Comments on: A shrinking middle class means a shrinking economy Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: Sophia99 Sun, 02 Nov 2014 00:23:46 +0000 I’d like to see some more current graphs, showing how after 6 years under Obama the middle class is shrinking faster and the lower class is growing faster.

By: Bpops Tue, 22 Oct 2013 20:23:01 +0000 I’m wondering how much Federal and State tax revenue has been lost by 1) keeping middle class earnings flat and 2) shrinking the size of the middle class.

By: jambrytay Tue, 17 Jan 2012 15:02:19 +0000 moderator, why do my posts get truncated? let me try again:

The middle class is getting smaller because the higher income group is getting larger.

The US Census tracks long term household income (40+ years of data) and if you use this data to create 3 income groups (low under $25k per year, middle $25k to $100k per year, and high over $100k per year) you’ll see a slow but steady drop in the number of low and middle income groups and an increase in the upper income groups. Bottom line, households are becoming more prosperous. See the August 21, 2010 article at m/

By: jambrytay Tue, 17 Jan 2012 14:59:38 +0000 The middle class is getting smaller because the higher income group is getting larger.

The US Census tracks long term household income (40+ years of data) and if you use this data to create 3 income groups (low $100k/yr) you’ll see a slow but steady drop in the number of low and middle income groups and an increase in the upper income groups. Bottom line, households are becoming more prosperous. See the August 21, 2010 article at m/

By: vwking Tue, 17 Jan 2012 14:29:24 +0000 Our economy had been evolving since the turn of the previous century. We started as an agricultural economy where people “moved” soil, seeds, and crops; Then it was the industrial economy where people “moved” metal, masonry, and plastics; Now we find ourselves in the information age where people “moved” equity (stocks, bonds, currencies, options, sub-prime mortgages, etc.). With each transition, the number of people we needed to sustain the “new” economy was drastically reduced. Such changes give rise to shrinking the number of haves and expanding the number of have-nots. Is it a good thing? Some obviously like the way it is. They would want even more. The rest of us just see life become harder and harder. If history is any indication, this will be the final phase. What comes next will likely be very ugly. Such cycles happened over and over in the past. We saw it with Ancient Egypt; the Roman Empire; more than a dozen Chinese dynasties; Louis XVI and Marie Antoinette; Tsar Nikolas II; just to name a few. At least this time around there is a raging debate. In the past, the vast majority were kept in the dark, or were fed a load of lies. Then when they suddenly realized the truth, blood flowed on the streets. Sure hope we’ve learned from history.

By: RailBended Tue, 17 Jan 2012 14:25:37 +0000 I liked your article. Maybe a little more salt-of-the-earth type language to help hammer home your point, but thats it.

We need the rich to not make as much money.

We need the not-rich to make more money.

I see it all as tied into out-sourcing jobs to other countries. We need to make it more affordable for people to keep jobs here.

Then there’s Wall Street.. but i leave that discussion to another article.

By: matthewslyman Tue, 17 Jan 2012 11:00:18 +0000 I haven’t read OneOfTheSheep’s post (just skimmed a few paragraphs), but the length of it demonstrates the lengths that some people will go to, and the difficulties that people face, in trying to disprove the clear data that Mr. Krueger is sharing with us…

It’s simply not possible to write an economic analysis that covers all possible phenomena – and it’s simply not necessary to do so.

Why, if every time I turn up the central heating, the temperature of the house goes up and if the corollary is also true (irrespective of outside weather, wind, sunshine etc.); then I would be a fool to say there was no evidence of a link between my central heating and the temperature of my home!

No matter, that the absolute temperature is not directly proportional to the intensity of my heating. The empirical correlation is strong enough, and the mechanism is obvious enough for the phenomenon to be effectively proven…

By: OneOfTheSheep Tue, 17 Jan 2012 08:16:35 +0000 Mr. Krueger,

You obviously believe that the federal government of these United States was given the power to collect and redistribute income among individuals by our founding fathers. I do not. The power to tax wages and not heads is NOT one of the specific powers granted the federal government by our Constitution, which specifically reserved ALL other powers to the respective States and to the People. The very idea of taxing income or redistributing tax dollars among the citizenry in any manner would have horrified each and every one of them.

An “Income Tax” applicable only to “the rich” adopted at a nominal rate at the beginning of the Twentith Century should today be a lesson to one and all of the dangers of letting a camel’s nose, or, in this case, the government’s “nose”, under the tent. Today that innocent, paltry little tax, together with it’s illegitimate brother, an “Alternate Minimum Tax” that intentionally ignores inflation’s ever-widening grasp, have metastasized into the primary sources of federal tax revenue.

Your period “observed”, from the end of WW II to 1980, is one of constant and significant flux absolutely unique in American history. Wartime material priorities led to an ever-increasing unsatisfied demand for consumer goods in short supply. Only War Bond sales tied up the “easy money” that otherwise would have fueled rampant inflation and a huge “black market”.
Wartime military manpower needs removed millions of our best and brightest young people from the civilian economy, thus creating jobs for our preexisting “underclass” and “stay-at-home wives and mothers”. “On-the job training” conveyed job skills and financial security without precedent as record numbers of citizens thus productively employed.

When the guns fell silent, the troops came home and got about the business or rebuilding lives derailed. Many of the “new jobs” disappeared as war production wound down. Many discharged Veterans reclaimed their old jobs. Many of those thus displaced were not happy with this “return to normalcy”.

Many Veterans went to college under the G.I. Bill as a grateful nation invested in the mental potential of a generation. As cars and refrigerators replaced planes and tanks coming out of the factories pent-up consumer demand and countless dollars tied up in War Bonds spilled out in a frenzy of spending. Times were good.

Levittown and it’s clones began creeping across the land near cities as construction switched from military bases to housing and new or expanding schools. As each area of the American economy caught up with demand and stopped growing or shrunk, activity would shift to other activities of promise. In the mid-fifties America “invested” in it’s Interstate Highway System. With many, many more college-educated people “in the economic mix”, America’s “middle class” grew to unprecedented size. Nobody planned it, it just happened; and it was the result of a convergence of circumstance that will not happen again.

As a professional paid to persuade, are you not disingenuous in offering this “smoothie” of unrelated but well blended data suggesting such major economic transitional periods as homogenous? Is it not even more so to suggest it somehow “proves” something is wrong with the American economy that needs “fixing”.

Everyone agrees something is wrong, but there is little consensus as to what it is and how to fix it. I think that’s because no one knows what the “new normal” will be for the American “middle class”.

Is it not obvious that today’s bloated, inefficient government comprised of hoards of unionized bureaucrats with high wages, lavish benefits and guaranteed pensions does not contribute to the American economy in reasonable measure to it’s cost in present and future taxpayer dollars? These people lay no track, brick or pipes. They shuffle paper, not make it. They ever more ensnarl business and workers in the workplace in more and more red tape. They are, by and large, more like sand in the wheels of progress than grease and oil.

With 20-20 hindsight is it not clear that professional economists were utterly clueless in seeing the economic warning signs preceding the collapse of our auto industry, our financial industry and our residential and commercial construction industry? A current commentary makes credible argument that the policies of Alan Greenspan almost exclusively brought about our economic implosion. No one is yet to be held meaningfully accountable for what has happened. In a bureaucracy, that’s almost always the case.

America needs to “restore itself” to a sustainable level of economic activity. That won’t be a “business as usual” recovery, but a reeducation and redirection with regard to what the country needs today and what it will need in the future. America is NOT about the “everyone gets a trophy” mindset. It is about “everyone has an opportunity to win a trophy”. A government can drag everyone down to a common level of misery, but those Americans usually emulate are not lifted by others but succeed by inspiration, preparation and perspiration.

Socialists forget that inequality is part of life. Life isn’t fair, and never has been; so we can’t “restore fairness”. Fairness is a “Will o’ the wisp”, a mirage of no substance that does not exist in the “real world”. For everyone above “average” there must be someone below “average”. That will never change. For everyone with income above “average” there must be someone with income below “average”. That will never change. For someone to “win”, someone must “lose”. That will never change. We all begin life earning nothing. Everyone’s journey is different. All will not “succeed”. That will never change.

Kids earning minimum wage today earn more as their skill and/or experience increases which increases their economic “value” to employers. It is common for what one earns to continue to increase until retirement in normal times. Accordingly, the people that comprise the low, middle and top groups are in constant flux.

Your presentation depicts a “static state” picture as artificial as it is useless. You ignore the significance of the “good” times and “bad” times that have originated throughout history from weather, climatological change, political or other stimuli. There are NO guarantees. In the overall, rulers and government have reacted to events more than they have brought them about. This administration has not filled me with confidence.

By: nohereman Tue, 17 Jan 2012 03:48:19 +0000 I agree with the article. But the truth is with the key players in the executive, legislative and judicial being millionaires, the chances of raising taxes on the top 1% let alone 10% of Amercan households is between nill and zero. The two party system is no longer adequate. We would be no worse off with a lottery system to select our president and fill the legislative branch with every tax paying, vote registered law abiding citizen entered in the lottery.

By: matthewslyman Tue, 17 Jan 2012 00:23:51 +0000 I’m concerned about the collapsed axes on some of your graphs, but generally, this is excellent information that goes right to the heart of why the US economy has been falling flat despite its enterprising and ambitious population.

Figure 5 is the one that worries me the most. Income inequality is close now to where it was at the start of the Great Depression, and we have nothing good to show for Reagan’s or Bush’s largesse toward the wealthy. Is it not time for this experiment to end, along with the pretenses of its proponents?

Will President Obama please join us in declaring that the old emperor Reagan has no economic clothes? Although Reagan can’t speak for himself from beyond the grave, He has plenty of advocates who evoke his image as a battle-standard, yet the data speak for themselves! Reagan had his good points, but economics WASN’T one of them.

Reagan’s greatest success? I heard from Republican-leaning folks that he bluffed the paranoid Soviet generals into overspending on their military (in Afghanistan, a land of the perpetual conflict; and in a phoney space-war). Long live the United States of America. May the USA NOT fall into the same trap that the Soviet Union did…