The Pew Research Center just released a report worth a close look, called "The Lost Decade of the Middle Class." (For the record, I wrote this a year ago... I await royalties.)
The title comes from the observation that real median income or the more comprehensive measure of net worth were lower at the end of the last decade than at the start (see figures below).
That's historically unusual, if not unprecedented. For years, starting in the 1980s, I wrote that median wages and incomes were diverging from productivity growth and were growing considerably more slowly than they had in the past. But they were at least growing in real terms -- i.e., they were lagging behind productivity but at least beating inflation. Now, they're lagging both.
Before digging into what's behind these changes, some definitions and a few other factoids of note from the report:
-- There is no accepted definition of middle-class families so everyone in this business has to make one up. Pew uses an admittedly arbitrary but reasonable measure: households with between two-thirds and two times the median income, which amounts to about $40-120K in 2011 dollars. Yes, you can definitely find families with higher incomes than that in some part of the country -- e.g., the urban northeast -- who could make the case that they're middle class too, but there's no perfect measure here.
-- As shown in the second chart below, real median net worth -- assets minus debts -- cliff-dove 2007-10, down a massive $60K, a 40 percent loss. Part of that dive is a "correction" from the unsustainable heights of the housing bubble -- for middle-class homeowners, housing, not cap gains or Cayman Island accounts, is at the heart of their wealth portfolio. But the fact that middle-class net worth is back to 1980s levels is important and unsettling.
-- The middle class may have been doing less well over time, but measured as noted above, they were always the largest share of the population and held the largest share of income. They still comprise the largest share of households, but just barely, at 51 percent, and their share of total income, trending down for decades, is now slightly below that of the top tier group.
What's behind all of this?
That's not a simple question and it's a lot of what we're about here at OTE... see here and here, e.g.
But one thing I thought about re the "lost decade" theme is the picture of job growth by decade you see here (pretty much decadal -- I tried to go business cycle peak-to-peak). Employment growth just sucked in the 2000s, not to put too fine a point on it. As I alluded to above, working middle-class families can't depend on their wealth portfolios to make ends meet and get ahead. For them, it's about the paycheck.
In this sense, a slack job market is the worst enemy of the middle class. All the political hurly-burly about budget deficits, tax changes, the 10-year budget window -- don't get me wrong -- that stuff's hugely important and I'll continue to beat the drum on it. But we can get all of that right and if we don't have a strong, tight, lasting (not bubble-and-bust) job market, I don't expect these middle class trends to improve much.
More to come on ideas to get there... and yes, I know few are listening now. But given the stakes, that's not going to stop me.
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within 10 years ... half the whites working down south will work for minimum wage .....
we're becoming a poor country .....
Decades of anti-labor, anti-union legislation, demonization of labor demands, workplace deregulation, outsourcing, privatization and suppression of the minimum wage has paid off for those at the very top. This is combination with the intense deregulation of the financial sector as a matter of national policy created the most radical distribution of national income in American history at the direct expense of the middle class and the poor.
In 1979, families in the top 20% received 467 times the income received by families in the bottom 20% of the national income distribution (291 times after tax).
By 2005, families in the top 20% received 2,231 times the income received by families in the bottom 20% of the national income distribution (and 1,587 after tax).
US Congressional Budget Office
http://www.cbo.gov/doc.cfm?index=9884&type=2
WORLD BANKER MAKES STUNNING CONFESSION
http://www.youtube.com/watch?v=mOwZwkhFemQ&feature=related
When you connect the dots, it's is easy to see a long term and well planned agenda.
Tell us about THAT! Who, why, when, where--all of it, and to what ultimate end!
Right back to the gilded age. The survivors of the wealthy's last great depression were dying off so the new uneducated masses slavishly listened to corporate media and propaganda.
The closeness of this election shows just how the willfull ignorant can keep following the trickle-down theory after it has nearly destroyed them. Propaganda is a powerful thing.
I can trace back changes in the laws regarding our economy to the mid 80's under Reagan with a continuing and accelerating move toward deregulation, offshoring, union busting and boom and bust periods meant to shake small investors out of the tree.
When you connect the dots, it's is easy to see a long term and well planned agenda.
Tell us about THAT! Who, why, when, where--all of it, and to what ultimate end!
It continues to be the plan today.
We are look at a new feudal era, and the corporatocracy on Wall Street have worked long and hard to achieve it. They won't easily relinquish it.
Kelly Business School at Indiana University said, 10 years ago, that the Middle Class no longer existed. Kinda like Beaver Cleaver's family, they don't exist anymore in the real world. Perhaps the dismantling of the Unions was also the dismantling of the Middle Class.