So how’s the American middle class, really?

In Cincinnati, Steve Raven has just moved his family into a faster economic lane. He recently started a truck-driving job that pays a lot better than his previous work making shock absorbers. It comes with solid health insurance, the hope of more vacation travel, and the prospect of his pay rising further from here.

In San Francisco, Jessica Beard is also doing work she’s excited about, but the similarities stop there. Her job title is adjunct professor, but the not-so-lofty reality is that her teaching schedule in English literature is uncertain from one semester to the next – and so is her income and her health insurance. She says she’s making less than she did in another job she had 15 years ago.

In Maryland, Hope Harley is a young student at Frederick Community College. She’s hopeful about earning a good living, and about the economy getting better for most people in general. But she adds a cautionary qualifier: “I feel like if you don’t go to college, you won’t have a good life.” She’s carefully choosing among some career options in health care, while working as a receptionist to avoid taking on student debt.

Three people, three stories. But together they provide a pretty good hint of the blend of progress and tribulation that defines today’s middle class in the United States – including those who aspire to it and those who aren’t sure they’re in it.

The old image of the “middle class” as an aspirational state of being – upward mobility coupled with a measure of financial stability – hasn’t disappeared. But it’s under stress as much as at any time in the postwar era. Fewer Americans these days call themselves middle class, and many who do use that label see it as a badge of struggle as much as a badge of opportunity.

The middle class is being redefined partly by demographics. In 1970, fully 40 percent of US households were married couples with at least one child under 18 years old. By 2012 that share had declined to 20 percent of US households – a shift that includes more single-parent breadwinners. It’s also being redefined by a changing job market – notably by the rising importance of education on résumés, as well as the disappearance of punch-the-timecard jobs in offices and factories that once produced comfortable lifestyles but were vulnerable to automation. 

All this doesn’t mean that living standards for average middle-income families are languishing in a state of permanent deterioration. A good deal of evidence suggests that’s not the case. And while some deride the insecurity of the Gig Economy – the growing legions of people doing freelance, contract, temporary, or other independent work – the changing job market has a bright side for many Americans: greater flexibility, creativity, and self-determination for one’s career.  

In fact, optimism about the future persists among moderate-income Americans to a degree that may seem surprising. It has just been tempered. The new watchword is realism – the awareness that the economically ascendant America of the baby boomers has now been superseded by an era of sluggish wage growth and financial setbacks. People who saw the dot-com boom go bust, and then the housing boom collapse, are more focused on carefully managing their debt and careers than on becoming the next Warren Buffett. Workers have little faith that their employer will look out for them. So they are finding ways to either look out for themselves, look out for each other, or both.

From Maryland to California, Americans are longing to see a patent-leather shine return to the American dream.

That’s why the challenges of average Americans loom as a central issue in the budding 2016 presidential race. Both Republican and Democratic candidates talk with varying degrees of passion about the need to rebuild the middle class. They just have different blueprints for how to do it.

Yet beneath all the political rhetoric and nagging insecurities, myths endure about just how doomed today’s middle class really is, while other forces at work weighing on Americans’ living standards may be getting too little attention.

•     •     • 

It’s a paradox of the 21st century: Alongside all the anxiety felt by millions of working families, the “stuff” that symbolizes middle-class life is as ubiquitous as ever. Americans live in larger houses, drive better cars, are better educated, and have more choices from clothing to recreation than ever before. Everyone, it seems, has a smartphone in his or her pocket and a billboard-size TV on the wall.

Yet stagnation in real incomes has many people feeling that a middle-class life is harder to sustain, or at least more precarious. And many firmly believe living standards are falling. 

Just ask Maurice Evans. He’s sitting on a shady stoop in downtown Frederick, a small Maryland city with a sizable middle class and a cluster of historic church steeples. Mr. Evans marvels at both the material progress he’s seen and the challenges he still faces. At first, what stands out to him is the price hikes in basic expenses. “Money’s not worth what it used to be,” he says.

He’s closing in on traditional retirement age, and he recalls once buying an entire T-bone steak for a dollar. He recounts having a good $35,000-a-year job at the Marriott hotel chain in the early 1980s, when he lived in the District of Columbia.

“That’s what people are making now,” even though the cost of living is much higher today, he says.

Still, on reflection, he says Americans are generally getting better off over time.

In fact, from homes to food to schooling, that is the case, according to an analysis by economist Stephen Rose at George Washington University. Many other economists concur that living standards have risen substantially in the past 35 years, wage stagnation notwithstanding.

Indeed, for all the consumer laments about rising prices, official measures of inflation probably are skewed to actually understate the gains in income and living standards. A May survey of several dozen prominent economists, for instance, found that 6 in 10 agreed with this statement: “The 9% cumulative increase in real US median household income since 1980 substantially understates how much better off people in the median American household are now economically, compared with 35 years ago.”

Only 1 in 10 disagreed (some quibbling over the word “substantially”), with the rest uncertain.

True, there are endless complications with this kind of comparison across the decades. Consider just one example: To the degree that median household incomes have risen over the past half century, a big reason is because of the longer hours worked (more than rising wages) as women have joined the workforce. In other words, two people are now working in many households instead of one.

Other caveats: Real median income still hasn’t caught up to pre-recession (2006) levels, and in some prominent areas of middle-class spending, costs have truly jumped in the past quarter century.

“Almost everyone who thinks of themselves as middle class wants their kids to go to college, and the cost of college has shot up a lot faster” than inflation in general, says Lane Kenworthy, a sociologist who studies the changing fortunes of different income groups in America.

Still, he’s persuaded that living standards have kept rising for most people. One simple benchmark of well-being: Back in 1960, Americans overall spent two-thirds of their income just on food, clothing, and housing. By 2013 that had dipped below 50 percent. Another: Average US life expectancy rose seven years (to age 78) between 1970 and 2007.  

•      •      •

So the question arises: Why do people feel as if it’s tougher to maintain a middle-class life if living standards are up? One reason is that fewer Americans are, in fact, part of the comfortable middle: The great mass of people with middle incomes has declined as a share of the overall population. Call it the barbell effect.

The number of Americans who have moved into upper-income brackets has expanded, and so have the ranks of those in the lower-income brackets. In other words, the weight on each end is getting heavier while the middle is getting thinner.

Part of this stems from the restructuring of the American economy. For decades, the demise of factory jobs has sent rolling shocks through communities large and small, spawning the term Rust Belt in the 1980s Midwest and leaving some towns with a persistent glut of boarded-up shop windows. Key drivers of change have been technology and a globalizing labor market.

The upheaval has swept through the service sector, too, swallowing up loads of white-collar jobs that could also be automated out of existence or outsourced overseas. Demand for high-skill workers has continued to expand, as has demand for low-skill laborers who can’t be replaced by machines – from janitors and landscapers to child-care workers. 

These changes are on display here in Frederick (pop. 68,000), where the median income is a bit above the national level and homeownership is a bit below average. Nestled in the first folds of the Appalachian Mountains, the city has a red-brick downtown with a creekside promenade. The job mix here ranges from button-down lawyers heading in and out of the modest county courthouse to the food-service workers who serve their lunches at places like Cafe Nola, where the entrees include shrimp hominy and Chesapeake eggs Benedict. 

You have to look a bit harder to find the middle-income jobs, but they’re still here. The challenge is that they – like the higher-end jobs – generally require more education than they used to. 

“We have to have a piece of paper” to get a job, says Kelly Billigmeier, a young student who is earning a degree in digital media design at Frederick Community College. Her dad was able to have a family-supporting career, working on computer software and security, without ever getting a degree beyond high school.

Students like Ms. Billigmeier are thinking hard about their financial futures, as well as how they can be of service to the world. Technological change has made their choices more transparent: A career website offered by the college shows students all the local jobs available in each degree program, and their pay.

“It’s the job opportunity that draws people into our classes,” says Jerry Boyd, an administrator at the college. 

One sign of education’s rising importance: In 2008, only about a quarter of Americans with some college experience but no bachelor’s degree placed themselves in the “lower” or “lower-middle” classes in Pew Research Center surveys. Now that proportion is twice as high: 47 percent.

•     •     •

Still, even if you have a lot of education, there is no guarantee of a high-paying job or lavish lifestyle today. Consider the situation of Ms. Beard, the adjunct professor in San Francisco. 

She has a PhD in English literature, but her combined jobs (teaching at two colleges) don’t pay as well as a coffee-retail managerial position she had a decade and a half ago.

“I love what I do. I just hate the working conditions,” she says.

Beard’s concerns are ones that legions of workers now face: high living costs (even with a rent-controlled apartment), student loans to pay off, and the unpredictability of knowing when – or if – their next contract will come. 

That last point, uncertainty, is key for the large and probably growing share of workers in the Gig Economy. Whether you attribute it to new technology and managerial strategies or to the sagging bargaining power of workers, a growing chunk of the US workforce is essentially “on call” – contractors, freelancers, and part-time workers who sometimes get little advance notice of whether they will work a shift or not.

And the challenges don’t stop with people who lack full-time salaried positions. Lifestyles may be improving, but the prevalence of single-parent households and “sandwich” earners, who are helping to support their children and a parent or two at once, adds to the financial struggles of families.

“The lack of two incomes in a family is an enormous factor” for many households, says Michelle Zukowski-Serlin, a mental health counselor who was a single mother after her partner died.

Now married, she says burdens have eased in part as she and her husband, Troy, can juggle responsibilities like ferrying Julia, their teenage daughter, to volleyball games. But to Ms. Zukowski-Serlin, many costs still seem higher than they used to be.

“There was no school fee when I was in school to be on a team,” she says. When Julia was heavily into gymnastics, the annual out-of-school fees alone (training camps, travel, etc.) came to $6,000, adds Zukowski-Serlin, who lives in Kalamazoo, Mich.

Nor are those the only rising costs confronting families today. On several fronts, the squeeze is more acute: 

- Health care. Even though a record share of Americans has health insurance – with recent gains spurred by the 2010 Affordable Care Act, known as “Obamacare” – the number of those who are insured through their employer continues to decline. That, coupled with rising copayments in the employer plans, keeps pushing out-of-pocket costs for the average family higher.

- Emergency funds. Many households have little money in the bank to handle a layoff or financial crisis. As of 2013, most US households could replace less than one month of their income through liquid savings, according to a Pew analysis of consumer surveys by the Federal Reserve.

- Wealth. From home foreclosures to cashed-out retirement plans, the Great Recession ravaged the net worth of millions of Americans. In 2013, middle-rung households of working-age people had lower wealth (assets minus liabilities) than they had two decades earlier, according to the Fed surveys.

- Retirement. The share of private-sector workers getting access to a defined-benefit pension was small before World War II, but soared to about 45 percent by 1970. Since 1980, however, it’s been in steady decline.

All this helps explain why so many middle-class Americans feel anxious. “The biggest benefit we’re looking for is just some sense of job security ... of being able to plan your life,” says Beard of herself and her colleagues.

Beard has health insurance, as long as she teaches at least two classes per semester at San Francisco State University. Last summer, when she had no classes, she turned to unemployment insurance to survive.

Even as she weighs a possible career change, Beard says she’s finding some optimism about the future – through what she sees as rising momentum for labor unions. “I’ve started to get a little bit excited about something that I never thought would happen,” as those with PhDs who are unionized join low-skilled workers to push for better employment contracts and legislation on things such as raising the minimum wage.

In Kalamazoo, Troy Zukowski-Serlin, Michelle’s husband and fellow counselor at the clinic they run together, also voices a battle-tested optimism.

“Right after World War II, with the baby boom, the economy just took off,” he says. “We did not have a lot of competitors around the world at that time.” In his view, the path forward is partly to realize that that era “was a blip, an unusual experience.”

He expects living standards to keep rising and that new policies can revive the health of the middle class. Expectations don’t need to be low, he adds, just reset for times that aren’t so booming. 

•     •     •

What does the future hold for America’s middle class?

The blend of hope and realism voiced by workers from Frederick to Kalamazoo is the tenor of the times – at least for now. A brighter mood may arrive if the economy keeps improving for a few more years without a recession, says Mr. Kenworthy of the University of California, San Diego.

Even today, though, most Americans persist in believing their own kids will be better off than their parents. In a 2012 Allstate/National Journal survey, 6 in 10 Americans said they are generally living the American dream, defined as “the opportunity to go as far as your talents and hard work will take you, and to live better than your parents.”

America’s next economic chapter may well involve some tug and pull between collective and individual efforts to forge a better future. 

On the one hand, some economists call for efforts to revive labor unions or for other policies that, in an era of widening income inequality, might lift the fortunes of workers (a higher minimum wage, paid sick leave). Policy efforts could also focus on growing the economy through innovation and education, tipping a higher share of jobs from low-skill to middle- or high-skill ones that boost average incomes. 

On the other hand, globalization of markets and technological advances have shaken up the old model of time-clock jobs in ways that will be hard to reverse. And many workers see benefits as well as challenges in the new era.

“I think we’re going back again to an earlier time where people my age and younger are feeling more responsible for their well-being and income, and I don’t think that’s a bad thing,” says Renee Lemoncelli, a mom near Columbus, Ohio, whose daughter is now pursuing a career in publishing.

Ms. Lemoncelli does work she loves, designing and making jewelry that she sells online at the artisan marketplace Etsy. The income can fluctuate based on seasonal demand. But she has developed several solid product lines, pays for her own health insurance, and feels that she and others are getting back “to what our country was founded on, which was freedom and liberty.”

In fact, some historians have found that, as the Industrial Revolution took hold, a commonly voiced concern was that factory jobs were eroding the flexibility and autonomy that people valued. Now, many gig workers covet those same attributes, even as others voice contrasting laments about the decline of traditional pensions or job security.

“My parents definitely were more secure,” Lemoncelli says. They worked for local utility companies in an era when “they were loyal to the company and the company was loyal to them.”

Now, as those bonds have frayed, Lemoncelli sees a positive shift: Her 20-something daughter is part of a generation of young workers attuned to charting their own job-hopping career paths – gaining skills and fresh experiences as they go.

For now, though, the young generation is navigating a job market that’s more polarized than it used to be, with more positions at the high or low ends of the pay spectrum. The middle is still large, but it has been squeezed both in numbers of jobs and by a dearth of wage growth, according to economists at the Federal Reserve Bank of New York. 

Some experts say America has a ripe opportunity to rebuild the middle class – and to thrust the economy forward in the process. What’s needed, says Joseph Fuller of Harvard Business School, is for states and localities to forge closer ties between employers and institutions like technical schools that can train workers for growing careers. Companies will get the skilled employees they need. Workers will advance into better jobs. 

In Cincinnati, Mr. Raven found upward job mobility through a training partnership between Napier Truck Driver Training Inc. and Hamilton County Job & Family Services. He sees a middle-income lifestyle coming into view.

“It’s coming into fruition,” he says. “I don’t expect it to happen overnight.”