There is plenty of evidence that political parties tend to target their campaigns and policies on the middle-classes, while low income strugglers have become increasingly disenfranchised. This is strongly influenced by the tendency of the MSM to focus on the middle and upper-classes, especially in front page and prime-time coverage of political news.
An article on Stuff this morning, at first seemed to be following the standard middle-class focus. But then, as it progressed it developed a critique of the relative impact of current economic realities on people in different class or income bands. The impact of the GFC on the middle classes, may not be as expected:
So with a recession, spiralling inner-city house prices and a rising cost of living, is the Kiwi middle-class also feeling the squeeze? You might think so, but some economists reckon the numbers tell us we’ve never had it so good.
“They don’t know how lucky they are,” declares analyst Matthew Nolan of Wellington’s Infometrics.
The author/s refer to various theorists, studies and statistics, providing more evidence than I have time to analyse before I head to work. But here are some extracts:
Jean-Pierre Du Raad, chief executive of the New Zealand Institute of Economic Research, agrees. The middle-class squeeze is “a bit of an urban myth”, he says.
Since 2001, our middle-class median income has risen by 21 per cent. Yes, the recession has hit, but it’s arguable the middle class has suffered less than the poor and the rich. In part, that’s because of Director’s Law.
Named after the late American economist Aaron Director, it suggests the middle class will always have undue political influence because of its size and aggregate wealth.
“The middle class has political power, so the things they are concerned about are acted on,” says Nolan.
So where did the myth of the middle-class squeeze come from? Well, says Nolan, the middle class knows how to make a noise, everyone’s feeling the recession, and many have paid attention to the noises coming from America.
Of course, this is about statistics – the average. This isn’t you, living from pay cheque to pay cheque, scraping together the school donation, the football subs, the car repayment, the Sky bill, the rent for the bach this Christmas.
Department of Statistics figures show, in the past five years, substantial climbs in the cost of insurance (home insurance by 130 per cent, contents by 41 per cent and health by 43 per cent), most foods (by about a fifth), rates (30 per cent) and electricity bills (26 per cent).
But remember, says Du Raad, rising prices hit everyone, but reduced mortgage rates are more likely to help the middle class (if, crudely, you presume the rich own their homes outright and the poor rent). And house prices? That’s merely young middle-class people paying more to older middle-class people.
But here is the real crunch:
What all three economists do agree on is the growing level of inequality in New Zealand – it’s this chasm between our poorest and richest that’s probably the real issue.
Du Raad says the squeeze has actually come strongest on low-income households earning between $30,000 and $40,000 a year.
“There are social issues we should be looking at, not a blanket claim that the middle class are struggling – it’s not in the data,” argues Nolan.
“We’d be better to focus our attention and efforts on people hit by the recession – the long-term unemployed; child poverty.”
The article humanises the issues by presenting some thumbnail sketches of different individuals and families. Some, like the unemployed 59 year old job seeker, and the quake survivors struggling in difficult circumstances. However, the examples tend to undercut the main argument in the article, and re-focus attention on the middle-classes. It doesn’t include any people who are really doing it tough, like Bernadette Connell, contemplating Christmas on the breadline.
Nor does it include people who will be contemplating attending Christmas celebrations or foodbanks organised by the likes of the Auckland City Mission:
Each Christmas the Mission supports thousands of people who have no-one else to turn to. Throughout December we expect to provide 2000 emergency food parcels, distribute approximately 20,000 Christmas presents and host around 2500 people at New Zealand’s largest community Christmas Lunch.
Or the Christchurch City Mission. These are the organisations that I know of. You may be able to provide links to others.
And, given the amount of detail in the above Stuff article, you may have more time to ponder on it and provide some insights, than I do right now.