And Unemployment and Inequality Are Worse Than During the Recession

The Washington Post notes in an article entitled “Census: Middle class shrinks to an all-time low“:

The vise on the middle class tightened last year, driving down its share of the income pie as the number of Americans in poverty leveled off and the most affluent households saw their portion grow, new census data released Wednesday showed.


For many economists, the most troubling statistics were those on income inequality underscoring the middle-class squeeze.

The 60 percent of households earning between roughly $20,000 and $101,000 collectively earned 46.6 of all income, a 1.5 percent drop. In 1990, they shared over 50 percent of income.

The Post also notes that inequality has actually risen post-recession:

“What’s disconcerting is that inequality is going up post-recession, and it’s happening because the top is starting to pull away again,” [Jane Waldfogel, a professor at Columbia University’s School of Social Work] said.

Bloomberg reports that income inequality has grown to the highest level since 1967:

The U.S. Census Bureau figures released yesterday underscored the struggles of American families in a sputtering economic recovery. The report also showed the income gap between rich and poor people grew to the widest in more than 40 years in 2011 as the poverty rate remained at almost a two-decade high.

In reality, inequality in America is the worst its been since 1917. Indeed, as we noted last year:

Inequality among Americas is worse than in Egypt, Tunisia or Yemen. As NPR notes, inequality is higher in the U.S. than in many banana republics in Latin America. And social mobility is lower in America than in most European countries (and see this, this and this).

It’s only gotten worse since then …

The Weekly Standard points out that unemployment is also worse than during the recession:

According to figures released by the Bureau of Labor Statistics (BLS), only 58.3 percent of Americans over the age of 16 are currently employed. That’s the lowest percentage in the past year—so things are getting worse, not better. But things haven’t just gotten worse over the past 12 months; they’ve also gotten worse since the recession ostensibly ended and the recovery ostensibly began.

In fact, for an amazing 38 consecutive months, the percentage of Americans who are employed has been lower than the percentage who were employed during the recession. According to the BLS, the low-water mark for employment during the recession was 59.4 percent, while the high-water mark for employment during the “recovery” has been 59.3 percent. That’s right:  When it comes to the percentage of Americans who are employed, every month of the “recovery” has been worse than any month of the recession.

The economy cannot recover unless inequality is reduced, there is a healthy middle class and people have jobs.

We’re going in the wrong direction.

Postscript: This is not a partisan issue. Despite what you may assume, most conservatives are against insane levels of inequality.

Category: Think Tank

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.

8 Responses to “Middle Class Shrinks to ALL-TIME LOW”

  1. miker says:


  2. miker says:

    Now Romney is saying he won’t raise taxes on any families earning less than a quarter million. But that just means his plan is completely mathematically impossible. He’s probably safer being attacked for making a series of promises that cannot be mathematically reconciled than being attacked for a specific ramification like raising taxes on the middle class. (Alternatively, Romney could just say he doesn’t care how much revenue he’d lose.)

    The basic problem for Republicans is that their highest policy priority is to cut the effective tax rate paid by the richest 1 percent of Americans, but the vast majority of the voters don’t share that goal.

  3. econimonium says:

    I think the discussion here is actually very complex, and certainly non-partisan. What I theorize is that the old saw of “technology is going to take your job away” has finally come true in lots of ways as we move into the full throes of the Technical Revolution (as history will see it). Whole classes of jobs are disappearing, dislocating large numbers of workers, and the internet has made it possible to locate workers, even higher level ones, anywhere in the world with significant wage arbitrage.

    Think back to your parents days…anyone could graduate from High School, go not far, and get a job at a local factory making decent money and with a pension. Those days are gone forever. Workers now need higher trained skills in larger numbers, and work isn’t likely to be close to home. So what’s happened is wages themselves have bifurcated as the middle level jobs have disappeared. Now high skill high pay jobs and low skill low pay jobs are the rule rather than the exception. Even if “manufacturing” were to come back to the US, most of the labor would be done by machines (ever been to a car plant recently?). So the days of the local GE employing 36000 people are over. And they’re never coming back.

    So the question is what should policy be? Should the government now step into a role previously supplied by employers and take care of health benefits and pension (which is sort of does for retired people) for all? Should education become virtually free for those at certain household income levels that need it? Is that the government’s job? (I think the answer is yes, actually) What about student debt? Should the government just underwrite loans at minimal interest for anyone that wants one? What about trade schools? Why have they disappeared? Maybe “trades” are now IT jobs and not metal fabrication in most areas. So there are a lot of hard discussions here, but suggesting that just certain government policy is to blame is a very specious argument. It’s structurally very much deeper.

  4. Greg0658 says:

    in my turn cheek hat – I see tycoons pushing towards what must happen in this out of balance machine ie: drive wages down to match other world economies : hense hoard to push/pull on the string
    ya RIGHT
    more like to Win the Game (& pass on to their tribe)
    econ…: should the government do more YES .. the world employment change ups you mention .. most do not want civil war as the demand call for growth – tho some do – to maintain the wash rinse repeat status quo

    we must get manufacturing of all items needed* on a daily basis built/mined in this country .. our media & accounting law jobs now in high demand will become obsolete someday when the cash wielding supplantation is no longer needed … eventually the manufacturing sector – once in control – will cull excesses in paperwork requirements placed on their operations

    * or world peace would work too

  5. jaykimball says:

    The Gini Index is a good measure of income inequality. I posted a chart that shows the trend in US Income Inequality over the past 50 years. I also include comparisons with other nations Gini Index. Bottom line: US Gini Index is at all time high, in the ranks of Rwanda and Uganda. See that charts at:

    Barry, thanks for the eclectic collection of links to related stories. It helps us connect the dots and see “The big ger picture.”

    Jay Kimball
    8020 Vision

  6. Maseratij says:

    The Government should do more…. really. Maybe that is why no one is retraining or getting the skills needed to keep the “machines” maintained, that will be doing all the manufacturing. The US is still a leader in manufacturing, we produce more, at higher prices, and productivity than most nations, including China. “Machines” are not going to be making $5 an $10 Chatzkies. This issue relates to a previous post here on TBP

    The only thing that caught my attention on the above chart was the dip in the assets of the wealthiest during the Great Depression. That certainly is not happening now! Did the rich recover, were the displaced? Either way they contributed to the restructuring then and they are not now.

    Should the Government do more? Are you out of your mind, the number of people going on SS Disability are ballooning, a 1/3 of the society is receiving Federal Benefits. These stratum of society sure isn’t getting rich on the US Gov., but neither are they prospering. The whole system is maintaining a status quo of the rich and the poor. The Middle Class is a casualty as the unfortunates suffer in schools that can not teach them to read, and institutions create vehicles for the accumulation of wealth.

    I have go now, regrettably my wife and I both have a hard time clearing $100k working one hundred hours a week. Under employed we must pay our health insurance premiums for our employers, pay for additional daycare, sporting, and supplies for the local school, not met by our taxes. Need to get my homework done for a set of new skills, while the wife spends quality time in the socialization of the children. We know we are getting pinched, but are confident, perhaps naively, that we can navigate towards a better future. BECAUSE we have to ! We do not want to drop down to a minimal substance living standard, so we work harder, produce more, organize better, have a plan and work it. If someone wanted to give me a check right now to maintain 60% of my lifestyle, I might take it and lose all incentive to make any further forwarding sacrifices.

    Money is the bottom line. The buck stops somewhere. My hope is that more people stop giving their money to corporate america. The worst summer box office in years, hurray! Cable companies and Wireless Carriers losing subscribers, perfecto!. Cut the cable, dump the smart phones w/data for clamshells, by local produce, create cooperatives that share resources, the revolution starts in our wallets !

  7. Rick Caird says:

    Interestingly, Don Beaudreaux at Cafe Hayak had a quote on this today. The quote was from Julian Simon in his 1995 book “The State of Humanity”:

    “Data on the absolute gap between yearly incomes of the rich and poor countries are beside the point; widening is inevitable if all get rich at the same proportional rate, and the absolute gap can increase even if the poor improve their incomes at a faster proportional rate than the rich. Here one should notice that increased life expectancy among the poor relative to the rich reduces the gap in lifetime income, which is a more meaningful measure than yearly income.”


    BR: The widening of the Rich Poor gap is far from inevitable — it is, mathematically t least, the result of specific tax policies.

  8. victor says:

    “The economy cannot recover unless inequality is reduced, there is a healthy middle class and people have jobs.

    “We’re going in the wrong direction.” Solution? Grow the pie and the population too (without killing the planet?). Increased taxation beyond a certain relatively low % tends to benefit disproportionately the well off especially if the current tax system stays in place.

    Nassim Taleb: “Don’t ask why is he/she poor or rich; ask instead why is he/she not poorer or richer?”

    The poor want to be rich; the rich want to be richer.

    Examine the cause of inequality: it is discrimination (racial, religious, sex, nationality)? Education or lack of it? Or is it inherited wealth that created it? Or is it “rigging the system”, just look at Bob Nardelli or Richard Grasso or Bob Rubin (legal crimes, ill gotten). Or is it criminal criminal: Madoff and today’s Al Capone’s. Or, finally is it differences in abilities, risk taking, health, genetics, luck, work ethic, geography, history, family issues, drugs, irresponsible behaviour, religion (monks don’t mind inequality) an a myriad of other issues/traits that make us different? Not everybody can be Sergey Brin or Bill Gates or Payton Manning not to mention Steve Jobs.

    Interesting fact: most private wealth in the US was created in the last 40 years, or so even Soros’ and Buffett’s and Gates’. Most of it will be given away one way or another; if not, chances are the descendants will squander it. And the poor have many more descendants than the rich have. There will be brand new rich actors; there will always be inequality, Capitalism is based on it. Vanitas vanitatum omnia vanitas.