8 Surprising Facts About The Shrinking Middle Class From 'Third World America' (PHOTOS)

The American dream may in fact be slipping away. The white picket fence, Social Security, sending your children to college -- what was once an attainable reality has become increasingly hard to achieve.

The harsh reality for today's middle class is that many of them go to work just to get by. Arianna Huffington's new book, "Third World America", sheds light on many of the crucial ways in which it has been short-changed. From our failing education system to the runaway greed of the financial services sector, America's middle class is facing on onslaught from all sides.

Below, we've compiled eight surprising and disturbing facts about America's shrinking middle class from Arianna's book:

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Income Inequality Is Soaring

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In 2005, the bottom 20 percent of household earners had an average income of $10,655 while households in the top 20 percent made nearly 160,000 – a disparity of 1,500 percent, the highest gap ever recorded, Arianna notes in "Third World America". (This chart, from UC-Berkeley professor Emmanuel Saez, shows income inequality is at an all-time high.)

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In 2005, the bottom 20 percent of household earners had an average income of $10,655 while households in the top 20 percent made nearly 160,000 – a disparity of 1,500 percent, the highest gap ever recorded, Arianna notes in "Third World America".

(This chart, from UC-Berkeley professor Emmanuel Saez, shows income inequality is at an all-time high.)

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BigJohnfromMN said on 7 Tuesday 2010 pm30 1:44 pm: How do republicans keep getting away with saying raising taxes kills jobs? Is America really that stupid? Because HISTORY IS NOT ON THEIR SIDE: In 1951, the highest individual income tax rate was 91% by 1959 it was still 91%, top corporate tax rates peaked in the 1950s 52% And? Total private sector employment increased by 22% in the 1950’s In 2000, the highest individual tax rate was 39.6% and in 2003 it dropped to 35% where it remains today, the top corporate is 35%. And? Total private sector employment fell by 2.9% in the 2000’s. By Republican logic the reverse should be true (http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=543&Topic2id=30&Topic3id=39) (http://www.economagic.com/em-cgi/data.exe/blsce/ces0500000001) The only way to create and keep a middle class in America is by taxing the rich – and investing that money in the infrastructure, basic research, and education that creates the high paying jobs of the future. During the war the government invested in basic research at unprecedented levels. After the war the government employed millions on infrastructure (the interstate freeway system, airports, etc.). The government educated an entire generation of young people through the G.I. bill, and then put those people to work on basic research (space program, defense initiatives, etc). This created a true historical anomaly, a middle class, and the only way to maintain it is to keep doing the same things that created it.

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Comments

[BigJohnfromMN]

01:44 PM on 09/07/2010

How do republicans keep getting away with saying raising taxes kills jobs?

Is America really that stupid? Because HISTORY IS NOT ON THEIR SIDE:

In 1951, the highest individual income tax rate was 91% by 1959 it was still 91%, top corporate tax rates peaked in the 1950s 52%

And? Total private sector employment increased by 22% in the 1950’s

In 2000, the highest individual tax rate was 39.6% and in 2003 it dropped to 35% where it remains today, the top corporate is 35%.

And? Total private sector employment fell by 2.9% in the 2000’s.

By Republican logic the reverse should be true

(http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=543&Topic2id=30&Topic3id=39)
(http://www.economagic.com/em-cgi/data.exe/blsce/ces0500000001)

The only way to create and keep a middle class in America is by taxing the rich – and investing that money in the infrastructure, basic research, and education that creates the high paying jobs of the future.

During the war the government invested in basic research at unprecedented levels. After the war the government employed millions on infrastructure (the interstate freeway system, airports, etc.). The government educated an entire generation of young people through the G.I. bill, and then put those people to work on basic research (space program, defense initiatives, etc). This created a true historical anomaly, a middle class, and the only way to maintain it is to keep doing the same things that created it.

[ponderingmuch]

03:11 AM on 09/09/2010

Fanned and faved.

[IMSickOfAllOfEm]

06:00 PM on 08/13/2010

There has been a conscious effort to lower the living standards of the US (by shipping jobs overseas) in order to try to equalize living standards worldwide.

The effect of moving all of those jobs out of the country was discussed in congressional hearings

http://www.c-spanvideo.org/program/178730-1

We have been $crewed.

Those responsible should be tried for treason.

[TonkaTruck]

10:46 PM on 09/02/2010

You are so right on the money; yet it's amazing how many people would disagree with you; I've had people disagree with me for the same point you've made.

Faved.

[ponderingmuch]

03:11 AM on 09/09/2010

Fanned and faved.

[Mike Nussbaum]

05:15 AM on 08/12/2010

NO MATTER WHAT IS HAPPENING IN THE WORLD YOU CAN ONLY CONTROL WHAT YOU DO IN YOUR LIFE. THE MOST IMPORTANT LESSON I LEARNED WAS THAT TO HAVE PEACE OF MIND I NEEDED TO GET CONTROL OF MY FINANCES. I STOPPED BUYING THINGS I WANTED AND ONLY THINGS I ABSOLUTELY NEEDED. BY LIVING BENEATH MY INCOME I HAVE BEEN ABLE TO SAVE MONEY AND PAY CASH FOR PURCHASES. EVEN IF I HAVE MONEY I DONT WANT TO BUY THINGS AS I WOULD RATHER HAVE THE MONEY IN THE BANK WHICH GIVES ME GREAT PEACE OF MIND. I NO LONGER DESIRE TO UPGRADE TO NEW THINGS. I HAVE FOUND FUN THINGS TO DO THAT COST NOTHING OR CLOSE TO IT SUCH AS A WALK IN A NATURAL SETTING. I CANT CONTROL THE WORLD AND YES IT DOES DISTRESS ME TO SEE THE CHANGE . BUT I FOCUS ON MY OWN GOALS OF BEING NON MATERIALISTIC AND SAVING MONEY TO USE FOR IMPORTANT THINGS THAT ARE NEEDED.

[lylo]

12:00 PM on 08/20/2010

Good for you, that you even have an income to save.

[WIpatriot]

09:51 PM on 08/20/2010

On the left side of your keyboard is a 'Caps Lock' key...press it once.

Thank you.

[Stephen Allen Smalley]

01:27 AM on 08/12/2010

Probably not in small part due to the focus on business in college and other educational institutions.

[iisguy]

06:01 PM on 08/13/2010

Missed the broadside of the barn that time.

[maninal]

06:57 AM on 08/21/2010

Exactly. As states cut budgets for education corporations stepped in at all levels. Now our colleges, once the centers of wide ranging though and intellectual exploration, are now corporate trade schools diminishing creativity, culture and social sciences.

[DFC1]

05:21 PM on 08/11/2010

The process we are seeing now is:

Trade deficit increasing --> Unemployment increasing --> Lower wages -->Not any recovery in consumption expected --> less tax collection--> High indebtness of government, companies and families --> lower expectations of all the economic agents ---> less investment (public and private) ---->less industrial production ----> Trade deficit increasing

At the end---> Recesion and deflation trap

The same process have been hapenning from more than 15 years ago, but to avoid the recession, the economy was based in a long succession of bubbles (mergers, dotcom, raw mats, real state) and in the cheap credit (due to low interest rates), and the industrial outsourcing were growing exponencially, all in a unsustainable way.

But now all the speculative business and the cheap credit is gone (as the authorities and economist should have expected) and we need a REAL economy, based on manufacturing REAL products, not merely smoke

Now, with the crisis, the trade deficit with emerging countries (mainly China) is widening because with the lower earnings of the families, the people trend to buy the cheapest products, looking for price, not quality, and that is the advantage of the chinese goods compare to US products (a lot of them made by chinese companies, more and more, not outsourced by western companies)

The next steps of the process is a reduction of the life standard and social protection for all the people in western countries (except the very rich, they will earn more, of course)

[iisguy]

06:02 PM on 08/13/2010

Pleas show the relatinoship of the trade deficit and unemployment.

[lpenny]

10:39 PM on 08/13/2010

Perhaps DFC1 means the outsourcing of jobs and the systematic destruction of our manufacturing base.

[DFC1]

10:40 AM on 08/14/2010

As Ipenny mention, the cause of the trade deficit is the same than that of unemployment= it is the huge outsourcing we are seeing from the last 20 years, that was accelerated when our dear Mr Bush brings China to the WTO, and then eliminate all the tariffs to their products

Now when all the bubbles have exploded (mergers+ raw mats+ financial + real state), we need a REAL base for the economy, and then for the employment.

In the "new" situation the only countries that can growth and create jobs are those that have a big manufacturing base, like Germany or China, the rest are doomed to see their life standard and labour conditions to deteriorated to the level of emerging countries, there are no fiscal stimulus than can change that

[guveqzero]

12:12 PM on 08/11/2010

The people that should get the message have closed their minds. Politicians, analysts, economists and the media are just going through the motions now. Until we take back our financial system from the fox, the hens will continue to disappear.

[InYourWorld]

05:25 PM on 08/10/2010

'Third World America'

Really? I have been in the third world, and there is nothing in the US that is third world. This headline is a slap in the face to people of Africa, etc..

[NewUnderTheSun]

05:50 AM on 08/11/2010

Your statement is sort of paradoxical. On the one hand it suggests that the horrible situations faced by Americans don't compare to those of third world countries (which, I guess I'd tend to agree with, though, happiness is a relative thing.) But, then you mention that this is some how a slap in the face to people who are facing atrocities far worse than being bankrupted trying to pay for cancer treatment.

I guess my point is, that they don't care about this article title, you do, and I think we're reaching capacity of people who are taking offense by Proxy to those whose legitimate problems make them unconcerned with what could be perceived as a misuse of language.

[rf-hawaii]

06:43 AM on 08/11/2010

We have indeed fallen quite far. The middle class is vanishing.

Perhaps we're not anywhere near third world Africa. But it seems much closer than it used to not too long ago.

If we leave support of the poor up to the Republicans, things will very bad for them very fast.

[MANOFCOMMONSENSE]

01:39 PM on 08/10/2010

Crist is not a hard core Righty!! His views are soft!! Which means he can change his mind on matter if they seem right to do!! If he was hard core than this would not be a balanced thinker!!

[janejoad]

12:53 PM on 08/10/2010

I don't know how long she's been writing the book, but I've lost a lung talking about this issue for 20 years. I watched it happen as neighborhood after neighborhood in LA turned into Tiajuana. The more I saw blight, the less it looked FIRST WORLD. Of course, the same could be said for many cities whose economies have been dessimated by The American Businessperson and his/her quest to save a BUCK by hiring illegals to do jobs in a THIRD WORLD fashion, and that does include construction of both houses and roads.

When cities started hiring private contractors to do the work that citiy employees USED to do, working under guidelines, they opened up the whole field to SHODDY, INFERIOR work that was done with SHODDY INFERIOR materials from CHINA, by SHODDY INFERIOR WORKERS, who CARE NOTHING about regulations.

AND THE AMERICAN SHEEPLE JUST LAPPED IT ALL UP>

BIG FAT HOUSES and BIG FAT CARS for BIG FAT PEOPLE and their BIG FAT KIDS>
none of whom have mowed their own lawns or done a lick of their own housework in the last two decades.

We GAVE this country away in 1987 and it's too late to cry about it now. WE'RE DOOMED.

[Coyote50]

05:02 PM on 08/10/2010

The highest tax rate went from 70% before Reagan to 28% during his term. That was the beginning of this return to the differences in wealth like we had in the '20's. Someone said, those who don't know history are doomed to repeat it. I hope we aren't that stupid and venal.

[Coyote50]

05:07 PM on 08/10/2010

This is the most amazing site - it has all the tax rates going back to 1913.
http://www.taxfoundation.org/publications/show/151.html

We all do well when we ALL do well. Paul Wellstone, may he rest in peace.

[missgramma2005]

12:49 PM on 08/10/2010

I believe it used to be illegal for companies to join up and become mega monoliths. Look where our fake news comes from...one mega phone that spews out whatever they want for the consumption of the naive trusting serfs....

[Coyote50]

05:04 PM on 08/10/2010

The anti-trust laws used to be enforced and they were designed to prevent monopolies. Also, we had laws forbidding media companies to own all the media sources in one community. These have been whittled away. President Eisenhower, a Republican, said in the 1950's (when the highest tax rate was 90%) that we needed to be wary of the "military industrial complex" - that it was the biggest threat to our liberty. Apparently we didn't listen.

[missgramma2005]

06:06 PM on 08/10/2010

I remember hearing my parents say "I like Ike." Ike when being a Republican wasn't a word that left a sick taste in one's mouth. Why is it that the John Birchers HATE(D) IKE and then William F Buckley?

Hopefully it isn't too late to rescue our country from the corporate lobbies that write our laws for their own benefits to the detriment of the dwindling disappearance of middle America.

[moon20]

11:36 AM on 08/10/2010

This article refers to our failing education system here in the US and at the same time I found at least four spelling mistakes on the first page/slide. If you are going to criticize what is going wrong in our country, please set a good example and edit the content of your site to ensure you are not seen as a 'Third World Publication'.

[Carl Stevens]

01:27 PM on 08/11/2010

where are those spelling mistakes to which you refer? I've looked over it twice, can't find any.

[moon20]

12:38 PM on 08/12/2010

Inquality = Inequality (1st slide title)
on onslaught = an onslaught (2nd paragraph in text above 1st slide)
Surpris = Surprising (this and the one below are found in a title to the right)
Clas = Class

In looking again, 160,000 should have a $ in front of it and 1,500 percent should not have a comma (I believe) (both found in the text below the first slide).

I am not the final authority on grammar or editing, however these are things that should not have been overlooked. Maybe if people were to pay more attention to detail in all realms of society, we'd be slightly better off.

[maninal]

07:03 AM on 08/21/2010

Your criticism of presentation does not negate the content.

[JimVinFalz]

11:16 AM on 08/10/2010

We may be entering an economic phase that could be called post-political. As long as the US Supreme Court thinks it is an infringement of free speech to prohibit corporations from making campaign contributions, the US will continue to have the best government that money can buy. The difference between Republicans and Democrats will continue to diminish. And the prospect of a political solution to our problems will slowly disappear.
One bit of good news: arguing which party is more responsible for The New Economics will provide some lenten entertainment for the incredibly shrinking middle class.

[Dave Thinkster Paulson]

11:13 AM on 08/10/2010

I’m really surprised at all the comments decrying this slide show and Arianna’s book as old news. While the assertion is technically true, it entirely misses the point. Sure, most of the folk here on HuffPost know most of the facts presented, at least conceptually. I doubt that everyone has memorized the detail; I for one didn’t know that 62% of BKs in 2007 were the result of medical costs, or that poorly maintained roads were responsible for $217 billion in accidents. But that’s not really the point either.

The point is in the power of this information and its potential impact on those who don’t understand the facts, on those who have bought a bad bill of goods. Numbers have the capacity to wake people up and gain their attention. And in case you haven’t noticed, there are MILLIONS of people out there who need to wake up.

I suggest that instead of casting disparaging remarks on this work, we all share it with as many people as we possible can. The fact of the matter is that we are at a critical juncture in the class warfare that erupted under Reagan. We now finally have a line drawn in the sand: http://exm.nr/bj4mYu. People need to be informed so that they can effectively pick a side. The corporatocracy is but one major battle away from irreversible victory — if they succeed at privatizing Social Security, they have won.

The only cure for ignorance is information.

[WIpatriot]

10:31 PM on 08/20/2010

You can lead a horse to water....

[Dave Thinkster Paulson]

03:41 AM on 08/21/2010

So, you just keep leading them back . . .

[gerald4]

11:05 AM on 08/10/2010

Maybe we should elect representatives to the US congress that will create legislation to repeal all of the "Free Trade" laws and other anti-business laws that caused our factories and our jobs to relocate overseas ! ! !

Only repeal of the "Free Trade" laws and other anti-business laws that caused US businesses to move their US factories and the associated jobs for US citizens overseas and lay off all of the US employees and take advantage of lower labor and environmental costs available in foreign countries will bring those jobs back to the USA.

[Dave Thinkster Paulson]

11:15 AM on 08/10/2010

I'm afraid that we'll have to pass campaign finance reform first.

[gerald4]

11:22 AM on 08/10/2010

Any "campaign finance reform" legislation will probably be written (in its final form) by the paid lobbyists, to maintain their control over the congressmen!

Maybe you need to create the language for the law, and push for passage by congress without too much modification by the US congressmen.

[Coyote50]

05:09 PM on 08/10/2010

Are you sure that the "Free Trade" laws are anti-business? I think they are pro- big business and that big business WANTED to go overseas. Seems to me we need to be thinking about tariffs again...

[avg american]

10:55 AM on 08/10/2010

Word to the wise:
If you don't like the way things are going, make sure you get out there and VOTE today.
Today is the day you can vote the greedy, gluttonous, corrupt corporate schills out of office.
Or prevent them from being elected in the first place...

[Dave Thinkster Paulson]

11:18 AM on 08/10/2010

Absolutely! And the more people who understand the content of this slideshow, the more people who will vote intelligently now and in November.

[gerald4]

11:23 AM on 08/10/2010

I might wait to vote in November.