Middle Class is Shrinking

Posted on Thursday, August 23, 2012 by Post Scripts

by Jack

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“Recession marked by housing crash dealt a heavy blow, the Pew Center said. People blame Congress, banks, others.”

According to any poll you want to look at, people are loath to accept any sort of personal responsibility for this nation’s financial mess. It’s too easy to blame Congress and banks for the housing bubble. But, who willingly signed all those contracts and bought houses they couldn’t afford?

Congress didn’t forced people to run up huge credit card debt to the point when the bottom fell out they had no reserves. Dumb Americans living on the edge did that.

When we blame Congress we’re really blaming ourselves, because we elected them. We helped put every stupid regulation and every freedom robbing law on the books by how we voted. And when I say [we], I mean the populist movement, this would be basically all the democrats, all liberals, all the welfare takers, all the unions…that make up the largest portion of the population. But, lets not overlook the GOP who didn’t hold true to their values, who didn’t hold accountable those errant republican lawmakers who were playing the same game.

There’s just a whole lot of blame to go around and that’s the undeniable, glaringly obvious fact. Now let’s get back to the current problem – the shrinking middle class.

According the PEW poll: In 1971 the middle class represented 61% of all Americans, today it’s only 51%. Ironically our middle class voter is leaning towards Obama. More than half, 52 percent, say Obama’s policies would aid the middle class, a 10 percentage-point advantage over Romney. This is pure populism at work folks and it is how elections are being won. It’s all about numbers, not informed voters. The demographics are abundantly clear… intelligent, informed voters will never again be a plurality in this country, we’re too far down the slippery slope to make it back to the top.

From 1992-2007 the top 400 income earners in the U.S. saw their income increase 392%. . . this is the big fat target of the Obama campaign and it gets votes.

The harder times are, the easier it is to focus on class warfare. Example from a recent best seller, “It’s important to note that for the rich, most of that income does not come from “working”: in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. ” Wealth, Income, and Power by Prof. G. Wm. Domhoff, UC Santa Cruz.

Sharing the wealth is the new emphasis for America. It’s not about entrepreneurs making the most of a capitalist system. It’s no longer about hard work and creative genius, it’s about income inequality and how unfair it is for the 1% to hoard all this wealth. It’s an easy sell to kids coming out of college and they are America’s future leaders. Given all the above you don’t need a crystal ball to see where this country is headed.

NOTE: The Pew study is based on an analysis of Census Bureau and Federal Reserve Board data and a phone survey from July 16 to 26 of 2,508 adults, 1,287 of whom identified themselves as middle class. The poll has an overall margin of error of plus or minus 2.8 percentage points, and 3.9 percentage points for the middle-class segment.

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4 Responses to Middle Class is Shrinking

  1. Jim says:
    Thursday, August 23, 2012 at 10:28 am

    Jack, Welcome to the Occupy movement. This is what they have been all about.

    The US economic policies of the last 30 years have been shrinking the middle class, while moving the nations wealth to the top 1%. This is largely due to the reduction in the upper income taxes, and outsourcing US jobs.

    US corporations are showing great profits, and have a lot of cash, but aren’t hiring. Proof that “trickle down economics” doesn’t work.

    So, the answer is higher taxes for the top tax brackets, they will only get a lower tax rate, if they invest in American jobs. Which historically they did. But why invest now, when they can just take the money and run? Now this isn’t “class warfare” it’s what made America strong and prosperous back in the 50s, 60s and 70s. It worked before and can work again.

    The second thing we need is tariffs to protect US made products. It works well for Germany.

    You’ll notice that neither Obama or Romney are having a serious discussion on these issues.

    Reply
  2. Post Scripts says:
    Thursday, August 23, 2012 at 11:12 am

    Jim, I know the outsourcing sure has had its effect. We’ve lost a lot of good blue collar jobs…what a shame.

    Reply
  3. Princess says:
    Thursday, August 23, 2012 at 1:40 pm

    Yes, the outsourcing is shocking. And the GOP candidate the RNC forced on us is right behind that. And the Obama administration has done nothing to insource jobs.

    Our country fought two unfunded wars and Republicans are trying to gear up for another one with Iran. Shouldn’t we be manufacturing things for this war? We have allowed our defense contractors to outsource jobs for their bids. If we made it a requirement that all defense contractors could only employ US citizens then we would put a huge dent in unemployment.

    I do not have the words to express my disgust with Republicans right now. Romney is horrible. HORRIBLE. HOw on earth did we nominate someone who refuses to release his taxes? If Obama pulled this we would go nuts. And rightly so. Paul Ryan? How many religious extremists do we really want representing our party? And now a plank in the GOP platform for convention is trying to ban abortions with no exceptions. Really? Is the biggest problem facing this country abortion? Are we a state’s rights party or not?

    I know people who worked hard their whole lives, who lost their jobs and their homes and are struggling to make it and there is not a single political party in this election working to help them.

    I just can’t believe that Republicans had a chance to wipe the floor with Obama and they picked Romney.

    Reply
  4. Tina says:
    Thursday, August 23, 2012 at 11:05 pm

    Elizabeth MacDonald of FOX Business looked into the Pew report and discovered some unreported facts in the fine print:

    http://www.foxbusiness.com/investing/2012/08/23/emac/

    Pew defines median middle class income as $70,000. The income range for the middle class is fairly wide here, $39,418 to $118,255 in 2011.

    Pew goes on to say: In 2011, this middle-income tier included 51% of all adults, versus 61% back in 1971. It cites rising income inequality pushing a growing proportion of families into low-income brackets.

    So about 10% of the middle income crowd fell out of bed. But into which bed?

    A greater proportion moved into the upper-income crowd versus lower-income — six percentage points versus four.

    It says: Over the same four decades, the share of the adult population living in upper-income households rose to 20% from 14%; for middle-income households, it fell to 51% from 61%; and for lower-income households, it rose to 29% from 25%.

    What is happening to median incomes? Heres what Pew says: From 1970 to 2010, median incomes rose 43% for upper-income households, 34% for middle-income households and 29% for lower-income households.

    So incomes are rising across the board — another reality deeper than the headlines that the middle class has “fallen backward in income for the first time since the end of World War II, as the AP story says.

    Pew goes on to say that in 2010: The upper income now takes in 46%, up from 29% four decades ago. The middle tier now takes in 45%, down from 62% four decades ago. The lower tier takes in 9%, down from 10% four decades ago.

    But perhaps wouldnt this income data square with more people moving into the upper income bracket?

    Heres the problem: Every day, month and year in America, the poor join the ranks of the rich, and the rich fall out of the upper brackets. The poor dont have lifetime membership in the poverty club. And the majority of those who are affluent dont start out life on third base, nor do they enjoy lifetime membership in an exclusive club.

    A 2007 Treasury Department study based on IRS data shows that almost 58% of U.S. households in the lowest-income quintile in 1996 rose to a higher level by 2005. And 57% of the households in the top 1% in income in 1996 dropped to a lower-if income group by 2005.

    Another problem with the income inequality debate are the distorted numbers that leave out all sorts of benefits the lower- to middle-income brackets get.

    The stats are usually based on IRS and Census data, which don’t include the noncash income received by the lowest-income households, such as food stamps, housing subsidies, earned income tax credits, or Medicare, Medicaid payments for things like hospital or doctor care, school meal programs; and the Supplemental Food Program for Women, Infants, and Children.
    America is a very generous country that really does make a valiant, noble attempt to help the poor, as do its numerous charities.

    Another problem with the national conversation about income inequality is that it doesnt include noncash fringe benefits middle-class workers get, such as health, 401(k) and pension retirement funds, medical disability coverage, or life insurance.

    As health costs rise, benefit costs go up, and wages stay flat. And watch how Pew fiddle faddles with the income data, and skips over the hit to net worth for the upper income stratus from the Great Recession and housing crash. It says the net worth of middle-income families took a hit during the past decade..Median net worth fell 28%, to $93,150, erasing two decades of gains.

    But it adds that: Wealth of middle-income families had been unchanged from 1983 to 1992, then grew sharply — by 43% — from 1992 to 2001, and continued to grow in the 2001-2007 period, by 18%.

    Thats the housing bubble.

    Then Pew says the net worth of middle-income families dropped 39% in the later years of the decade as the housing market crash and Great Recession wiped out the previous advances.

    It then says: Over the 1983 to 2010 period, only upper-income families registered strong increases in wealth.

    Wait a second, what happened to the net worth of the upper-income category from 2007 to 2010? It dropped 17%, to $574,788, though overall it grew 8.6% from 2001 to 2010.

    MacDonald knows her stuff…the article goes on to flesh out other recent reports. Good reading.

    Reply

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