The Middle-Class Litmus Test for the Economy

October 2, 2014 | | Wall Street Journal |

When people like me write about the middle class, it has nothing to do with envy or class warfare—two shopworn epithets that should be retired from the political lexicon. The condition of the middle class—its size, income and self-confidence—reveals the extent to which economic growth increases opportunity. When the middle class is shrinking, when incomes of middle-class families are stagnating and when the heart of American society is losing hope in a better future, then the U.S. economy is in trouble. And so is the political system. [...]

Take public higher education, which for the past two generations has been a key gateway to the middle class. Although media reports have focused on gold-plated facilities and bloated bureaucracies, the per capita cost of educating students has risen only modestly in recent years. The costs for families have soared mainly because states have slashed funding for higher education, forcing colleges and universities to raise tuition faster than costs.

Since 2008, according to the Demos public-policy group, state higher-education funding, adjusted for inflation, has fallen by nearly $2,400 per student—26.7%. The State Higher Education Executive Officers Association reports that real per capita funding fell in 2012 to its lowest level since 1980. As recently as 2002, net tuition (tuition minus state-funded financial aid) accounted for only 30% of total revenues. Today, that figure stands at 47%. No wonder middle-class families are emptying their pockets and taking out large loans.