Death of the middle class? Think again

September 23, 2010

Elizabeth Warren, just appointed a special advisor to President Barack Obama for consumer protection, says we are witnessing the “death of the middle class.” Slate’s Timothy Noah, a terrific writer and thinker, believes the rich are running away with the country. This new Census Bureau report, showing a nearly 5 percent decline in middle-class household income, received banner-headline treatment, with news stories suggesting typical people are being clobbered.

Middle-class life is the soul of the American experiment. Are things really so bad?

All the angst is focused on pretax income — not after tax.
Stated in today’s dollars, median household income was $45,000 in 1985, peaked at $52,500 in 2000 and is $50,000 now. (Absurd precision such as the “$46,269” median for 1991 doesn’t appeal to me.) Nearly all the decline from $52,500 to $50,000 has occurred since 2007 — that is, during a recession. Most likely that loss will bounce back.

But the key point is that the numbers in the Census Bureau report, and in nearly all alarmism about the middle class, are pre-tax income.

Federal income tax rates for the middle class were cut in 2001 and again in 2003. Because of the cuts, in 2000, 29 percent of American households paid no federal income taxes; today, 44 percent pay none. The result is that slightly lower middle-class incomes are being taxed less — and all that matters to the individual is buying power. The Tea Party crowd, which claims taxes are rising, doesn’t like to talk about the reality that taxes are falling. (Tax cuts, not spending increases, are the main reason for rising deficits.) The left doesn’t like to talk about after-tax income — only pre-tax numbers are used, because they’re the only numbers that are disturbing.

After-tax and adjusting for consumer prices, middle class household income is about the same today as a decade ago. That’s not fabulous — but it’s also not the emergency being claimed.

The angst also ignores rising benefits.
A generation ago, about 30 percent of Americans lived in a household where at least one member was drawing federal benefits — now 48 percent do.

In his important new book Rebound, Stephen Rose shows that when middle-class tax cuts, very low inflation, declining real-dollar prices in sectors such as food and electronics, and most of all rising government benefits are taken into account, most middle-class Americans are slightly better off than a decade ago. Nearly all are substantially better off than their parents.

Who is Rose, some Fox News apologist? He’s a labor economist at Georgetown University and a lifelong lefty. Rose has been taking a beating on the hard left for refusing to toe the party line. His work deserves wide attention.

Ever-rising federal benefits may be good or bad for the country’s fiscal management. In most cases, they smooth out income trends for the middle class, leaving most households about where they were previously. Warren, in my experience, doesn’t like to talk about rising benefits, because this subject undercuts alarmism (which can be used to rationalize more benefits).

Federal benefits to typical people are about to take a huge leap.
The new health care rules will function like an income-redistribution plan. The well-to-do will be taxed more, with the proceeds used to reduce health-care costs for average people. This is defensible as social justice. But it sure doesn’t jibe with the trendy notion of average people being shafted by the affluent: the Obama health care legislation represents a fantastic victory for average people over the affluent.

What if we’d done things differently?
Those who believe the middle class is being destroyed generally have two policy prescriptions: soak the rich, and stop globalization. Whether globalization even could be stopped now is far from clear. But if liberal international trade had never happened — say, tariff walls had been erected in the 1970s, a time Warren curiously depicts as the best-ever for the middle class — it’s likely typical people would be worse off today. Economic growth would have been lower, inflation surely higher: and inflation harms typical people more than stagnant wages.

Since roughly 1975, when middle-class income gains began to stagnate, lifespans have improved, material living standards have risen (safer cars, nearly universal air conditioning), education levels have gone up dramatically, women’s freedom and gay and minority rights have expanded — a lot of good things have happened for average people during a period that, to hear some talk, was dominated by a conspiracy against average people. Some conspiracy!

It’s true many European Union nations accomplished about the same with less increase in inequality. But since 1975, the United States has accommodated more than 40 million immigrants, allowing most to escape poverty, whereas European Union nations have accommodated less than a tenth as many immigrants in the same period. Which of the two regions has, in recent decades, produced the greatest good for the greatest number?

40 comments

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“$46,269 median for 1991″ is in no way “absurd precision”. The median is not a calculated or derived value. It is merely the observation in the very middle, separating the higher half of a sample from the lower half. Perhaps you should learn what these terms mean before you bemoan them.

Also, you claim that “a lot of good things have happened for average people” since 1975, pointing to “safer cars, nearly universal air conditioning” as two examples. You seem to want to link these to “liberal international trade”. Perhaps you’ve never heard the phrase “correlation does not imply causation”? In other words, have you considered other reasons that “material living standards have risen”, or that they did so despite your supposed reason?

Posted by GWolf | Report as abusive

The author neglects an important point–how the middle class got to where they are. They often achieved their status because of a college degree, which is currently being priced beyond what middle class families can afford. And how can a college graduate with a degree in teaching from a middle class home maintain a decent income of their own when they owe $60K+ in student loans (the cost of a public education.) We should not “soak the rich” but we should insist that the rich shoulder their fair share of the burden. Unfortunately, this will not happen if there is a Republican majority elected to Congress in November.

Posted by gangof4 | Report as abusive

Please explain further your definition of “rich” and “fair share”. I assume, like most Democrats, “rich” is any family making over $250,000 per year, regardless if its $251,000 per year or $10,000,000 per year. I do not believe I’ve heard Mr. Obama define exactly what he means by “fair share” although the proposed 3.6% increase in federal income tax, 2.9% increase in medicare withholding, loss of personal exemptions and itemized deductions, increase in cap gains & dividends tax rate, etc., 50% is probably approaching “fair share”. Or do you feel that should go much higher.

Posted by GoBucks10 | Report as abusive

The issue is not that we are not somewhat materially better-off than our parents generation. The issue is that it is only due to our technological advances, not true societal improvement. My great grandparents were farmers living not far above the subsistence level. My grandparents were solidly middle class holding a number of different non-professional jobs. My parents and their siblings were all professionals in the middle to upper-end of the middle class. I and my siblings and cousins are also upper-middle class professionals.
My father was educated at Harvard and the U of MD. I was educated at Boston University and the U. of MD. My father bought his first house at 34. I bought my first house at 33. My things in 2010 are a bit nicer than his things in 1977, but I am at the same place on the social ladder.
The plain fact is that the great social mobility of the 20th Century, whereby the great mass of our country became middle class, is over. It is now much more difficult to move up the rungs of the social ladder. The “promise” of 20th Century America (that if you work hard your children will be better-off than you) no longer applies.
The middle class is indeed not dead — it is stagnated.

Posted by nadie | Report as abusive

Easterbrook wrote: “Whether globalization even could be stopped now is far from clear.”

Nonsense. The 2010 difference in trade between the USA and Canada is not large: the ratio is 17/21. The difference in 2010 trade between the USA and Mexico is not large: the ratio is 11.5/16. However, for China that 2010 ratio is just under 1:4. And for 2008, the ratio for China was 1:6, i.e. the recession interrupted China’s march to the top, but only temporarily. (all data from http://www.census.gov/foreign-trade/bala nce/)

China can do this because it abuses the WTO, protecting its markets while demanding that the West open its markets. NAFTA was not a bad idea and we should have left it at that. No other free trade agreements should be allowed.

The USA used to have textile and furniture manufacturing sectors. Those jobs were outsourced.

The USA used to have millions of high-tech manufacturing jobs. Now those have all moved to India and China.

The USA used to have millions of call center jobs. Now most of those jobs have moved to India.

The USA used to have millions of software engineering jobs. Now most of those jobs have moved to India and other countries.

It used to be that American high-tech companies hired local talent. Now they are allowed to import hundreds of thousands of mainly Indians under H-1B and L-1 visas. Microsoft management is often seen before Congress begging for yet more.

I wonder where those former middle class workers reside in your twisted world.

http://saucymugwump.blogspot.com/

Posted by saucymugwump | Report as abusive

FLAT TAX. end of story.

Posted by RailBended | Report as abusive

“Nearly all the decline from $52,500 to $50,000 has occurred since 2007 — that is, during a recession. Most likely that loss will bounce back.”

Gregg,
Is that so?
How can you back your statement with facts, and show that it’s not merely wishful thinking?

And BTW, these days the US government is deeper in debt, and some say nearly broke, which means that taxes won’t stay as low forever…

Posted by yr2009 | Report as abusive

Taxes have not gone down. One tax in general has gone down a little bit, the Federal Income Tax, but nearly every other has gone up. Property taxes are certainly higher. Many state income and sales taxes have gone up. Gas taxes, cigarette taxes, alcohol taxes all going up. Park fees are higher. The lowering of one tax does not mean someone’s tax burden in general has been lowered. Add in the astronomical cost of college and medical insurance and there is no doubt the middle class is being squeezed out. None of the increased productivity has gone toward lower and middle class wages. It is all going to yachts and mansions.

Posted by anarcurt | Report as abusive

You are in la la land. The federal income tax is one tax among the many that people pay. Other taxes include but are not limited to: state income tax, local income tax, school tax, property taxes, and sales tax. NONE of these taxes have gone down. In fact when federal taxes decline, these taxes tend to go up, since money from federal sources are smaller. These are the taxes that eat away at middle class incomes, and they are also vital to healthy schools, maintaining infrastructure, and insuring quality of life. You also seem to have amnesia regarding how quickly healthcare, childcare, and college tuition has risen in cost in this country. All of these three expenses have been growing much faster than inflation and are items that people must have. Count that in and the middle class is a much more difficult position to achieve today compared to the past.

Posted by BB1978 | Report as abusive

So, in America around half of households are in receipt of federal benefits, and pay no tax at all.

This is not sustainable. Is the Federal government handing out benefits to people that are far too well off to need them?

If not, it seems like the middle class really is dead.

Posted by Dafydd | Report as abusive

In my point of view there is a economic cycle . In the cycle there need a recession for a upward an upward trend.Certainly I am having a great doubt in atomization.For example if we take the tollbooth, we are paying in highways .The complete procedure is now automated. So in that case it is controlled by a central unit.Of course some work will be available for the initial installation and for the software etc..This will help the banks .But if we took long term , in one or two years the company pay the installation cost for automation and the job for the maintenance of the system is only there. Here one think we need to consider for an highway of thousand miles how may jobs are axed here.Where these job are accommodated.Here we need the circulation of money.This is the way U.S economy grow up to this.That makes the more middle class here. Other wise the money began to accumulate in one place.It make billionaires more rich only.So they need to spend the money as charity to circulate.
Socialism is good but there is not a single person is good enough to implement the ideology.The human nature is not good enough to implement that.

Posted by DipuKurian | Report as abusive

This is infuriating big-goverment propaganda.

1. “All the angst is focused on pretax income — not after tax.”
So the middle class is better off if we look at their income AFTER the government takes a big chunk of it? That’s just dumb on the face of it. And the 44 percent (up from 29 years ago) who don’t pay any taxes are the growing bottom class. Even after you juggle the numbers, you admit middle-class income is roughly the same as a decade ago. Meanwhile, in that same time period the dollar has fallen to about 75% or less of its 2000 value. The same money no longer buys the same value.

2. “The angst also ignores rising benefits.
A generation ago, about 30 percent of Americans lived in a household where at least one member was drawing federal benefits — now 48 percent do.”
Nearly half the population existing to some extent on government largess indicates the middle class is thriving?

3. “Federal benefits to typical people are about to take a huge leap.”
See #2. How does more people sucking the government teat make the middle class better off? Only a big-government liberal would think this is a good thing. Where do you think that money is coming from? Not just the middle class, but our kids and grandkids.

4. “Those who believe the middle class is being destroyed generally have two policy prescriptions: soak the rich, and stop globalization.”
We don’t need to soak the rich, we need to let them fail when they make stupid decisions, not bail them out. And as the rich in this world equate to globalists (since they make their profits from cheap 3rd world labor), letting them fail would stop globalization.

Posted by WhoopdyDo | Report as abusive

I think the middle class is fine.

I’ve done a study of the number of households in upper, middle, and lower income groupings using census data covering 40 years (1967 – 2007). The data shows that the percentage of lower and middle income earning households has decreased and the number of upper income households has increased over that time span. You need to look at the long term (v. just a few years) to draw a meaningful conclusion.

The detailed data are on my blog: http://unrepentantcapitalist.blogspot.co m/

Posted by jambrytay | Report as abusive

saucymugwamp hit the nail on the head. I have been an educated computer professional since 1986. In 1996, I had headhunters calling me on a daily basis, companies offering bonuses to come work for them, and job opportunities abounding. Now, the only place you will see that is in Inida, China, Brazil… So called growth markets. The companies that control the I/T industry have quickly shipped the majority of these jobs to low labor countries in the guise that they would bring high sales as their countries develop. But, the fact is the only things we are selling there still are our jobs. It has gotten so bad at the company I work for, that when a person here on a H1-B visa left to go back to India, we couldnt even replace her with anyone living in this country. Even though the person was to work directly with US customers. We were only allowed to fill the position with someone from low cost countries.

You will see this repeated over and over until someone can somehow put a stop to it. Don’t tell me that less govt is the answer. Leaving this up to Business will only further result in futher job losses and the deepening decline of the middle-class.

Posted by fromthecenter | Report as abusive

Wow, I became more and more furious as I read this article. I don’t even know where to begin. He makes claims that the middle class makes the same amount of money as they always have… MORE even, but you’re not taking into account the fact that we just flat out have less middle class living in this country as we did a decade or 30 years ago. OK, they may make the same amount, but with less money IN the middle class as a whole, I’d say things are worse off… wouldn’t you?

Posted by the_sconnie | Report as abusive

Gregg – The middle class will soon be extinct! The following have all gone up: property taxes, sales taxes, medical insurance rates, public transportation, utilities, and college education just to name a few. Middle-class jobs have been lost to outsouring for ever. Foreclosures on middle class families are at an all time high.

If people are lucky enough to have a job and even some of us who have been lucky enough to get a raise, the paltry raises we get do not offset the rising cost of each of the above mentioned items that have risen. In my case alone just my commuter costs have gone up on average of at least 10% a year and projected to raise 25% this year are not offset by a 3-5% raise.

Gregg -its basic math which obviously you did not take or pass in grade school!

Posted by Comply | Report as abusive

Nice Article. I think there are real problems, if for no other reason than growing inequality, but it’s important to examine the issue from all sides.

Posted by bruce1963 | Report as abusive

Income levels and professions no longer exist to support a middle class as we in the US & Canada used to enjoy.

Posted by Simplerman | Report as abusive

@saucymugwump

What local talent? There is a serious demand supply gap as far as the no. software jobs and no. of qualified local talents. You need only go to the universities to see the class composition of an average computer science/ information systems program. If more Americans could be convinced to study IT, then this problem can be addressed. Sadly, because of the prohibitively expensive tuition fees and general lack of interest and awareness in prospects within IT industry, that will not happen. We need to fix that first.

When you are competing in a global world you have to be allowed to be competitive. American success stories like Microsoft, Google etc are better served being allowed to get the most suitable workforce for their needs be it local or outsourced. Let them get the best people at the right price point for what they need to do.

What do you think the armies of qualified Chinese and Indian IT professionals and prospective students are going to do if America is not perceived to be an attractive location to work and study? They are likely to find jobs and study elsewhere being some other countries competitive strength. Most of Europe has a severe skilled workforce crisis, as does America.

Posted by Mishti99 | Report as abusive

To Mr Easterbrook’s point is that many people in the so called middle class will benefit from the various government programs is reasonable. But I think in the past the middle class could be self-sustaining with the salary levels they had. They did not need a government hand out. The bar to say you are living a “middle life” in the US now costs more so the government has to subsidize it. I think even though the middle-class is not dead, I think it has changed to a lower definition. The only reason this is in the press is because the politicians are trying to stop the forces of the nature that are attacking the middle-class. The fact is the middle-class has been under attack for 200 years.

The bottom line is that the US does have to compete on price in global markets and frankly our stuff costs more and than stuff from China or elsewhere. Demand always gravitates toward the lowest cost producer. The US has done well on innovation in the past and we always will in the future. However, industries in the US get squeezed by countries that can do the same for less, therefore workers/middleclass get squeezed:

Drams went to Japan in the 70′s
Cars manufacturing: 80′s
Clothing manufacturing: 90′s
Software development: 00′s

The new paradigm in all economies is managed capitalism. China is using this to modernize their country as they missed the first industrial revolution. the US lower/middle class always bears the brunt of the changes in the economy. Our system is going to look more like these managed economies out of necessity not any politician mandate. There is a tremendous vested interest to make the American system work and it will morph to the market. The point is the American middle class will morph with it. The middle class will always exist and never die, but take any ten year time window and wait 10 years, the middle class definition will be different.

Posted by freedomadvocate | Report as abusive

the_sconnie,

you said ‘we just flat out have less middle class living in this country as we did a decade or 30 years ago’

you’re correct. we have fewer lower income too. in the last 40 years the ranks of the higher income have grown while there are fewer lower and middle income households.

fewer poor and middle, more rich…this is a problem????

Posted by jambrytay | Report as abusive

Yes, I will concede that as a college-educationed professional I am making about what I made 12 years ago. However, 12 years ago my salary included a pension plan, life insurance, health insurance (including vision and dental), paid vacation time, and paid sick time. With excellent performance reviews, I could resonably expect my income to increase over time.

No more. I was laid off, my job outsourced. My company realized that it needed some US employees, so eventually the layoffs stopped and the visa workers were brought in to replace many of the US workers laid off. Now, I have been hired back as a contractor only; working for the same pay as the H1B visa workers – about what I made 12 years ago and not subject to increase (3 years at the same hourly rate but until I can sell my house, I’m stuck).

The big difference is that now my income does not include ANY benefits; no paid sick leave, no insurance, no pension plan – and all of those things must now be purchased by me, with after-tax dollars, on the private market. I’m over 50, health insurance is unaffordable for me since it would cost about the same as my mortgage payment. Of course, trying to save for retirement (my original retirement savings were wiped out during the 2 years I was unemployed after my job was outsourced) at the income level from 12 years ago is tough. Gas prices, vehicle costs, property taxes, home maintainence and repairs costs – all are higher than 12 years ago. I have to pay more out of that salary from 12 years ago, so I don’t agree that it leaves me just as well off. 12 years ago I was that much farther from the retirement I could look forward to; now I seriously doubt that I will ever be able to afford to retire.

If the Republicans regain control, I am concerned that by the time I’m eligible (67 for me) to retire, that the Social Security benefits will have been gutted. They are already making noises about reducing both SS and Medicare (in only 14 more years I can go to the doctor if Medicare is still intact); they are trying to portray both programs as “unsustainable” and as “government dependence” and “welfare”.

So, with no savings left and no benefits and a salary level from 1998 but 2010 expenses – I just don’t see that I am as well off as I was in 1998. Many of my peers are in even worse straits. So, yes, I do see the demise of the middle class – not this year, but I do believe it’s coming.

Posted by MidwestVoice | Report as abusive

“$46,269 median for 1991″ is in no way “absurd precision”. The median is not a calculated or derived value. It is merely the observation in the very middle, separating the higher half of a sample from the lower half. Perhaps the author might learn what these terms mean before bemoaning them.

Also, you claim that “a lot of good things have happened for average people” since 1975, pointing to “safer cars, nearly universal air conditioning” as two examples. You seem to want to link these to “liberal international trade”. There is a phrase: “correlation does not imply causation”. In other words, perhaps there are other reasons that “material living standards have risen”, or that they did so despite the author’s supposed reason?

Posted by GWolf | Report as abusive

Who’s the middle class precisely, just distinguish Which groups of citizens would be, but anyway the parity is to be pointed at them indeed!!

Posted by iloveyoumyboozz | Report as abusive

The definition of terms here is misleading.

“Average” is not the same as “middle class”.

“After tax” is not the same as “after income tax”.

The proportion of the population that sees itself as middle class is decreasing markedly. Self-image is important to the middle class. So is power or the perception of power. Neither party treats the middle class as anything but dupes. Most middle class people under the age of 60 see themselves as dispossessed. Not all this hand waving will convince them otherwise.

The consequences for both our political and economic systems will be huge. The game is about to change for people who are *NOT* middle class as well, and the changes are not going to be pleasant.

Posted by txgadfly | Report as abusive

“Those who believe the middle class is being destroyed generally have two policy prescriptions: soak the rich, and stop globalization….”

Not true. I believe the middle class is being destroyed and also believe we should let the rich get richer by investing in America as well as promoting globalization.

Posted by CuriousOne | Report as abusive

“Those who believe the middle class is being destroyed generally have two policy prescriptions: soak the rich, and stop globalization….”

Not true. I believe the middle class is being destroyed and also believe we should let the rich get richer by investing in America as well as promoting globalization.

Posted by CuriousOne | Report as abusive

This just goes to prove the old adage “figures don’t lie, but liars figure”.

It’s like comparing apples to oranges. First of all why use “household income” without considering the history number of 1 worker households vs 2 worker households over time. Then there is the issue of private sector vs public sector wages. I think it’s a safe bet that those positions in the public sector have received healthy raises in the past 20 years, while those in the private sector have fallen. Then you have illegal immigrant workers. I have read where there is an estimated 12 million of them. Surely, by failing to account for them the data is skewered. Then there is the slide in value of middle class homes, erosion of their 401k’s, etc, etc. I could go on and on. This is laughable. Who are you trying to kid and why?

Posted by garrisongold | Report as abusive

RailBended: “FLAT TAX. end of story.”

you mean 36% of my income means the same to me as 36% of the income of a millionaire means to them?

someone who makes $40,000 lives a lot different than someone who makes $20,000. Yet I’ll bet someone who makes $5 million a years doesn’t live that much different than someone who makes $6 million and the difference is one million dollars!

You see my point? The less money you have, the more money means to you and the more it effects you. A flat tax of, say, 40% means little to the rich yet would aversely effect the non-rich (ie the people the Wall Street wages class war against).

Flat Tax is a windfall for the rich only and a noose for the rest of us.

Posted by TonTonMacoute | Report as abusive

With Fiat Monitory system, Middle class will never get feeling of total destruction for a while but when we will get it it may be too late hence it’s duty of all people to learn all this economics..of paper currency to survive.. I personally have made huge mistakes due to lack of understanding of system.. now knowing system I have started a blog to help learn it better with each other. ( http://amareshgangal.blogspot.com/2010/0 4/chapter-1.html
)
Thanks
Amaresh.

Posted by Amaresh_Gangal | Report as abusive

“only pre-tax numbers are used, because they’re the only numbers that are disturbing.” Really? I find the distribution of income numbers really disturbing and they are disturbing whether you are looking at pre- or after-tax income. Why? Because the top marginal rate is at historically low levels. That change in median income you cite? Why not compare that to change in the average income for the top fifth of Americans so we can see how the incomes of 20% of our population have risen exponentially while middle incomes have put-putted along during the past 20 years.

Posted by MM1711 | Report as abusive

[...] makes some very important [...]

Stephen J. Rose does offer an important corrective to “the middle class is dying” lament, but his analysis has some limitations: 1) it emphasizes gains over the last 30 years at the expense of stagnation over the last ten); 2) it emphasizes education gains over 30-40 years without really grappling with the fact that those gains have stalled — not entirely, but the U.S. now lags many other wealthy countries in providing educational opportunity; and 3) though Rose claims credit for discovering rising income inequality in the US in the eighties, he really doesn’t grapple with the extent to which it’s metastasized over the past 10-20 years.
Also, while you take a swipe at Timothy Noah, you don’t engage Noah’s estimates of the causes of rising inequality, in which “trade” accounts for only 10% of the rising gap, education failures for 30%, runaway Wall St. and corporate pay for 30%, and the (perhaps inevitable) decline of labor for 20%.
Ten years of economic stagnation, during which the gains of the top 1% and the top 1/10 of one percent swallowed a wildly disproportionate share of GDP growth, should not be airily dismissed as a nonproblem. The middle class may not be disappearing, but prosperity isn’t increasing, and rising income inequality threatens the health of our democracy and commonwealth.

Posted by adsprung | Report as abusive

[...] workers would get ahead, but now only half the country believes it. Or perhaps all the angst is overwrought and alarmist – things aren’t perfect, but they’re far from disastrous. Post your comment! Go [...]

[...] workers would get ahead, but now only half the country believes it. Or perhaps all the angst is overwrought and alarmist – things aren’t perfect, but they’re far from [...]

[...] This post was mentioned on Twitter by Lauren Young and Lauren Young, Louise DiCarlo. Louise DiCarlo said: Is the middle class dead? http://ow.ly/2JubS [...]

Brain-dead is more like it; caving in to pressure and giving away their hard-earned privileges by listening to the Pied Piper of economic opportunism (at the expense of others), especially the disadvantaged, being the willing slaves of corporate interests in a pathetic attempt to preserve their privileges, neglecting their children for consumerist addictions, the list of indictments is endless. Watching them fly about grubbing for their next deal reminds one of vultures in the deserts. Just like cowardly economic migrants leaving their homelands rather than pursue reform, this parasitic class genuflects willingly to tyranny, hates unions, and encourages exploitation of resources that dooms species and robs further generations of their birthright. Good riddance to them…

Posted by Snowyb | Report as abusive

[...] a comment » A little reminder, from Greg Easterbrook, that life in America is actually pretty good and getting better: Since roughly 1975, when [...]

Mr. Easterbrook neglected to mention that it now takes
two people in a household to make that average wage. And that one of the reasons for the massive debt in this country was a result of people using credit to retain their living standards as their jobs were shipped over seas and the top two percent sucked up more and more of the counties wealth.I guess life is getting better for people like him.

Posted by thfcts | Report as abusive

[...] makes some very important [...]

The only way out of this quagmire is to reduce government influence and regulation. The EPA has had a stranglehold on manufacturing ability for over 2 decades. The reason for off shore business was because the EPA and Unions made it entirely too expensive to perform manufacturing in the US. Now we have outsourcing and contracted jobs to Americans at H1B/L1 worker wages. Of course this will happen, businesses can not afford to pay top dollar wages to more educated, professional people who are required to manage or supervise union employees who make more than they do. The outsourced imports will do that work because they have different cultural standards that work in today’s business operations. While we coddle workers, they whip and berate them knowing they will not get the axe because they are working on the cheap no matter how many times one goes to complain to HR. Lastly, Our own politicians are as guilty of class warfare as the rest of the millionaires/billionaires. They have been making huge sums off of impending laws, lobbyists and under the table donations for decades. Time for term limits NOW.

It’s also time for the Fair tax or flat tax initiative across the board.

Posted by Gorio | Report as abusive

Amazing, beyond intellectually dishonest in so many ways, by redefining some terms, using accurate, but misleading statistics to measure certain things(as another reviewer said, using household income: yes, if the mother and father worked and all children grew up and lived at home and worked, there would be more middle class people?), and totally ignoring what people mean about a middle class standard of living and/or quality of life, not just pre or post tax income or consumption, etc. Yes, we have cable TV and cures for more diseases and safer cars and cheaper airfares to Europe. We also have virtually no good public schools, safe bridges, drivable streets in cities, moderately priced housing in low crime areas, more lives put on hold by frivilous lawsuits, a fortune for insurance of every kind, not just medical, etc. The costs for duplicating the quality of life of the 1960s for the average citizen has outstripped inflation by 3X or more. As one of a thousand examples, think tuition at a UC or Cal State school. The fact that his distortions of what is really meant by people using the “middle class” terminology are embraced by the MSM, which knows better, is suspicious at this time, especially.

Posted by jaazophyl | Report as abusive

The median income for the US may have been stagnant, but how has the distribution around that median changed? How has the standard deviation changed? How has the percentage of Americans within a standard deviation changed?

Posted by drewbie | Report as abusive

Like another reader suggested: check out a flat tax. Here’s the entire tax code:
1. Deduction = $20,000 (no one pays any tax on the first $20K)
2. Flat rate on anything above $20K: 20%.
And the Fed. gov’t takes in the same in personal inc tax as it does now.
Benefits: The real rate paid by those near poverty is 0%, the real rate paid someone earing $40K is about 10%. You don’t max out at the nominal rate until you hit about $250K in income.
Finally: the rich can’t avoid paying taxes because THERE ARE NO LOOPHOLES!
Disadvantages: CPAs are suddenly out of work (but as ingenious Americans they will find new ways to create (real) value))

Posted by mheld45 | Report as abusive

Re: Gorio, the only way i would agree to term limits is if lobbyists were the first to abide by them.
The rich, and i wish i were one of them, have steadfastly increased their share of the American wealth. A journalist on Fox stated that only the wealthy create jobs. If the wealthy create jobs it is because of the handling in America of their imported luxury cars their Italian marble and suits, their French kitchens and the booking of their foreign holidays.

Posted by Bejack | Report as abusive

[...] some nonideological contrarians like Georgetown economist Steven J. Rose, author of Rebound, and Reuters blogger Gregg Easterbrook, author of Sonic Boom) who argue that all this talk about income inequality is overblown. To me, [...]

This extremely shallow and misleading article ignores a wealth of easily available information.
Between 1947 and 1973, actual incomes rose at the same rate for everyone. But from 1973 to 1993, it was only the highest quintile, the rich, that enjoyed a significant increase in wealth. The top 1 percent of the nation saw its income level grow 78 percent between 1977 and 1989, and Federal Reserve Board figures from 1989 reveal that this elite group owned 40 percent of the nation’s wealth. By 1995, the figure had risen to 47 percent — more than $4 trillion in assets — while the upper quintile owned 93 percent. The result is that America is no longer a middle-class society. The two lowest quintiles (bottom 40 percent) experienced a decline in income during the period from 1973 to 1993, whereas the top quintile saw a transfer of $275 billion per year from the middle class to the rich. In 1973, the typical CEO of a large company earned about forty times what a typical worker did; today, he earns from 190 to 419 times as much. We have seen an unprecedented redistribution of income toward the rich. In terms of wealth disparity, the United States leads all other major industrial nations.

Posted by russellwhitely | Report as abusive

[...] published an extended discussion (more here and here) of the problem.  As Gregg Easterbrook points out, Elizabeth Warren, newly named as special advisor to President Barack Obama for consumer [...]

[...] James Chu 1/8 | Asian American Rags to Riches Success Stories | GoldSea From Poverty To Power: Celebrities Who Started With Nothing – Investopedia.com 10 Famous People Who Didn Rags To Riches: 10 Self-Made CEOs Who Started With Nothing (PHOTOS) Death of the middle class? Think again | Gregg Easterbrook [...]