Actually I think you are both wrong. There is as Doug says a large "middle class" - though not as large as he says. ("Middle class is lousy term for it - perpetuating among other things the illusion that most USAians are "middle class". I prefer almost any other term - "New Class" "Coordinator Class" "Managerial/Bureaucratic/Technical Class".) I think aside from job titles one of the strongest indicators of this is that since 1972 about 80% of the work force (according to U.S. DOL figures has not had a raise per hour. For that 80% of the work force 100% of income increase was due to increased hours of work within the household, not increased pay per hour of work. For 20% of the workforce there has been a real increase, not just in absolute terms, but per hour. That is a real material difference from the situation of the bottom 80%. But 20% is lower than the third he gives, and I think 20% may still be a bit high. A lot of the people who have had nominal raises have had their time eaten into in ways that is not quite so easily measured - longer commutes, more self-service in shopping, more goods coming with "some assembly required" (Hey Tom - here's something Timeworks may want to tackle!). So the actual size of the Coordinator Class is signifincantly less than 20% - perhaps 15% to make a silly wild assed guess, half the size a simple look at job classifications would indicate. And yes that class is shrinking - part of the object of class warfare by capitalists is to knock coordinators out of their intermediate class and into the working class.
What about subjective identification contrary to material interests? A hell of a problem, but it happens with people no one could call anything but working class - not just with people in a contradictory class position.
If you are trying to find the roots of the failure leftist in this country to maintain a viable left movemet, I would argue that at least one contribution to this failure is paying to much attention to coordinator and middle class interests and not paying enough attention to working class interests. The leadership of a lot of left groups comes from an intermediate class position for good structural reasons. But it also produces a culture hostile to the working class in a whole bunch of ways (and I'm not talking about taste in music.) For example, why has single payer health been so low a priority for so long on left agenda? Part of the answer is that if a lot of the leadership has good health insurance, they don't see urgency of the need.
Another flaw I often see is the inability to try and aim policy proposals at as broad a constituency as possible, but instead focus only on the poorest of the poor. For example, I'd like to see health care activism focus on high quality single payer coverage for everybody rather than simply buying second rate coverage for the uninsured . I'd like to see the object of people campaigning for more child care funding to try and win child care for everyone with children rather than simply the poorest mothers.
I think focus on just the poor is paradoxically a result of intermediate class position; it is easier for a middle class imagination to sympathize with the problems of the truly poor who face immediate life and death problems, than to empathize with more subtle problems faced by the majority of U.S. workers who are not poor in obvious ways, but face terrible insecurity and pressures every moment of their lives.
One of the roots of the success of the right in turning much of the working class reactionary has been by tapping into a genuine anger against people in such and intermediate class position, based on real oppressions they have suffered. Nathan Newman's figures about union membership are quite right; working class people in unions, even white male protestant blue collar working class people, are much less reactionary than those outside unions. Membership in an organization with even as diluted a concern for genuine working class interests as U.S. unions have can overrun many of the "cultural concerns" of right wing evangelical fundamentalism.
So I agree with Carrol about the ideological battle that needs to be fought; he's just on the wrong side of it. Leftists need to understand that there is such a thing as an intermediate class, that it has interests differing from those of the working class, and primary appeal of the leftist should be to that working class on not to the intermediate class.