In my opinion, what made this country great, a shining city on a hill to borrow a phrase, is a strong middle-class. But over the last 30 years, with an acceleration particularly in the last 10, the American middle-class has been shrinking. A growing income inequality caused by tax cuts which mostly benefit those at the top, stagnant wages, and the outsourcing of manufacturing jobs are largely responsible. A few facts and figures:
* "In the United States, two-thirds of the income growth during the boom of 2001-2007 went to the top 1 percent of the population. That is about a 60 percent increase in the average income of that segment of the population, while there was a 6 percent increase for the rest of the population.
Unemployment in the country as a whole today is 9.5 percent to 10 percent, but in the bottom 40 percent of the labor force it is 17 percent, while in the top 30 percent it is just 4 percent...the borrowing boom of the 2001-2007 period primarily benefitted the wealthy, while the impacts of the crash and austerity measures will affect primarily the lower and middle classes."
Exhibit A, the recession is over on Wall Street:
"Five of the largest banks on Wall Street -- Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley -- increased their total headcount in the first quarter, the first three-month jump since the start of 2009...The five banks posted combined net income of $16.2 billion in the first quarter, and three reported record fixed-income trading revenue. It was the highest combined profit for the banks since the second quarter of 2007."
Exhibit B:
"According to a study by a professor at the University of California, the average American household lost an astounding 36 percent of their total wealth. But the top 1 percent households lost only 11 percent. So the net result is that the wealth distribution is even more unequal than it was it was before the financial crisis."
* "In the past three decades, the income of the richest Americans quadrupled, while the income of the lowest ninety percent actually fell. Today, the median wage is lower than it was in the 1970s, even though productivity has grown by nearly fifty percent.
* The richest four hundred Americans were worth an average of about $13 million each in the middle of the century, using today's dollars. Now they average over $260 million each.
* The ratio of executive salary to the average paycheck during the mid-twentieth century was about thirty to one. In the last decade it has ranged from three hundred to over five hundred to one."
Also in the mid-twentieth century the top marginal tax rate was 91% as opposed to the 35% of today. Do you think maybe executives were putting that money back into their businesses and hiring people, instead of outsourcing the jobs to Bangladesh for 30 cents an hour and stashing the cash in the Cayman Islands, or buying a fourth vacation home?
* "The top 10,000 wage earners in the United States have a median annual income of $50 million and assets of $350 million--an increase of 550% since 1978. That top 0.01% paid 120 billion in taxes in 2009--just over 20% of their income."
* "Of every dollar of real income growth that was generated between 1976 and 2007, 58 cents went to the top 1 per cent of households."
* "An analysis of income-tax data by Congressional Budget Office found that the top 1% of households own nearly twice as much of the nations corporate wealth as they did just 15 years ago."
One more that I'll throw in as a personal observation and opinion. From post-WWII to the late 70's union members averaged about 33% of private sector employees. Today that number is less than 8%. I don't think it was just coincidence that about the time union membership took a downturn worker's wages started to stagnate and the income gap began to widen dramatically.
* "In the United States, two-thirds of the income growth during the boom of 2001-2007 went to the top 1 percent of the population. That is about a 60 percent increase in the average income of that segment of the population, while there was a 6 percent increase for the rest of the population.
Unemployment in the country as a whole today is 9.5 percent to 10 percent, but in the bottom 40 percent of the labor force it is 17 percent, while in the top 30 percent it is just 4 percent...the borrowing boom of the 2001-2007 period primarily benefitted the wealthy, while the impacts of the crash and austerity measures will affect primarily the lower and middle classes."
Exhibit A, the recession is over on Wall Street:
"Five of the largest banks on Wall Street -- Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley -- increased their total headcount in the first quarter, the first three-month jump since the start of 2009...The five banks posted combined net income of $16.2 billion in the first quarter, and three reported record fixed-income trading revenue. It was the highest combined profit for the banks since the second quarter of 2007."
Exhibit B:
"According to a study by a professor at the University of California, the average American household lost an astounding 36 percent of their total wealth. But the top 1 percent households lost only 11 percent. So the net result is that the wealth distribution is even more unequal than it was it was before the financial crisis."
* "In the past three decades, the income of the richest Americans quadrupled, while the income of the lowest ninety percent actually fell. Today, the median wage is lower than it was in the 1970s, even though productivity has grown by nearly fifty percent.
* The richest four hundred Americans were worth an average of about $13 million each in the middle of the century, using today's dollars. Now they average over $260 million each.
* The ratio of executive salary to the average paycheck during the mid-twentieth century was about thirty to one. In the last decade it has ranged from three hundred to over five hundred to one."
Also in the mid-twentieth century the top marginal tax rate was 91% as opposed to the 35% of today. Do you think maybe executives were putting that money back into their businesses and hiring people, instead of outsourcing the jobs to Bangladesh for 30 cents an hour and stashing the cash in the Cayman Islands, or buying a fourth vacation home?
* "The top 10,000 wage earners in the United States have a median annual income of $50 million and assets of $350 million--an increase of 550% since 1978. That top 0.01% paid 120 billion in taxes in 2009--just over 20% of their income."
* "Of every dollar of real income growth that was generated between 1976 and 2007, 58 cents went to the top 1 per cent of households."
* "An analysis of income-tax data by Congressional Budget Office found that the top 1% of households own nearly twice as much of the nations corporate wealth as they did just 15 years ago."
One more that I'll throw in as a personal observation and opinion. From post-WWII to the late 70's union members averaged about 33% of private sector employees. Today that number is less than 8%. I don't think it was just coincidence that about the time union membership took a downturn worker's wages started to stagnate and the income gap began to widen dramatically.
For the people who vote against their own economic interests, *quintile* is the eyes glazed over word - I don't think many people have any problem understanding what is "middle class", think of it this way - it's just like pornography - no one can explain it very well, but every honest person instantly recognizes it when they see it. What is a hard concept for most of those voting against their own economic interests to understand is that (most of) them are NOT middle class even though they define themselves as such! What is interesting here in SA is that those tea baggers who rail against the government are the ones with the nice federal government retirements!
Middle class can be defined as being able to start life with a living wage, being able to pay for life's basic necessities and also a few basic niceties. It means being able to pay your bills on time, including medical, without fear of going into bankruptcy. It means being able to live without incurring debt for that basic living with a couple of niceties. It means being able to save money. It means that home ownership is a reasonable expectation. It means not having to use the equity in your house to borrow against except in extreme emergencies and extreme emergencies don't happen except very rarely (you don't even KNOW anyone who has had an extreme emergency). It means that your retirement benefits are stable and untouchable by the company that promised them. It means that you can start your adult life in one income bracket and lifestyle and work your way into a better one, and that your children can do the same. (It is what upwardly mobile really means.) It means that you can afford the education you desire and need. It means that dreams of travel or other pleasurable ventures during retirement, and even, retirement itself, are realistic and achievable dreams. It means that when you are 80 years old, you can expect to not to have to work and still have a good life - with air conditioning AND heat and you are quite sure any canned goods you consume are NOT meant for domesticated animals. It means that any time you do have to borrow money (and that is, remember, only very occasionally) you have the ability to pay it back in the short term. Being middle class means that you can survive on one paycheck for those times your family may need someone at home. Being middle class means that your family can actually take a family vacation without having to forgo utilities to do so.
IOW, a nice life - maybe not the life of a rock star - but certainly a fulfilling one and way less stressful than what people are forced to live nowadays. And before anyone says that type life is not possible - it is - it is the life my parents had.
I think seeing how there has never been a middle class like the U.S. had after WW2, there is no real question as to what constitutes a middle class.
Besides the middle class is being destroyed by the rich and their bought and paid for puppets in Washington. So the real question is what WAS the middle class, and how best to describe it.
What does it mean to be middle class? Does it mean being solidly into the part of society in which one has sufficient income to meet one's family's most basic needs, have something left over to save for a "rainy day," and something to save toward a child's education and one's retirement, while paying off a mortgage before one retires from full-time work?
How do you define the middle class, in order to suggest that it is shrinking?? I've been playing with the question of what percentile groupings in the income and net worth distributions constitute the middle class, and I'm not comfortable with the results.
Check out this blog post for more on the data, taken from the Federal Reserve Board's 2007 Survey of Consumer Finances: http://lvtfan.typepad.com/lvtfans_blog/2010/04/americas-wealth-distribution-2007-wealth-concentration-part-3-of-3.html and, more generally, http://lvtfan.typepad.com/lvtfans_blog/middle-class/
they'll sleep like babies...reptile babies.
Crash of 2008, not 2007. Although the bubble was beginning to burst in 2007....
Score:
RHM: 100
Oil: .............
Good response, RHM!
Let's face it....when the unions were strong, the middle class was strong. And all this started around 30 years ago. Quick! History lessons: who was inaugurated on January 20, 1981??? What political party?
What "voodoo economic" theory is associated with this actor/politician? Which economic theory has been totally responsible for the crash of 2007? And, not to belabor the point (but I will) which president was the one who was all for breaking the unions and killing any effective government?
Personally, I know that when corporations such as GM were allowed to outsource their manufacturing jobs (with no reprisals), my solidly middle-class hometown DIED. Thousands of jobs vanished....all sent to Mexico, India, China, where workers were paid pennies (or pesos) so that GM could squeeze a few dollars more of profit. And look where it got them...they had to be bailed out anyway. Did any of them stop to realize that because their former workers were no longer employed, they couldn't afford to buy the products they used to make? And GM, in its infinite stupidity, not only outsourced jobs, but produced inferior products. Why, when the government bailed out the auto corporations, were there no stipulations that in order to receive bailout money, the jobs would have to be brought back to America?
The middle class is dying. And it's the GOP that is killing it.
Most financial crisis are merely manufactured slumps design to give the rich more opportunity to swoop in and buy up more stuff at bargain prices.
If you notice CONservatives want to attribute ALL gains to war. War is their bread and butter. If they can't take your stuff through legitimate means they will just declare war on you and kill you for it.
One more reason why they favor "cutting connections"... They like stagnation, it allows them to move in and take control. As a whole they are slow and methodical. No real imagination or innovation coming from themselves. They must steal others ideas in order to survive.
Look, it isn't about financial this or economic that. It is about control.
They want to spout off that out-sourcing wouldn't have happened if the poor would have paid 100k for their education. When it was the CONservatives who facilitated and gave tax breaks to corporations who did out-source in the first place.
Wake up! These "people" are evil. They don't care about America, all they care about is how well they and their own do. If it means stealing from their neighbors to do it... they will, and sleep like a baby afterward.
Ever notice how CONservatives are suppose to be tough. Get R Done and all that. What you are really seeing is institutionalized psychosis. A ruthless psychotic mentality that rationalizes things like torture, murder, and wars for profit. You think them stealing all of our money is going to bother them one bit?
MUAHAHAHAHAHAHAHAHA
bammm,
the saddest part is how many folks actually believe that in order to be prosperous we must kiss the collective ass of corporate america in hopes that they will rain their benevolence upon us becuse surely they care mor for people and country than profit margins...
The US was on top because we had the industrial base built in the war, and millions of returning veterans who were motivated to start families and careers. Since then, the rest of the world has caught up to the US in education and industrial development.
To start with first things first -- we had the industrial base built in the war. That is not true. Our industrial base was built before the war - our industrial base, for the purpose of war, was repurposed to making war machines and war paraphernalia and was run by women, Rosie the Riveter. After the war, there were no jobs - women were encouraged to quit, so that the returning soldiers could have jobs. VA benefits allowed many returnees to go to college and paid living expenses while they did so. It took a few years, but it became boom because all those returning soldiers were spending lots of government money. That spending of government money, spurred the production from war to peace-time goods. The more goods produced, the more jobs were necessary. It was close to the time of the depression and everyone knew and understood that spending government monies helped the economy jump start. And jump start it did - to roaring success.
As to the rest of the world catching up - they did that by the US, under republicans, sliding back to the brink of 3rd world status, not by other countries bounding ahead, although, using American technology, almost all industrialized countries have moved ahead of the US.
It is the republican "idea" that the US shouldn't "throw money" at its schools. The once greatest schools in the world are now crumbling buildings, taught by bureaucrats and *Kristianists*, ignoring science and ridiculing intelligence and accomplishment as of the "elite".
The system we have now, gives us fools who believe it is due to interaction with other countries we have lost jobs, and do not have the ability to see that their own fascist policy obstructionists have redistributed the wealth of the US into the hands of the uber rich - which is what Des' post is about.
Even though Americans were already the most productive workers in the world before the economic crisis, in the third quarter of 2009, average worker productivity increased by an annualized rate of 9.5 percent, at the same time unit labor cost decreased by 5.2 percent.
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Figure that for each dollar the vast majority had to spend after taxes in 1961, the vast majority in 2006 had that buck and four more dimes after income and payroll taxes. And at the top? Now, that’s a different story. For every dollar those at the top had after taxes in 1961, they had $27.70 in 2005.
For many, the reality is that two jobs produce the same or a smaller after-tax income than just one job did three and four decades ago.
Facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions:
Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007)(Thanks, Codycap)
Not only are wages stagnant, they aren't keeping up with real costs at all. Health insurance that cost $100 a month for good, full coverage 10 years ago costs $600 a month for 80% high deductible coverage. Electric rates are soaring, tuition has increased two and three-times over, and overall living expenses are just becoming impossible for two-income families to sustain without mountains of debt.
The only two things that are declining in price or staying stagnant with wages are cheap plastic goods at wal-mart or cheap plastic food - one sends jobs overseas, costing us much more in the long run, and the other kills our health, increasing already out of control costs even more.
We need a true middle class champion who can stand up to the GOP and corporate America now more than ever.
The mid century years are gone, never to return. That was a different time. Europe was recovering from the devastation of WWII, Asia was just starting the climb to full industrialization, and the rest of the world was irrelevant, other than as a source of some raw materials. The US was on top because we had the industrial base built in the war, and millions of returning veterans who were motivated to start families and careers. Since then, the rest of the world has caught up to the US in education and industrial development. Anyone who thought that wasn't going to happen wasn't paying attention. The other countries are fully competitive with the US in fields other than manufacturing now, and we will have to deal with that by becoming more productive or more innovative.
If you really want to force white collar jobs to stay in the US, cut network connectivity to other countries. Without freely available high bandwidth connections, no office jobs would have moved overseas.