US: A nation of "haves" and "have nots"?

Since the gap between the very richest and the poor has been widening it is not too surprising that public perception that US is divided into "haves" and "have nots" has increased. Of course there is a large "middle income" group but as the article notes their income has not grown much in spite of the fact that there are more and more two or more income earners in a family unit.

http://pewresearch.org/pubs/593/haves-have-nots>

A Nation of "Haves" and "Have-Nots"?

Far More Americans Now See Their Country as Sharply Divided Along
Economic Lines

by Jodie T. Allen, Senior Editor, Pew Research Center and Michael
Dimock, Associate Director for Research, Pew Research Center for the
People & the Press
September 13, 2007


Over the past two decades, a growing share of the public has come to
the view that American society is divided into two groups, the
"haves" and the "have-nots." Today, Americans are split evenly on the
two-class question with as many saying the country is divided along
economic lines as say this is not the case (48% each). In sharp
contrast, in 1988, 71% rejected this notion, while just 26% saw a
divided nation.

Of equal importance, the number of Americans who see themselves among
the "have-nots" of society has doubled over the past two decades,
from 17% in 1988 to 34% today. In 1988, far more Americans said that,
if they had to choose, they probably were among the "haves" (59%)
than the "have-nots" (17%). Today, this gap is far narrower (45%
"haves" vs. 34% "have-nots").

These shifting attitudes have occurred gradually over the past two
decades, although the perception of personal financial stringency
appears to have risen more rapidly in recent years. As recently as
2001, a 52%-majority still viewed themselves as resting on the
positive side of the economic balance, compared with 32% who felt
they were monetarily in need. Since then the number of self-described
"haves" has fallen by seven percentage points, a decline as large as
that which occurred over the previous 13 years.

The share of Americans who see the country as divided along economic
lines has also continued to tick upward, though at a somewhat slower
rate in recent years (Have/have-not perceptions rose by 18 points
over the 13 years between 1988 and 2001 compared with a rise of four
points over the last six years).

The increased prevalence of both views -- that the country is
increasingly divided along economic lines and that a given individual
is on the wrong side of that divide -- finds support in national
economic data. As numerous studies have demonstrated in recent years,
income gains over the last few decades have been heavily concentrated
at the very top of the income distribution. For example, in an update
of their earlier study of long-term U.S. income trends,1 economists
Piketty and Saez compute that the share of income going to families
in the top 1% of the income scale has doubled from 8% in 1980 to 16%
in 2004 even excluding capital gains.2 (For a review of other recent
studies see an earlier Pew commentary, "Pinched Pocketbooks: Do
Average Americans Spot Something That Most Economists Miss?"3)

Meanwhile, Congressional Budget Office data4 show that despite the
increase in the number of families with two or more earners and
widespread income gains in the latter half of the 1990s, families in
the middle fifth of the income distribution realized only a modest
$6,600 increase in annual income between 1988 and 2004, while the top
1% of families saw their incomes rise from $839,100 to an average
$1,259,700. Recently released Census Bureau data show that in 2006,
median household income adjusted for inflation was still 2.1% below
its 1999 level.5 More sensationally, Bloomberg.com recently reported
on a study showing that "top private-equity and hedge fund managers
made more in 10 minutes than average-paid U.S. workers earned all of
last year."6

Factors Driving Perceptions of an Economic Divide

These objective facts of economic life might seem, at first glance,
to be the primary source of the rising perception of a have/have-not
nation. And the trends are surely reflected in the growing numbers of
Americans who view themselves personally as on the wrong side of that
divide. But in judgments about the larger state of the country
Americans have traditionally turned a deaf ear to commentaries or
analyses that might be characterized as evocative of class warfare,
whether grounded in objective facts or not. Successive Pew Global
Attitudes polls, for example, find that at every income level,
Americans are far more likely than Europeans to believe that
individuals, not society, are responsible for their own failures,
economic and otherwise.7 Also, economists have pointed to other
factors contributing to modest economic gains among middle-income
households -- such as an aging population and smaller families --
that do not necessarily suggest a growing socioeconomic divide among
wage and salary earners, as well as to higher levels of consumption
and expectations across the income board.

Analysis of polling data over the years also strongly suggests that
the growing perception of societal divide is driven as much by
political factors as by economic ones. Not that the phenomenon is
restricted to those of one political persuasion: Republicans as well
as Democrats have recorded an increase among party adherents who see
a have/have-not divide: Between 1988 and 2001, the number of
Republicans viewing the country as so divided increased from 19% to
34%, declining slightly since then to 33% but still resulting in a
net increase of 14 points over the period.

But the rise in the number of Democrats perceiving a divided society
started from a higher base (32%) and has risen continuously. Now, in
2007, fully 63% of Democrats see a social divide, a share nearly
twice as great as that seen among Republicans. As a result, the
increased perception of societal division in recent years coincides
with a widening partisan gap in views of American society.

Differences in the current prevalence of this view across other
demographic groups are far more modest by comparison, as seen in the
table. Although upper-income Americans are less prone to see a divide
than are those with middle- or lower-incomes, and college grads are
less likely than those with lesser education, only the difference
between black and white adults (67% and 45% respectively) rivals the
partisan gap in size.

Nor are substantial differences seen in the degree to which persons
in various income and demographic categories have become more likely
to see a "have/have-not" division over the 1988-to-2007 period. One
exception is that people who are middle-aged record a somewhat higher
percentage-point increase in this perception compared with other age
groups. The same is true of people living in the eastern part of the
country compared with those in other regions. But these within-
category variations are dwarfed by the political affiliation divide.

This tendency to view the national economy through the prism of
politics is not a new phenomenon: Over the last two decades, the gap
between Republicans and Democrats on opinions about income
distribution has consistently been larger than the gap between upper-
and lower-income respondents. Nor is this partisan cleavage unique to
opinions about the nation's economic divide. As earlier Pew analysis
has shown, a similarly strong political influence is observed in
judgments about the current and future state of the national economy.
8 As noted there, the causal link between political party affiliation
and perceptions about the larger state of the economy and the nation
may operate in both directions: Families in the top income-tiers are
both heavily Republican and, understandably, more likely to look with
favor upon the nation's larger economy and their own place within it.

Still while many people may view both their choice of political party
and the state of the nation through the prism of personal economic
circumstance, other factors may dominate. For example, evangelical
Christians are among the GOP's strongest adherents, yet Pew surveys
find that their average incomes are somewhat lower than those of
other Protestants or of seculars.

To filter out the independent effects of party affiliation, income
and other demographic variables including income, race, sex and
education, multiple regression analyses were run on the July 2007 data.

As seen in the chart, political party affiliation is far and away the
most important independent determinant of views about whether the
country is divided between "haves" and "have-nots." Race is the
second most important determinant, though its potency is only half
that of party while income and education have virtually no
independent effect on such perceptions.

Which Side of the Divide Are You On?

This sharp partisan partition is not observed, however, when the
focus shifts from the state of the nation to the state of one's
personal finances. Not surprisingly, views about one's own position
relative to the income divide are heavily influenced by the
independent factor of personal income. While party affiliation
remains a significant influence, it is dominated by the objective
reality of economic status as well, to a lesser degree, by race.

A more detailed look at the increased prevalence of have-not status
across various economic and demographic categories shows surprisingly
little variation across groups. Although Republicans remain more
likely to see themselves as among society's "haves," (50% do so now,
as compared with 44% of Democrats), both groups record a substantial
decline in the share of those who count themselves among the
economically favored (13% and 12% respectively).

Declines in perceived personal economic status vary little among
those in the top, middle and bottom thirds of the income
distribution. However, middle-income families record the largest drop
(from a solid 61%-majority in 1988 to a 43%-minority in 2007) in the
number of those seeing themselves as among America's "haves."

Among age groups, young people (ages 18-29) are the most likely to
see themselves as "haves," although the share taking that view fell
by a sizeable 19 percentage points over the years between 1988 and
2007. Those ages 30-49 experienced a similar decline in perceptions
of "have-ness" but starting from a lower base so that the middle-aged
are now the most likely age group to classify themselves as "have-
nots." Interestingly, the elderly (65 and over), while recording a
substantial gain in perceptions of economic status in 2001 (59% haves
vs. 45% in 1988) have now reverted to their 1988 reading.

Women are more likely to see themselves as have-nots (37%) than are
men (30%) and the gap between the sexes has widened slightly since
1988. Across geographic regions, persons residing in the South
experienced the smallest decline in the number classifying themselves
as "haves" (minus 10 percentage points compared with declines of 15
points in the East and West and 17 points in the Midwest). As a
result, the South now registers, by a small margin, as the
economically most satisfied region in the country.

Haves, Have-Nots and Horse Races

What ramifications might these differing perceptions of a
socioeconomic divide have for the coming 2008 primary elections? At
the moment the likely impact seems slight. A look at voter
preferences among the leading candidates in both political parties at
the end of July shows little if any difference between those who see
the country divided between haves and have-nots and those who see no
such schism.

On the Republican side, the only significant difference is a somewhat
stronger showing for John McCain among those who see a divide than
among those who do not, a preference perhaps accounted for by the
higher proportion of Republican-leaning independents among his
supporters.

On the Democratic side, only Barack Obama receives significantly
stronger support among those seeing America as a nation split along
economic lines -- nearly a quarter (24%) of such -- name him as their
preferred Democratic candidate for president compared with 16% among
those seeing no such divide – a finding consistent with other
analyses showing Obama recording greater popularity among liberal
Democrats than among other factions of the party. By contrast, John
Edwards, despite his overtly populist campaign message, draws equal
support from those on their side of the "divide" divide.

This is not to say that such perceptions will not play some role in
the subsequent general election. But given the strong correlation
between partisan preference and public opinion on the issue, it seems
unlikely that the have/have-not question will play a strong
independent role in the final outcome.