As graduation nears and rumors of an economic recovery swirl, perhaps some of you may view your college experience as time on an ark. While the rest of the world drowned in the torrential rains of recession, you could find confidence in your forethought. Someday, you thought, I will emerge from this ship with all the tools I need to build a new world. Well, the olive branch was a fake and you and I are disembarking into the worst class war in half a century. I hope you packed your swim trunks.
The old cliché, “The rich get richer and the poor get poorer,” is alive and well in Oregon. The disparity between upper class and lower class is becoming more evident as wages for the middle and lower classes are remaining stagnant. According to the Oregon Employment Department, inflation-adjusted annual wages for Oregon’s top 2 percent of earners was $153,480 in 2008, a 29.5 percent increase from 1990. Workers in the supposed “middle class,” or 50th percentile, earned $32,659 in 2008, an increase of just 2.9 percent since 1990.
It gets worse. According to the Oregon Center for Public Policy, the United States ranks 41st among 102 nations in 2009 for income inequality, placing us among the ranks of most third world countries. Oregon ranked right in the middle among the nation for income inequality in 2004–06.
There has been an explosion at the top, where the top 1 percent of earners have increased income from $138,594 in 1980 to $1.2 million in 2007. The middle and lower classes have remained generally the same for almost a decade.
But what exactly is the middle class? The passage of Measure 66 raised personal income tax rates on taxable income above $250,000 for households and $125,000 for individual filers. If we can assume that $125,000 is the top of the upper-middle, then the range could be anywhere from $25,000–$125,000. As the income gap grows, fewer and fewer of us are actually middle class, but are convinced we are. A poll by the tax foundation found that four out of five Americans consider themselves middle class.
The U.S. Department of Commerce defines the middle class as a group “defined by their aspirations more than their income.” Middle class families believe in home ownership, a car, college education for their children, health and retirement security and occasional family vacations. If that’s true, I’m surprised only 80 percent of Americans consider themselves middle class. The government seems to have outlined the American dream.
That dream is becoming increasingly difficult to achieve as the prices for key goods rise while wages remain the same. Health care, college tuition and housing prices have risen faster than income.
Only one percent of Americans acknowledge that they’re dirt poor. The rest choose to believe they’re working class or lower middle. In Oregon, 13.5 percent of the population lives below the poverty line, a fraction higher than the rest of the country.
I filled out the Facebook income bar. I know I’m $2 shy of homeless. I also know that as a resident of Oregon below the poverty line, I pay for my status. Oregon is one of the few remaining states that taxes the poor, and its tax is among the highest in the nation—according to the Washington, D.C.,-based Center on Budget and Policy Priorities. 29 of 42 states with income taxes do not tax the poor. Joy Margheim of the Oregon Center for Public Policy states that Oregon not only sets the level for having to start paying income taxes much lower than other states, but it also imposes one of the heftier income tax bills on low-income families once they rise above that income level. Other states either levy no income tax on working families or give them a negative income tax where families get more money back than they put in.
If you’re graduating in the coming weeks, don’t be afraid. There’s always a silver lining. Yes, you’re heavily in debt and poor. The average person carries about $44,000 in debt and people are cutting their debt at the fastest rate in six decades according to the Federal Reserve. We’re also building up personal savings to 4.2 percent of disposable income. The Obama Administration recently signed the Income Based Repayment program into effect for federal student loans. Monthly payments will be capped at 10 percent of income after covering basic needs. Your interest will dramatically increase in a few years, but your college degree will be paying for itself by then. Right?