There Isn’t a Homogenous Middle Class Anymore; Class Segmentation

Yesterday I wrote a post about how states scheme to attract the residents and favor the residents they want.  I was thinking about that and how random the preferences of people are.  It explains why some people flock to Florida, and others to Colorado.  The states are as different as night and day.

As I was thinking about that, I was thinking about how people are highly segmented today.  The current Presidential election shows it.

If you went to college, have a great job and are earning a decent buck, it’s very likely that you are backing DEMe candidate Hillary Clinton or a GOPe candidate like John Kasich, Marco Rubio etc.  If you didn’t go to college, and you work, you might be likely to back Trump.  If you are white, and young and educated, you might be likely to back Sanders.

Demographics are so interesting.

As I said yesterday, my wife and I do a lot of driving around the country.  We meet a lot of people.  They aren’t extraordinary people by fame or fortune.  They are just common Americans like ourselves.   As America has evolved since the end of WW2, and especially since The Great Society of 1965, the middle class has segmented massively.  The range of income from lower to upper middle class is defined as $35,000 to $100,000 per year.  In some states, it’s possible to game the system and get enough government benefits to put you into lower middle class territory without working.

I see four to seven segments

• Blue collar factory workers (shrinking)
• Blue collar tradesman (stable)
• Blue/white collar salespeople (stable)
• Government workers (increasing)
• Small businesspeople/Shopkeepers (stable)
• Independent consultant/professional workers (increasing)
• Non-profit or NGO employees (increasing)

They might or might not be college educated.  If we look at the various segments, there is flux in them.  Certain states attract certain kinds of people and employees.  So do the political parties.

Blue collar factory workers were traditionally Democrats.  I see that changing.  Immigration, and corporate inversions are hurting them.  Big government regulations and tax policy are hurting their opportunity too.  They are looking for a home, and currently they probably have found a home with Trump.  The Club For Growth/Social Conservative wing of the Republican Party doesn’t want them-nor does it know how to talk to them.  The elite wing of the Democratic Party only wants their votes, it doesn’t project policy that can help them.

Blue/White collar sales people and tradesman are split.  Most lean Republican since they need an expanding/low tax economic environment to do better.  Again, these people are likely not huge social conservatives.  Republicans don’t really know how to talk to them except to say “We will lower taxes and the deficit” but they haven’t done much of either.  Forget about the Democrats.

Government workers are 100% behind the Democratic Party.  The Dems are the party of government unions.  Hence the incentives behind their policy to project and expand government.  Republicans would be smart to attack government unions like Scott Walker and Mitch Daniels did everywhere they can if they want to continue to win elections.  If there is a state with a Republican governor, and a Republican controlled legislature that isn’t following the Walker/Daniels playbook, they are making a massive error in judgement.  Massive because this faction is never going to back them.

Small businesspeople are generally Republican.  They feel the effects of high tax rates, increased government intervention and government mandates.  However, these people also are disconnected from the establishment Republicans.  When I speak with them, they are pissed.  Trump is finding a lot of support here.

Independent consultants/workers are split.  I find the older they are, the more likely they are Republican.  Younger, Democrat.  Virtually all of them describe themselves as social liberals/fiscal conservatives.  They are pissed off too.  They aren’t voting for Hillary.  Nor were they behind any establishment Republican candidates.

NGO employees are Democrats in general, or establishment Republicans.  It depends on the cause.  But, they need more government spending to keep the grant money flowing into their NGO so they can continue to create policy papers.  Hillary and GOPe candidates found a lot of support here.  If Kasich isn’t nominated, these people will gladly vote for Hillary.

My gut tells me there is room for a third party to emerge.  It would be a mishmash of Trump/Cruz/Paul/Sanders.  It would be a very fiscally conservative party.  It would blow up the revolving door between corporate America and K Street.  It would stay out of your bedroom.  The federal safety net that was erected under FDR would not go away in sum, but change to incentivize work rather than idleness.  The size and scope of government would be slashed, and government pensions would change from defined benefit to defined contribution.  All elected officials would have term limits.  But, to get it started it probably takes and ideological person with money.