The research report that you need to some some time with over the weekend is from the Pew Research Center, and its titled: The Lost Decade of the Middle Class
Some charts and excerpts are below:
As the 2012 presidential candidates prepare their closing arguments to America’s middle class, they are courting a group that has endured a lost decade for economic well-being. Since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some—but by no means all—of its characteristic faith in the future.
These stark assessments are based on findings from a new nationally representative Pew Research Center survey that includes 1,287 adults who describe themselves as middle class, supplemented by the Center’s analysis of data from the U.S. Census Bureau and Federal Reserve Board of Governors.
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Source: The Lost Decade of the Middle Class
Pew Research Center, August 22, 2012
Category: Digital Media, Wages & Income
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
The only interpretation I’m hearing of this story is “how sad it is that the middle class is declining.” Having seen the world a bit, bitching about a 69k household income seems absurd – even the American lower middle classes are insanely wealthy by present global standards, let alone human history.
Then again, the idea that wealth and social standing is measured on a relative basis (i.e. we need to keep up with the Joneses ad infinitum) is proving salient. Weird but true to realize that even multi-billionaires experience status anxiety.
So, somebody tell me, after all that, how housing is going to bounce back to inflated levels, as some claim is happening. Seems to me that the bottom is still a long way off. And, as housing goes, so does the economy.
That trickle down will start working any day now, you betcha.
…not that anyone with any sense ever believed that in the first place or understood it to mean anything other than a paraphrase for pissing on someone while trying to convince them it was raining.
dear middle class, you will never regain your net worth hiding out in cash, and buying short term bonds in your 401(k) all in the name of risk management.
BR, this argument has been wearing me out and finally, SOMEONE put together actual stats to show the middle class has NOT had it so bad. I do not have the capacity to verify her data but this is definitely worth a read: http://www.marketwatch.com/story/why-henry-blodget-is-dead-wrong-2012-08-24?pagenumber=1
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BR: Go figure — an economist in the Reagan, Bush I and George W. Bush White House doesn’t agree with criticism of their policies.
#FAIL
well its all relative. in a country where the cost of living is small (and standard of living is also low) , having a small income isn’t a big problem. but in a country where the standard of living is high(er) the cost of living tends to also be higher.
now if we want to lower the standard of living to match third world countries, i think we really really need to have a discussion about this, cause that means that future generations will absolutely be much worse off than today. and those are your children. and theirs.
in a country that has always strives to increase the standard of living, not decrease it, that seems to indicate that some think that going backwards is ok
The increase in income of the consumer (middle class) is what drives economic growth. The spend-produce cycle that keep everything going, is driven by spending. But without income there is no spending. The housing bubble created artificial income as people drew out equity to substitute for increased income, but that is gone and no other asset bubble (that benefits the consumer class) is in sight. Predatory capitalism has malfunctioned big time as the rich destroy every mechanism that could distribute income to the consumer class. In their sociopathic “I got mine f-you” stupor rich morons like the Koch brothers fail to understand that they are wringing the neck of the goose that laid all those golden eggs for them. Unless the predators wake up, it will end bad – only question is how bad and how much of whose blood will be spilled.
The model we are heading for is south America in the 70’ies, with a small rich upper-class and a large population of dirt poor under-employed people. They kept that system going via a brutal military dictatorship. But all the talented people from those countries fled to North America – ensuring that the malfunctions were locked in and continued. Wonder how Sao Paolo is for an illegal undocumented US immigrant.
DeDude is right! So what did we do, we went and refinanced our homes to get cash for everything from Cars to Plasma TVs! Engineers, scientist and the like were not going into manufacturing or making anything real, they were going to Wall Street, because that’s where the money was and nobody wanted to work in manufacturing as it was considered dead.
Folks there has to be a productive sector or sectors to actually make something. We can’t just be a service economy. Look at Europe for instance. The North pays it’s way with some very generous social programs to boot! The south does not. The North are exporters and lenders. The south are importers and borrowers. When times were good the south was OK, now they are broke and looking for a bailout.
If you want a middle class you have to build one….we have been doing everything possible by design and neglect to have make ours as poor as we can because there is a definite lack of growth.
Personally, I find it quite incredible that the median net worth of the middle third has barely budged over nearly thirty years. The DOW, adjusted for inflation, has increased 4 or 5 fold over this period, suggesting this group has not been much of a participant in the markets. Over this period, of course, pensions have increasingly disappeared.
“The only interpretation I’m hearing of this story is “how sad it is that the middle class is declining.” Having seen the world a bit, bitching about a 69k household income seems absurd – even the American lower middle classes are insanely wealthy by present global standards, let alone human history.”
I think it’s understandable that people would be more likely to compare their own financial situation across different points in time rather than to others in different countries.
Yes, it is funny how they leave benefits out in these stats and put them in when trying to show working people are much too rich for their own good and need other working people to help put them in their proper place.
…..do not have the capacity to verify her data but this is definitely worth a read: ……
Are we finally getting acclimated to “fact free postings??
I’m currently reading “The Betrayal of the American Dream” by Barlett and Steele (writers for Vanity Fair and in the past for several other publications and the winners of two Pulitizers and two National Magazine Awards. It’s a fairly depressing polemic of how we got to where we are with lots of first hand stories of actual people who are impacted by various government policies. The use $35000 to 85,000 to define the middle class. I guess I agree with DeDude’s analysis here. One can get stretched very thin in a hurry when looking at all the expenditures and the amount of discretionary income needed to make the economy hum along is pretty small in these households.
Now I’m retired (though my wife is still working full time) and if I ONLY look at my pension income which falls in the above range, there isn’t much left over after taxes, insurance, utilities, food, etc. We are fortunate that our kids are out of the house and through with college.
It’s clear to me that the Republican call for increased defense spending is to keep the peasants from rioting in the streets so they don’t end up like Louis and Marie of France.
@Tamu82:
The author there says “income inequality hasn’t increased much”, then shows a chart which shows increasing spending inequality over the last 25 years. In the chart, the middle three quintiles have definitely decreased.
Of course, there’s a huge spread of incomes in the top 20%. That chart would show the change in equality quite a bit better if you split the top 20% into more groups. The spending ability of the top 1%, for instance, has increased waaaaay faster than the 80-90th percentiles. So the inequality is there, just hidden by poor graphing.
On top of this, she explains *why* we haven’t increased inequality more: we made the tax system more progressive, and gave large tax breaks to the bottom 80%. We’re now at the point where we give a tax credit for working (EITC), we expanded food stamps and unemployment benefits, and we enacted a temporary cut to payroll taxes. It’s not sustainable; we can’t keep lowering taxes.
What can’t be sustained, won’t be.
I see a connection here between the high corporate profit margins and the high inequality. We had a productivity boom from offshoring and automation which ultimately left many Americans without jobs, while the benefits accrued disproportionately to the top 20%. We maintained our lifestyles well for a while, partly by increased debt, partly by lowered taxes, but eventually the consumer is tapped out, and sales fall.
The first time this happened, companies trimmed down substantially.. which speeds up this process, I think. Income disparity very clearly increased after the ’08-’09 crisis, as a result of mass layoffs, which also increased profit margins. But if profits accrue to the top of the chain, who will be left to buy the products?
I can guess at two scenarios, really two sides of the same coin:
- Continued deleveraging and deflation: Say that unemployment benefits and payroll tax cuts and such roll off. The consumer, already not in great shape, is tapped out again, and we go into another recession. Companies get as much leaner as they can. Eventually, they can’t get any leaner, and they’re forced to lower prices. Margins suffer.
I think this ultimately corrects via a depreciation of the US dollar and a quasi-recovery of employment and consumer. Suck it, China.
- The recovery: Americans adjust. We find gainful employment, and we grow our way out. The consumer recovers through increased US productivity and production, and sales of iPads are able to keep up even as the government counter-cyclical spending rolls off.
Eventually, those companies with high margins are going to face pressure, with new businesses trying to cut in. Whether the old ones hire more to stay ahead, or they lose some of their share to new businesses, the profit margins decrease. And US employment gets better, and the income disparity with it.
Really, these are just two sides to the same coin; deflation versus recovery. I think we’ll see some combination of the two.
The 1% has been at War with the middle class for 30 years, transferring risk down, and profits up.
We can get wiped out by medical costs, as companies are on a mad rush to cut all benefits for workers, then cut workers.
And how is Romney going to help, by giving more tax cuts to corporations for transferring jobs to China?
I’m starting to think only Paid Trolls “believe” the Republican platform.
Am i the only one shocked by the stat that over 90% of the middle class feels that they have little or nothing to do with their current situation?
Not to sound a war on this site but is there NO personal accountability in this country? Yes the cards are stacked against the middle class but how many used the free house ATM funds wisely to say start a company or invest (not doubling down on housing mind you) vs consuming sh!t…and if the thought didn’t occur then perhaps that’s WHY they are middle class vs entrepreneurs / leaders / wealthy.
Just some friday Food for thought im not trying to antagonize here for the sake of it.
My favorite question and answer from this research piece is…”How much do you blame (each) for the difficulties the middle class has faced in the last 10 years? Middle Class People themselves…8% A lot, 42% a little, and 47% not at all.
You want to know what is wrong with America today? The answers to this question. Really, 47% not at all????? Lack of personal responsibility much? It seems like the new American slogan should be “I am the always the Victim”, or “it’s not my fault”, or “When all else fails, blame someone else”. We are raising a whole generation of victims…quit blaming the government, corporations and the Rich. BTW, guess who voted in all of these congressman, senators and Presidents that you blame for your situation in life? YOU DID!
If you were dumb enough to buy an over-valued house that you couldn’t afford, with no money down, and a floating rate, then you deserve to live with the consequences of your bad decision. If you sucked out all of the equity from your home to live beyond your means in the good times, then sack up and change your lifestyle in the bad times. Talk to your Grandparents and get some perspective on life. Put blame on yourself and take responsibility for once.
I am middle class as they get…and the only person that bears responsibility for my success or failure in life is MYSELF! If I am unhappy with my situation in life…guess what, I’m going to do everything in my power to change it. It’s on me and no one else.
This Research piece paints a sad and disturbing picture of America.
Thanks kbwoody- obviously I’m NOT the only one….
@waterboy10 – what decade are you living in. Median income is $50,000. If you have a simple family of four, own a very modest house and played by the rules, you would not have much to invest after living expenses and investing??? Well this modest family would have seen their 401(k) lose about 30% of its value because of the meltdown (chances are they would not have had a defined benefit pension plan). There kids are looking to do the first two years at a community college before transferring to a state university so they wouldn’t have to take out student loans and exactly what kind of great business idea are they going to come up with given that 90% of all such opportunities fail? Get real.
@kbwoody – we are not talking about the fools who believed in the madness of crowds, we are talking about those who played by the rules and got screwed. See my previous response to waterboy10 and try to tell the machinist who just turned 50 and saw his job off shored that it’s just too bad but it’s his fault.
kbwoody, I used to work in the technology sector. During the dot-com bust, companies were slashing payroll after the Y2K hiring bubble. It matters not if you were a Stanford PhD with shelf full of patents to your name, you were fired if your department was to shut down or offshored. So, it is ALL your fault that the CEOs over expanded based on their stupid business plans?
@orange14 – $50,000 Median Income, family of four and modest house example…If they live within their means and make sacrifices when necessary, they can live very happy lives. Life is not easy and it’s not fair, it’s what you make of it that matters! Get some perspective on life by talking to Depression era kids…you will learn that they have never felt entitled to anything in their lives and appreciate everything that they have earned.
We need more of that in America today!
BTW, sorry for the mushy and deep soap boxing on a Friday.
The chart of median net worth is fascinating.
Looks like the all of the gains over 27 years were wiped out in the last 3 years.
Mr. Obama?… no, the popping of real estate and stock market bubble.
Looks like we need to inflate another bubble to create the illusion of wealth.
But what if the 30+ year bubble in bonds pops?
The size of Government has grown substantially since 2000 along with our annual budget, deficit, and long term debt of $15.5 trillion. It wasn’t a lack of tax revenue, it was a lack of fiscal discipline. Our Government spending habits would make F. Ross Johnson, Former CEO of RNR Nabisco proud.
People always talk about income when you talk about lost decade. Take a step back and look what else we lost, our health (avg age is declining), our education system (declining in science and math), inventions (the smartest people went to Wall Street and created paper money) , when you look back the decade it was 911, two wars, and a Black President.
Apparently kbwoody knows my dad…Lessons of a depression era father have kept me humble and responsible. Save for a rainy day, look for opportunities (but be skeptical), and be thankful for the little things in life. Patch your pants, clean your plate, and any day you aren’t forced to wear a sandwich board life is good. These are the messages that raised and I am hard at work passing them on to my children.
As for jobs / industries moving off shore or going boom-bust, the current economy moves faster than ever and sadly it is our responsibility to keep skills current. Companies are no longer willing to train employees to keep them current, they want to hire experience and won’t pay to retain as new skills are needed. Smart and inexperienced probably isn’t enough to open the door. I don’t like it but it’s the truth. Piss and moan or adapt. We all must take personal responsibility for creating a career or protecting an income source. Read industry trades / think above your role in the company, and strive to understand the far away forces that will someday impact you. GET INFORMED. Yes it’s hard with everything else going on, raising a family, being distracted by consumption, etc. To put it in athletic terms, think of how the great ones don’t react, they anticipate…they know their game so well they are able to be ahead of the curve and find themselves in the right place at the right time. This isn’t luck it’s hard work and preparation. Why do we applaud this and not expect the same out of ourselves?
BR: You said — “Go figure — an economist in the Reagan, Bush I and George W. Bush White House doesn’t agree with criticism of their policies.”
Your comment is the sort of thing I think we’ll hear a lot this Fall. Both sides saying things like this where facts get in the way of the truth. This is why I am politically agnostic — I don’t know who to believe. Facts are facts and both sides skirt them. Why are the facts you posted from Pew any different? I could say the same thing about their political bent. Personally, I don’t care, I just want to know if it’s true. We can’t agree on facts today. Sad.
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BR: This economist was part of the “Trickle down” side supply policies. The Facts are they made deficits worse, gave huge tax advantages to the top of the income scale (Thanks!) and widened wealth & income disparity. These are simple facts; dunno why you are having a hard time with them . . .
I too am a child of depression era parents and had the same lessons instilled in me. The problem is that the opportunities in this country are not expanding any longer except in some very targeted areas. I found the report today from the BLS quite depressing in this regard: http://www.bls.gov/news.release/archives/disp_08242012.pdf One can make every attempt to stay current and develop new skills. The actualities of today’s America indicate that is not enough. The days when there were good manufacturing jobs to create a middle class are sadly finished.
@ Windchaser;
I think you are absolutely right free trade gave huge benefits to the investor class and mostly hurt the consumer class by lowering their incomes a lot more than it lowered their prices (and as a result has helped increase income inequity). But I am not sure I can agree with your recovery scenario. As companies get leaner they also produce more product per work hour; and unemployment will reduce the total need for product as consumers drop their consumption to the minimum. This is a downwards spiral and there is no reason to believe that some outside stronger economy can help us by allowing a relative currency depreciation (we are the worlds consumer and other economies go down with us). There will be no way to find gainful employment and “grow our way out of it”. Until we find a way to distribute income better, increased productivity will be gasoline on the fire – not water.
Furthermore, as people are forced into some of all that “live within your means” stuff that self-righteous fools always trod out when they do their little “take personal responsibility” spiel; then the whole thing will really go down the drain. If people actually find out that they can live very happy lives if they give up the idea of keeping up with the Jones’es, then even God can’t save the world. Think about it. A world where all that a person cares to acquire (food, shelter, clothes, entertainment, stuff) is produced by 1 work hour per day. How is that going to work out in practical terms unless we raise the minimum wage 20 fold or reduce prices 10 fold. Talk about needing one of them there wonderful imaginary adaptors (that appear to be the magic tool against “piss and moan”). Off course we could just listen to them there ‘personal responsibility” preachers and all become Mark Phelps – just grow longer arms and webbed hand/feet, it is the easiest thing in the world – and then you can live from endorsing products.
mpappa,
“The size of Government has grown substantially since 2000 along with our annual budget, deficit, and long term debt of $15.5 trillion. It wasn’t a lack of tax revenue, it was a lack of fiscal discipline.”
Wrong.
The OVERWHELMING majority of those federal deficits & debt are as a direct result of the massive decline in federal income tax revenue caused by the numerous rounds of tax cuts enacted by Chimpy Bush and the Republican Congressional Majority which overwhelmingly benefited the Rich & Corporate.
According to the independent non-partisan Congressional Budget Office, federal income tax revenue plummeted down to the lowest level since 1959.
Tamu82,
“…this argument has been wearing me out and finally, SOMEONE put together actual stats to show the middle class has NOT had it so bad.”
Reminds me if the RightWing “economist” who claimed that seniors are actually very wealthy because of the equity in their homes.
Why YES, if seniors just sold their homes, they could live in their cars and have plenty of money !
Overlay that data against the increase in Financial, Insurance and Health Care costs (and profits) to make it clear.
@waterboy10 & kbwoody re: personal responsibility? – yes but consider the heavy FIRE marketing of RE. Greenspan himself belssed/marketed option ARMs and Bush pushed the “ownership society” while liar loans were rampant (and apparently legal?/reg capture non- enforcement.) Government leaders and corporations overtly encouraged that behavior and then blamed individuals for basically following the orders/suggestions and winding up under water or robo-foreclosed, unemployed from global labor arbitrage, and/or broke due to medical/insurance costs.
R2CONomics has a pictorial which is agitprop about the debt. The image is the ‘debt is like coming home and finding your basement filled with sewage’. You may have seen it or had a facebook friend who “liked it”.
It ends with pumping out the debt from your basement. Not adding more as if R2CONomics is going to anything but create more debt as safe t-bill havens for the wall st gambling take.
However, when the idea of sequestration comes up, no one wants to pump the sewage if it costs dividends from the war profiteers.
My response was: your basement was filled from “trickle down” sewage, to fix it end “trickle down”. That is raise taxes on capital, and cut the war machine in half.
Our fascistic banking system systematically screws the least sophisticated [trying to save with CDs] and the entire population with inflation– for the benefit of banks that should have gone bankrupt. And for the benefit of the govt, which gets 1st dibs on the freshly created money, before inflation devalues it.
Notice that affluent alert investors can make out pretty well.
I’m not saying this is the only factor in the trend, but it shouldn’t be ignored.
@DeDude:
I know, it’s a rough downward spiral. The depreciationary recovery scenario depends on other countries finally admitting that they’re losing money by selling to US consumers who can’t afford it, and cutting their losses. (I’m looking at you, Asian export-based economies). Although, transitioning away from an oil-based economy would also help quite a bit.
We don’t need a “stronger economy” to help us, we just need consumers in other countries to step up to the plate and enjoy the lifestyle to which they’re entitled. If they’re running large trade surpluses, then they already have the productive capacity to make this happen, but there, as here, the money may be in the wrong hands for the consumer to strengthen. I.e., it may be in low-money-velocity hands of investors/capitalists, rather than in the hands of actual consumers.
So what if the profits from sales here are flowing to small bourgeousie in other countries, and it’s not so easy as “consumers there need to consume more, and balance out the trade account”? Then I think we will continue to see this deflationary cycle. Our consumers “run out of money”, then the producers have to cut prices and probably raise productivity, which just keeps going until prices are a fraction of what they are today and it’s cheaper to higher humans than robots.
But luckily, we also have an inflationary counter-force, in our government. We have a loose Fed and large fiscal deficits from the government, which have an overall effect of adding to the money supply. I think it’s near-guaranteed that if the fiscal deficits remain as large as they are, that *eventually* the value of the dollar will drop. But Japan illustrates that this can take quite a while, depending on demographics and the level of demand for gov’t debt. The “money printing” by our Fed has been offset by the destruction in trillions of dollars of credit in the private sector, and as the total amount of private-sector debt is in the range of ~$50 trillion, our government deficits look rather puny in comparison.
The good news is that, as others have pointed out, we’ve been Japan on fast-forward, pushing fiscal and monetary loosening much more quickly and strongly. It doesn’t mean we’ll recover soon, but we’ll probably recover more quickly than Japan, at least.
Main reason for this lost decade: The financialization of our economy. That said, we Americans should not consider birth rights things such as: comfortably belonging to the “middle class”, including nice stuff such as cheap gas and affordable health care.