The Middle Class in America Is Radically Shrinking.

[Smoot Point Really]

Why don't we just all vote for the right party and ask them to "TAKE" it from the rich and then we'll all be truly equal!!! eh, Comrade? It's boggles my mind that people view this as simply greed, 'trickle' down or the free market... It's as if they all believe Brezhnev was standing in the same bread line with the common man.

[Burgold]

Why don't we just all vote for the right party and ask them to "TAKE" it from the rich and then we'll all be truly equal!!! eh, Comrade? It's boggles my mind that people view this as simply greed, 'trickle' down or the free market... It's as if they all believe Brezhnev was standing in the same bread line with the common man.

and you accused me of blather? Sheesh! You're having too much fun today.

[Corcaigh]

I thought American middle class was getting larger, not shrinking.

[Hunter44]

I think some people didn't even bother to read the article. For example: • In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.

Some don't see that as a problem or an issue... amazing, "it's just middle class spends to much on needless things."

[Elessar78]

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

I don't know how this shows that the middle class is "radically shrinking". Wouldn't the top end and bottom end of the income spectrum mean that the group in the MIDDLE is expanding?

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

I don't know what the big fuss over globalization is? Globalization IS capitalism at work. Capitalism works to create as much profit as possible and labor and production costs are two of the variables that businesses try to control. Once local markets are saturated, new markets need to be found. "Exploiting" is a matter of perspective. One of the leading causes of poverty worldwide is the inability of many third world countries to provide jobs. It may not be right by American standards but I'm sure many third world workers would rather be working in less than ideal conditions but it's better than starving (being willing to work and not able to find employment).

Sure that comes at the expense of a certain segment of American workers we all know that everyone has access to education. Everyone knows that if you don't study hard/do well in school your options may be limited to jobs that can be outsourced.

• 61 percent of Americans "always or usually" live paycheck to paycheck

• 36 percent of Americans say that they don't contribute anything to retirement savings.

• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.

• 24 percent of American workers say that they have postponed their planned retirement age in the past year.

• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.

• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.

I think this reflects a lack of general knowledge of personal finance in our population. Live within your means and have a budget which factors in retirement savings.

• Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.

It's RELATIVE poverty though and not ABSOLUTE poverty. These children have access to food, education, shelter, and some form of health care.

As for the disparity/gap in wealth. Once you reach a certain threshold, there's only so much you can spend on subsistence and "toys". Beyond that the only thing to do with surplus money is invest. It's not really a secret why the rich are getting richer. The poor on the other hand just need to pay the bills in order to get by. Most of the middle class are too busy chasing symbols of wealth to actually amass real wealth.

To me, the lifestyles that a vast majority of America lives is unsustainable. Our local, state, and federal governments are in debt up to their eyeballs. Citizens and governments need to backoff a little. Services and general quality of life will suffer in the short term but going on a diet is never easy.

[Hubbs]

So what do you say "caused" this?

This:

A wise man once told me that it's hard to lose money when you're on the receiving end of compounding interest. For the past 30 years, the debt of the average American has been growing faster than the economy. That unsustainable pace was magnified by the fact that personal debt became more and more of the engine that drove economic growth, rather than the result of economic growth in the form of increased savings and capital against which responsible consumers could borrow. I'll bring in another chart, one of my favorites around here, to illustrate my point:

The blue bars represent our GDP growth as reported. The red bars represent our GDP growth minus loans (debt) taken out via mortgage equity withdrawals. Those loans equaled additional demand, demand that created the illusion of economic expansion that wasn't really there. And when the veil of our national credit binge is lifted, what we see is an economy that's been standing still for a decade. Now the middle and lower classes are left holding the bag, a bag full of years of debt piled upon debt that they used to compensate for real wages that were consistently dropping and savings that were consistently spent. It all has to be paid back, with interest. And just like it's hard to lose money when you're on the receiving end of compounding interest, it's hard to make money when you're on the giving end.

[Hunter44]

^^Interesting point.

What about the huge income disparities. Does the chart explain the reason for that? I would think that if people had more income then they would have less debt or the debt would be easier to pay down.

[panel]

• 83 percent of all U.S. stocks are in the hands of 1 percent of the people.

I don't see haw this hurts the middle class, anyone who wants to can buy shares, if they want to sell them to gets some cash out of them, they can do it and here are people willing to buy them. I don't care if the person who buys my stocks is in the top 10% or not, what helps ME, is that the person buying them is paying top $ for them

• 61 percent of Americans "always or usually" live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

We are in a temporary recession, no duh. I don't have exact statistics on this, but my grand parents worked paycheck to paycheck for much of their lives, so did my parents, but I am not, I see the same thing with a lot of other people too, where the families that grew up in the 50s-70s didn't live wealthy lives, putting food on the table wasn't easy. I would say that paying for food now days is a lot easier than it has been in the past. And is there also a culture that exists now where people are now willing to live beyond there means, when in the past people only paid for what they needed? Obviously though, in 2007, the recession really hadn't kicked in, in 2008, it started to, and in 2009 it was in full swing. Those stats shouldn't be shocking.

• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.

What is with the selective years in these stats? In the other examples 2008 and 2009 are included, but this one only goes to 2007. Could it be that they are counting stock gains as income gains, and did not want to include 2008 and 2009 because stocks lost value?

If that is what they did (which I am pretty sure they did) it is purposely misleading. Many of the gains from 2001-2007 where just gains to make up for all the money that was lost after 99, then they exclude all the losses in 2008 and 2009 to make their number as big as possible. If you have your money in stocks, in the long run, you will make more money then the average person, there is not secrete there, but it is not guaranteed, some years you make money, some years you lose money. I think the policy that is hurting the middle class the most when it comes to this is that we have to pay social security taxes, with the money that we could be putting into stocks, where we could be making they types of increases that would like (in the long run)

• 36 percent of Americans say that they don't contribute anything to retirement savings.

Well, the rich can't be blamed for this, it is a personal decision, "am I going to make sacrifices and save for the future?", or "spend what I have now?". Schools should probably teach kids better about money, but I'm sure too many people would complain that this would be teaching their kids how to be greedy people.

• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.

But that means more than half of people DO have more then 10Gs saved up. And lets not forget this is a nation that has 40Million immigrants, and that number keeps growing. So what may seem like on paper as bad (we are getting poorer and poorer) actually isn't bad (poorer people are moving into the US for a chance to establish themselves)

• 24 percent of American workers say that they have postponed their planned retirement age in the past year.

People are living longer, and are healthier at older ages, this could be viewed as a positive. Maybe people aren't getting poorer, they are realizing that they have the ability to live a better lifestyle if the work longer.

• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.

1.4 million is less then 1%, it like 0.3%. And shocker, 2009 was a year where the recession and the housing market disasters were in full effect

• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.

Sure, it is harder to pay for property when it gets more and more expensive, but people are finding a way to do it. The fact that US property has risen in price that much is a good sign, and besides, in 1975 was it only the rich that owned property? Or did everyone enjoy the increase of value of their homes in that time? Are the people buying homes today screwed because it is so expensive, or are they making an investment that will prove to increase their wealth in the long run?

• For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.

Duh, that is because too many people defaulted on their homes recently. I do not think the banks are happy about this, they will be working to change this as fast as possible.

• In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.

Two points ago we were comparing today with 1975, in this point we are going back to 1950, what's with these selective dates? It isn't that in the 1950s, the US was starting a post war society so there were many small businesses just getting started? If Bill Gates make 500million in a year, and each of his employees make $100,000 a year, is that a bad thing? that is a 5000 to 1 ratio. Companies are bigger and employ more people now. I don't think that this proves anything

• As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.

Again, picking 2007 before the markets went down so that the number would be as big as possible

• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

Why aren't they using 2007 statistics for this point? Besides, the bottom 50% don't pay taxes right now either.

• Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

In 2008 they were artificially low because it became a big election talking point, and people were forced to temporarily cut their bonuses until the elections were over and politions stopped grandstanding.

• In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.

This one does sound messed up, the government should not be so big that it can spend excessively, while talking from the privet sector to pay for it. On the other hand, this point doesn't say what the ratio used to be, may be the ratio has always been high for reasons that make sense, I just don't know

• The top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.

But are they taking away from anyone else? If you make the pie bigger, and keep most of the part that you made, are you really hurting anyone?

• In America today, the average time needed to find a job has risen to a record 35.2 weeks.

Shocker, that wouldn't be because we keep extending unemployment benefits so that you can make $1200 a month by doing nothing for 2 strait years? Take that away and watch the number drop in a big way.

• More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.

They are also often high paying. To lump in Lawyers, Accountant, Professors, and doctors in one Narrowly defined group, and insinuate that the whole sector is low paying in sneaky.

• or the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

The population is also bigger than it ever has been before too, with higher numbers of immigrants then ever as well. It has also gotten easier to get food stamps.

• This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.

We are also able to take advantage of it, now these items are available to Americans at prices that are cheaper then ever.

• Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.

I don't know for sure, but I think that this has to with a combination of increase in the number of immigrants in the US, and the temporary recession that we are in.

• Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.

The number of Millionaires is always going to go up because a million dollars in not what it used to be. The true value of a million has gone down due to inflation. This number will always go up, the less a million is worth, he easier it will be get there.

• The top 10 percent of Americans now earn around 50 percent of our national income.

Hasn't always been about this much? In 1983 the number 48%, I don't see this as proof of a bad thing, again, If you make the pie bigger, and keep most of the part that you made, are you really hurting anyone?

I have an optimistic point of view, I think a lot of these stats have been cherry picked to make it look real extreme. Overall, I think people's lives are getting better. More and more people are getting access to high speed internet, the number of people with cell phones is growing, the number of people dieing of starvation in this country is going down, people are living longer. People still want to be (and are) moving to the US. I don't see it, I don't see things around me crumpling, with only the rich surviving.

I see a nation that is in a temporary recession, that people still want to move to, that has a bright future.

[Springfield]

Partly, I think these are unintended side effects of the information age. Once the world was connected at the push of a button things started going downhill. Who here has ever visited a travel agency in the last 10 years? That whole industry is a thing of the past thanks to our friend the internet.

Now as far as the "global economy". I can't think of anything that is worse for the working man of America. It will bring us, the middle class, down. Take for instance a tech support hotline. You can't call and speak to an American any more. Why, you ask? Because they can pay somebody in India a fraction of what they would pay an American to do the same job. This will happen/is happening to any sort of middle class job where locality isn't a must.

See, the "global economy" will bring us as a country down. Economy likes equilibrium. When America, more specifically the little guys in it, is at the head of the class there is but only one way to go. Sooner than later the little guy will feel it hard.

The "global economy" is only good for rich people. That's a fact.

[Elessar78]

^^Interesting point.

What about the huge income disparities. Does the chart explain the reason for that? I would think that if people had more income then they would have less debt or the debt would be easier to pay down.

Not necessarily. If your household expenditures rise at the same rate as an increase in income, then the net gain is zero.

[Destino]

Why don't we just all vote for the right party and ask them to "TAKE" it from the rich and then we'll all be truly equal!!! eh, Comrade? It's boggles my mind that people view this as simply greed, 'trickle' down or the free market... It's as if they all believe Brezhnev was standing in the same bread line with the common man.

From 1933-1981 the top tax bracket in the US was higher than 63% Did the US economy collapse during that time or did the US rise up to become a super power and a super economy?

When a conservative mentions communism I have to laugh... because I don't think many of you actually know what communism is or maybe it's US history that's missing. You see making "taxes = communism" comments and those like them clearly indicate that something is lacking. Unless of course you mean that the largest economic expansion in US history happened under the rule of communism.

[twa]

Des studies prove raising the tax rates too high resulted in lower collections...the rich ain't stupid.

[December90]

From 1933-1981 the top tax bracket in the US was higher than 63% Did the US economy collapse during that time or did the US rise up to become a super power and a super economy?

When a conservative mentions communism I have to laugh... because I don't think many of you actually know what communism is or maybe it's US history that's missing. You see making "taxes = communism" comments and those like them clearly indicate that something is lacking. Unless of course you mean that the largest economic expansion in US history happened under the rule of communism.

The problem is not the taxes in and of themselves. The problem and comparison to socialism or communism stems from the leftist/democrat view that the government should provide so many entitlements for the masses.

[Destino]

Des studies prove raising the tax rates too high resulted in lower collections...the rich ain't stupid.

I know they're not. We didn't see the explosion in executive pay until after Reagan lowered the tax rate.

you also didn't answer my question. Did the US economy collapse during that period or did the US thrive? According to conservative logic such a thing is sure to lead to absolute ruin with all the rich leaving the county and no one taking executive jobs.

[Smoot Point Really]

and you accused me of blather? Sheesh! You're having too much fun today.

This was one of my more enlightened responses... I will confess that it takes blather to know blather...

Actually, I'm looking at these statistics and I'm starting to believe it's all bull****. Define middle-class... If it means covering someone else's wealth than we are all in the same boat. Just because it has gotten better for the top over the last 20 or so years or even two years doesn't mean that the middle class is shrinking. I don't remember until very recently people being defined middle-class by their retirement or how many stocks they own.

I just read Panel's post a few above and he hits what I was thinking pretty well.

[Smoot Point Really]

From 1933-1981 the top tax bracket in the US was higher than 63% Did the US economy collapse during that time or did the US rise up to become a super power and a super economy?

When a conservative mentions communism I have to laugh... because I don't think many of you actually know what communism is or maybe it's US history that's missing. You see making "taxes = communism" comments and those like them clearly indicate that something is lacking. Unless of course you mean that the largest economic expansion in US history happened under the rule of communism.

Way to be relevant... So... Do you think Brezhnev was in the same bread line? Has anyone who ever came espousing a "spread the wealth" philosophy actually lived by it?

[twa]

Perhaps we start with getting people back to work?...aside from for the govt:silly:

http://money.cnn.com/2010/07/23/news/economy/white_house_budget_review/

White House: Unemployment at 9% until 2012

[Destino]

Way to be relevant... So... Do you think Brezhnev was in the same bread line? Has anyone who ever came espousing a "spread the wealth" philosophy actually lived by it?

You bring up Brezhnev and claim that a point about US tax rate history is irrelevant? That's funny. No one is talking about communism but you. Taxing the wealthy is not communism. Read that last line again. It's true no matter what your well conditioned mind might be screaming at you when you read it. A great deal of American history stands as absolute proof of it.

Since we radically lowered the top tax bracket what has happened to salaries across the board. How have the changed? Is that an improvement?

[youngestson]

How about that trickle down economics....

More like being trickled on.

At least screwing America's middle class has proved that our elected leaders CAN work together if they feel it's in their best interest.

[TimmySmith]

I see a nation that is in a temporary recession, that people still want to move to, that has a bright future.

You are young and optimistic. Fine traits. Regardless of the reasoning behind the assertions, the underlying supposition remains strong. Taxes are out of control. Not necessarily income tax, but add on taxes for everything consumed. For example, 1/4 of my electric bill here in MOCO is tax. Why is that? Because they can. Roughly the same for my cable bill and cell phone bill. This is not a temporary recession, these are permanent and worsening drains on our wallets. Ask yourself how it is possible that ANY product can be manufactured, shipped 8000 miles then taxed can still be cheaper than a product made here. The gut answer is "cheap labor", but that is only a small part of the equation. Businesses here are put behind the 8 ball with strict regulation and taxes. WaMart's ENTIRE business principle is based on buying foreign made products for pennies and sell them for a buck. They actually LOSE money on large items to get you in the store to buy the cheap stuff. A company buying American stuff cannot compete. Basically we are replacing solid manufacturing jobs with minimum wage sales jobs.

[Smoot Point Really]

You bring up Brezhnev and claim that a point about US tax rate history is irrelevant? That's funny. No one is talking about communism but you. Taxing the wealthy is not communism. Read that last line again. It's true no matter what your well conditioned mind might be screaming at you when you read it. A great deal of American history stands as absolute proof of it.

Since we radically lowered the top tax bracket what has happened to salaries across the board. How have the changed? Is that an improvement?

We're talking about the middle-class shrinking. The proposed solution to this problem is generally wealth-redistribution which is socialism. I never used the word communist... You did. Btw, taxing the wealthy ( confiscating property) is one of the 10 pillars of communism if I am not mistaken. We have done this in the past as a country and often do it today.

[Destino]

We're talking about the middle-class shrinking. The proposed solution to this problem is generally wealth-redistribution which is socialism.

No. That is certainly not the proposed solution for this by anyone that isn't creating a straw man.

Btw, taxing the wealthy ( confiscating property) is one of the 10 pillars of communism if I am not mistaken. We have done this in the past as a country and often do it today.

Communism isn't about taxes it's about control and power. Like I said, US history at a time that most would consider far less "socialist" than today had tax brackets that went as high as 90%. Since Reagan enlightened us all with trickle down nonsense... there is no question who benefited and how salaries changed. Learn from history, don't ignore it.

[Willy Wonka]

Healthcare for example costs more because of how many advances, more medications, more treatments/technologies there are.

Technological advancements and more goods/services bring prices down in an economy. These are NOT the reasons why health care costs as much as it does.

[Hubbs]

^^Interesting point.

What about the huge income disparities. Does the chart explain the reason for that? I would think that if people had more income then they would have less debt or the debt would be easier to pay down.

Increasing income disparity is a cause of increasing indebtedness, not a result. As real wages fail to keep up with an expanding economy, the only way for consumer demand to expand faster than wages is through debt. And once you plug an economy into the ever-expanding debt machine, that expansion has to be maintained for growth to continue. So whenever people begin to rein in their spending, alarm bells go off in Washington, and new incentives for lending and borrowing are rolled out. That's how you get a chart like this:

This all seems like a lovely plan as long as debt can continue to expand faster than the economy, much like a Ponzi scheme seems like a lovely plan as long as more new investors can be found. They actually work in very similar fashions. And they have very similar results. Ponzi schemes work... until they don't. Debt-based growth works... until it doesn't. It's mathematically impossible for either to go on forever.

[Willy Wonka]

Increasing income disparity is a cause of increasing indebtedness, not a result. As real wages fail to keep up with an expanding economy, the only way for consumer demand to expand faster than wages is through debt. And once you plug an economy into the ever-expanding debt machine, that expansion has to be maintained for growth to continue. So whenever people began to rein in their spending, alarm bells went off in Washington, and new incentives for lending and borrowing were rolled out. That's how you get a chart like this:

This all seems like a lovely plan as long as debt can continue to expand faster than the economy, much like a Ponzi scheme seems like a lovely plan as long as more new investors can be found. They actually work in very similar fashions. And they have very similar results. Ponzi schemes work... until they don't. Debt-based growth works... until it doesn't. It's mathematically impossible for either to go on forever.

Good points made here.