", unemployment among university graduates has risen from six percent in 1973 to 30 percent at present. In Greece, where salaries are even smaller, they talk about the "700-euro generation".

In the United States, the phenomenon is associated with Wal-Mart, the world's largest retail chain, with 1.3 million employees. Its success is based on low prices at the expense of tiny salaries, minimal social benefits and the mass importation of cheap products from emerging markets, which is destroying domestic industry. In response to this Walmartization of the United States, President Barak Obama set up the Middle Class Task Force, with the goal of alleviating the situation of a social group to which 78 percent of the country's citizens say they belong.

Meanwhile, the boundary that separates the middle class from exclusion and poverty is disintegrating. From New York to Madrid, the demand at soup kitchens is growing. In Spain, a 2007 study by the INE found that nearly 20 out of every 100 people were living under the poverty level. What's more, the last FOESSA report on social development and exclusion found that12.2 percent of Spanish households contain "poor" members; that is, those who are socially integrated but with insufficient income who are at a high risk of becoming excluded.

Other experts are more optimistic and do not think that the middle class is dying out at all. "This is an overly simplistic assertion that ignores some of the major long-term advances made in Spanish society... Even though inequality levels are high here compared to the rest of Europe, we are still far from being a polarized society," says Luis Ayala, a professor of applied economics at Rey Juan Carlos unversity. In this country, where unemployment is at a record high of four million, an even more telling figure shows just how precarious the situation of the middle class is: in over one million families, every single member is now out of work. Moreover, the unemployment rate among principal earners has reached 14.5 percent, a very similar rate to that of the spouse or partner (14.4 percent), whose income is considered supplementary.

This leads us to the question: How are parents going to help their children if they have lost their jobs themselves? According to Josep Pijoan-Mas, a professor from the Centro de Estudios Monetarios y Financieros (CEMFI), "The increase in inequality on an individual level is amplified when we group the data by household. This suggests that, contrary to popular belief, the family is not a good safety net in Spain: when one member of the household experiences a loss in income, the same thing happens to the remaining members," he says.

Claiming that for the first time since World War II (or the Civil War in Spain), future generations will be worse off than their parents may seem like a recklessly bold assertion. Never have so many young people studied abroad, done so much travelling or gotten so many degrees. But this sensation of wealth is illusory and tied to family dependency. The number of young Spaniards who are totally independent financially fell from 24 percent in 2004 to 21 percent in 2008, according to the latest report by the Instituto de la Juventud (Injuve). The same trend can be seen across Europe. The number of "old students" has grown at a dizzying rate in the last few years; 51 percent of all full-time students in the EU are over the age of 30, according the EU Youth Report published in April. But when these veteran pupils finally enter the job market, they can expect to find temporary contracts -perhaps forever. Others will join the workforce at the age of 33 and by the age of 50, run into a layoff plan or pre-retirement. "The problem is, we offer jobs that anyone can do. That's why, oddly enough, young people will respond to the crisis depending on their chances of waiting and getting the proper training. In that regard, their parents' purchasing power and educational level is decisive," says the sociologist Andreu López, one of the authors of the most recent Injuve report.

But young people are not the only ones who are suffering. The thousands of workers who are now losing their jobs may re-enter the job market when the crisis is over, but not with the same conditions. For example, the huge group of construction workers who have supported the Spanish economy will have to find work in other sectors. "Everything they've learned professionally in recent years will be of little or no use to them. When they find new jobs, their salaries are not likely to be high," says López.

Governments have found a miraculous cure for unemployment and job precariousness: research, development and innovation: what Zapatero has dubbed the "new productive model." Aside from the fact that technology industries do not require a large labor force, the premise is based on a kind of fallacy: the idea that emerging countries are just going to sit around and wait while we turn our Andalusian farms into superconductor chip factories and genetic labs.

Considering this climate of insecurity, it is hardly surprising that 45.8 percent of Spain's unemployed are thinking about sitting for official examinations and 14.6 percent are already preparing for them, according to a survey by Adecco. Being a civil servant has become the dream of any Spanish worker, and it may be the last stronghold of the middle class. The only danger is that the price of government employees is increasingly high for a country where revenue from social security -not to mention business and income taxes- is plummeting. The last survey of the working population (EPA) shows that there are now three million civil servants, which will cost taxpayers a total of over 103 billion euros this year, according to data from the Ministry of Territorial Policy. Can such a struggling economy afford to pay government salaries amounting to 10 percent of the wealth generated by the country in an entire year?

With such a bleak outlook for so many people, one might think that major social upheaval is around the corner. Some warn that radical movements, such as neo-fascism, are resurfacing. For the moment, none of this has occurred. General strikes organized by traditional labor unions in countries like France and Italy have had little consequence, because the individuals affected the most -the unemployed and those who earn under 1,000 euros- don't feel represented by them. In Spain, no such strikes have even been announced.

It may not be very romantic to say that once again, we are not going to see a revolution. But it is highly likely that the erosion of the welfare state will be accepted with resignation. Politicians will meet it with indifference, increasingly gravitating towards a politics of spectacle, as exemplified by Silvio Berlusconi and Nicolas Sarkozy, whose social life gets more media coverage than the measures they adopt as the heads of their governments.

Along these lines, economist Santiago Niño Becerra thinks that at present, "ideology is practically dead" and that we will gradually move towards a political system where a group of technocrats will call the shots and "people, the populace, will have less and less of a say".

He foresees a post-crash society of "insiders and outsiders": those who are necessary to generate GDP and those who are not: "We will see the rather rapid formation of a group of necessary individuals who will contribute to the generation of GDP, whose total volume will decrease compared with the present moment; highly productive people with high salaries (this is why their GDP per capita will be much higher than now). The rest, a fairly homogenous group, will include temporary employees when needed who collect a subsistence subsidy that covers their most basic needs to complement their working income. Recovery will come through productivity, efficiency and the necessary technology; but in this trinomial, very few workers are needed."

The Italians Gaggi and Narduzzi share this impression. In their most recent book, El pleno desempleo (Full Unemployment, 2009), they paint a picture of a labor situation with no contractual benefits, baby boomers (the generation currently between the ages of 40 and 60) who are postponing retirement, temporary service contracts and self-employed workers with no security... and in spite of all this, an amorphous, resigned society.

"The masses of the 21st century are a non-material, figurative social form in the sense that it is rare to see concrete political or social manifestations in the street, while it is easy to identify mass trends or behaviors such as the use of Google or the passion for the iPhone," they argue. "This means that four million unemployed are less dangerous today than they were in 1929, because there is no political ideology that agglutinates their discontent and dissention. Also, labor unions have gotten weaker. The current crisis politely contradicts what we said in our essay last year: the job market is becoming so flexible that most workers are in effect unemployed. It is the triumph of capital as a factor of production, which is apparently in crisis, but the crisis is actually the excuse to give the final push to the few remaining certainties that workers still have".

Four years ago, Carolina Alguacil hit the nail on the head when she defined the term mileurista. "A young university graduate, with foreign languages, postgraduate studies, masters degrees and courses under her arm (...) who earns no more than 1,000 euros. Who spends over a third of her salary on rent, because she likes the city. Who doesn't save, doesn't have a home, car, or any children; who lives from day to day... Sometimes it's fun, but it's starting to get tiresome." If we had to update this definition, we might add: "The mileurista can now be any age. He earns 1,000 euros a month, doesn't save, lives from day to day off sporadic jobs or subsidies, yet despite all this, he doesn't rebel."

The 'Plug Generation'

Internationally, they are known as baby boomers. In Spain, they are called the "plug generation", which refers to all those born in the 1950s and 60s, coinciding with a spike in the birth rate. They filled almost all positions of responsibility in politics, business and even culture, blocking access to subsequent -and supposedly better-trained- generations.

They hold the permanent, best-paid positions, protected by workers' rights and powerful unions, while mileuristas are left with precarious, temporary jobs. The annual salary of workers with temporary contracts was on average 32.6 percent less than those with permanent contracts (2006 Wage Structure Survey).

But not all forty-somethings are successful heads of the family. They also suffer from a polarized situation. The salary gap between executives and employees has widened in recent years. Directors of companies with over 10 workers earned 206.6 percent more than the average salary in 2006.

In times of recession, all eyes turn to them. Apart from being the target of layoff plans, pay cuts and cuts in services, baby boomers will be the suckers, with their taxes, who will have to shoulder the growing debt countries are accumulating to weather the crisis. And this, without taking into account the threat that their pensions may not be there when they reach retirement age, as the IMF and other harbingers of doom never stop warning us. But even though they may be a burden on the workforce, they are also the lifeblood of consumption. So we'd better think twice before pulling the plug, lest the gas should escape.