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FT: Goodbye Middle Class

Posted By Barry Ritholtz On August 8, 2010 @ 6:41 am In Economy | Comments Disabled

Fascinating piece in the FT about the decline of the US middle class:

“The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession [1], which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” [2] by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the ­multiple is above 300.

The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.”

Interesting . . .

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Source:
The crisis of middle-class America [3]
Edward Luce
FT, July 30 2010   
http://www.ft.com/cms/s/2/1a8a5cb2-9ab2-11df-87e6-00144feab49a.html


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2010/08/ft-goodbye-middle-class/

URLs in this post:

[1] Great Recession: http://www.ft.com/indepth/recession

[2] “median wage stagnation”: http://www.ft.com/cms/s/0/2c9185c4-4cca-11df-9977-00144feab49a.html

[3] The crisis of middle-class America: http://www.ft.com/cms/s/2/1a8a5cb2-9ab2-11df-87e6-00144feab49a.html

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