Hollowing Out of the American Middle Class
Rather than rely on one of our commenter’s recitation of the arguments of his overseers, let’s take a look at *real data* that shows how squeezed Middle Class Americans are:
That is more than 30 years of wage data and it is adjusted for inflation. Look at how flat the wages are for the middle 60% and the bottom 20%. These are not wages that have kept up with the vastly increased costs over the past 30 years, while the upper 1% have done just fine, thank you very much.
Next up, a look at how all of the vaunted productivity gains of the American worker have not shown up in American worker’s wages:
And a comparison of income growth during the period of the great building of the American Middle Class (1947-1973) with the last 30 years:
A look at the actual median growth in middle class wages vs. what that growth would have looked like if inequality did not escalate over the last 30 years:
The last three figures come from a fantastic report called the State of Working America by EPI. It is worth going over there and seeing what the assault on middle class workers looks like when you pull together the data. It isn’t pretty. And most folks know it. Workers are being asked to do way more with way less, pay more for their health care, pay for other work-related items, pay for their retirement — all of which represent pay *cuts* to workers who are at best getting COL increases to their paychecks. Interestingly, they’ve been bullied into looking at this state of affairs not with resentment and anger, but with fear — at least *they* have a job. But in the meantime, owners get paid handsomely on these workers work. Or if you are a taxpayer paying for the services you so badly want, you are getting more value at someone else’s expense. And saving your politicians from ever dealing with you honestly about what those services you want actually cost.
There is one more figure I want to post that shows the average growth in wages vs. the growth in consumer credit. Over the past 30 years, the American middle class got more in consumer credit that it did in income growth. I can’t find that at the moment, but there is plenty here to show that the middle class isn’t getting such a great deal. And that the effort to make sure that the middle class doesn’t get any help is being done by middle class (barely, most likely) wingnuts with more aspirations than an ability to look out for their own interests.
I will easily rationalize your cherry-picked data and put it into context later.
But now, I’m off to do fun, weekend stuff! But before I go, let me bow down to the great George Meney, FDR, Walter Reuther and other pro-labor folk for giving us the weekend…lol
The “strict father” model it makes perfect sense that the top 1% prospers disproportionately. They are virtuous and hard working as evidenced by the fact that they are wealthy. They look at those graphs and don’t see a rigged system, but an orderly universe.
Can’t wait for NH to embarrass himself with showing how this data is “cherry-picked”. What we’re going to get, folks, is the rationalization that Jason330 outlines — that it is good for rich people to get richer as the rest of the US sees their wages deteriorate.
And there won’t be any data that you won’t laugh at — i.e., from Heritage or Cato or some such place that is specifically funded to make sure folks like NH are pushing the overseer’s interests first.
Rank and file conservatives look at those graphs and see chickenscratch. Four in ten of them believe in strict creationism (that’s almost 40%!) Mathematics and economics are like alien technology to them. If a liberal shows them the graphs, they are sure they are part of some socialist conspiracy.
Excellent post Cassadra. Nothing like factual outcomes to show how economic conservatism has failed to trickle down and lift all boats. For anyone to even suggest that the facts are otherwise is not only mendacious but callously insensitive to the plight that millions of American poor and middle class people have experienced for decades. But then class traitors don’t give a shit about their suffering peers.
no no no. socialism has just been damming the river. if we remove all taxes totally, the flood of money will water the plains of the middle class. ALL HAIL THE FREE MARKET
Sorry… Nothing of the sort.
The wealthy (major corporate owners) have funded a department of propaganda (Fox News) with the specific intent of fooling one class of people (the ignorant) into voting for wealthy interests on nearly every issue.
The ignorant in America are the social conservatives. They’ve been tricked into supporting all sorts of crazy things (like huge tax cuts for the rich), and end up screwing themselves along with nearly everyone else.
And now they’re attacking unions based on similar lies. What those conservatives fail to realize that when the unions are busted, that virtually ALL jobs will have lower salaries. It’s a direct attack on the middle class designed to benefit only the wealthy.
Those ignorant conservatives are only hurting themselves by helping the very rich in nearly every instance. And that’s why the wealthy have teamed up with social conservatives. Social conservatives are the only group stupid enough to screw themselves over, again and again.
So, into the ditch we all go. Well, everyone except the wealthy.
Not to repeat the obvious, but all that needs done, is tax the top 1% at a 40%.
And, of course, allow them to write off “real” capital investments. The goal of raising these rates, then allowing the “real capital” write-offs, is not to fund the treasury, but,… force them to bury their money into the economy so it can’t be taxed… It worked well for the years of Truman, Eisenhower, and Clinton.
The president can jawbone companies about putting their money into investment, or one can make them want to do it on their own. The latter course always works better.
All those giant American companies we used to decry, who didn’t pay any taxes on their millions of earnings….. did pretty well back then and hired a lot of people…
Let’s have more government programs, that is the answer.
I’m tempted to not address Rove’s comment because it is so weak. But I started thinking about the government programs I read about recently, that are in need of cutting.
Like the tax abatement program which BANK OF AMERICA used to not pay a single penny in federal income taxes. Or the government program that shoved billions of tax dollars in the pockets of Boeing executives and shareholders while returning $0.00 in tax money to the treasury.
Then or course there is the government program that Citigroup exploited to receive tax subsidies to support its lavish executive salaries while paying $0.00 in taxes.
As I recall John Kerry wanted to cut the government program EXXON-MOBIL used to pay $15 billion in taxes in 2009. That program diverted that tax money away from the American Treasury and to the Cayman Islands. George W. Bush decided to not cut that program.
Great Job Cassandra!
The truth is that escalating housing, fuel, and medical costs have stripped middle class the ability to build savings and wealth. Over the last decade financial institutions not government encouraged the use of home equity loans, credit cards, and pay day lenders. Middle class was bombarded with daily mailings insisting that you should “ let your equity and savings work for you by spending your savings” All this in order to offset the lack of growth in real wages.
Kavips – Spot on:
These absurdly low tax rates are encouraging wealthy companies and individuals to hoard money. The balance sheet does not lie.
These absurdly low tax rates are encouraging wealthy companies and individuals to hoard money.
And yet at the highest levels our politicians from both parties still talk about policies to “free up capital.” Which is code for “more tax cuts for the rich.”
The way to “free up capital” is to free it up from the capitalists. Not by confiscating it, as the wingnuts like to claim, but by once again making hiring and reinvestment the most attractive option.
We did have one opportunity to reverse or at least slow this trend. It was lost on December 13 2010.
Republicans had a chance to cut billions from the deficit by ending tax rebates for oil companies. They chose not to take it, instead made cuts for child nutrition and programs that help people.
It is not reasonable to expect Republicans to raise taxes on the rich. It is not in their nature. It is however reasonable to expect Democrats to raise taxes on the rich when necessary. We are supposed to be the smart ones who know how to read charts.
When we were in the House majority, it was just too uncomfortable to point out that Democrats were now the ones implementing the tax policies that continue to hollow out the middle class, and was working deals to undermine Pelosi. It was considered rude to point it out.
And even now, it is considered rude to suggest Democrats hold Democratic politicians accountable for supporting policies that hollow out the middle class. Wouldn’t be prudent.
I wish every Democratic blogger in the US had posted an article like this, with charts, at the end of November when it became clear Obama wasn’t behind the House bill to let the tax cuts for the rich expire. Even that might not have turned the tide, but at least we’d have credibility in the future when we once again began pointing out how damaging those tax cuts are.
Now, we are once again falling into our familiar minority easy chair from which we can criticize Republican tax policies, now that we can’t do anything about it. Except that Democrats now own the Republican tax policies.
The Bush tax cuts for the rich are dead. Long live the Obama tax cuts for the rich!
We are reliving the Guilded age of the 1920’s. I would like to see a grapf of how many democrats and republican Senators and Congress are millionaires. How many were millionaires before they entered politricks. Was’nt Eisenhowers rate at nearly 70%? So 40% is very low.
Roll Call:
The Senate’s famed “millionaires club” is becoming a little crowded.
According to a Roll Call analysis of Senate financial disclosure forms filed in 2010, more than half of the chamber’s membership, 54 lawmakers, reported a minimum net worth of more than $1 million. Another four Senators fell short of that mark by less than $100,000.
In addition, more than half of the Senate’s membership saw their individual fortunes grow in 2009, the period covered by their most recent disclosure reports.
237 millionaires are in Congress that is 44% of the total.
Millionaires make up 1% of the General Public, so they are WAY over represented.
It is becoming increasingly difficult for a non-wealthy person to win a public office.
While there are strict limits on how much a party or individuals can donate to help a candidate, there is no limit to how much an individual can donate to his or her own campaign. Here in Delaware, for many candidates, half of the campaign fund comes from the candidate’s own bank account.
In fact, many parties expect candidates to donate significant of their own money. Now, we even see candidates selected not for their integrity or their experiences, but instead they are chosen based on their net worth. How else can we explain the candidacy of Michelle Rollins?
We can pass a law in Delaware that says a candidate can only donate $600 to his or her own campaign.
Jim
How about a $20,000 spending cap?
I am about as left as I can be but Jason even I find “destitutes for Congress” an odd thought.Its not that somebody has some resouces its how they deal with them:)
Big companies have been hoarding cash for 30 years or so.
I’ve been making this point, since the media has swallowed the BS about companies nervous about investing — the whole uncertainty narrative. Companies *will* invest when they think that consumers are back and buying stuff.
But the 30 year duration is about the duration that American middle class wages have been largely stagnant. I think that the accumulation of cash (and the resulting very nice balance sheets) have more to do with the fact that these companies no longer feel compelled to pay their employees commensurate with their vastly increased productivity, rather than beneficial tax laws.
YES MASTER
What will it take for teapublicans to realize, their relationship, as members of the republican party, is similar to a master/slave relationship; “they, the people,” being the slaves, as rich republicans tell them, what is right and good.
How long will it take, before the teapublican slaves realize, that it is their “rich brothers” who actually will own, control, even more; teapublicans, even less. Who is tightening the noose, by hiring those would will work for even less, even when their favorite “affordable” workers” aren’t American. Not saying anything pro or con about that, except, “rich brothers” favorite workers, aren’t you, teapublicans.
Think, teapublicans. What are teapublicans actually supporting, rather than their own best interests? The ultra rich/slave relationship. Or the ultra rich/non American worker relationship. What’s next? Hello there teapublican, want to be my slave laborer or starve?
Teapublicans, kindly listen carefully to Rush’s, Hannity’s, Beck’s, O’Reilly’s PR. Keep in mind, where corporate jobs are going and who is very successfully doing their labor. “Ultra rich republicans are very fat and happy with that. Your $40-$98 jeans were made at $1 total cost. Notice “the people” who are now highly employable, they aren’t teapublicans, frequently aren’t American, don’t live in America. As ultra rich republicans have their way with you, teapulbican, it will be too late.
Then think about the poor, the middle class, even some upper middle Americans, who call themselves “republicans,” and are willing to doing the voting and bidding for the happy union of ultra rich/third world workers. Think about how tea publicans are damaging their own interests, leaving teapublicans interests, out of that fat and happy “rich republican” picture.
Clever PR by the “ultra rich” wouldn’t you say, teapublican? Of course “ultra rich brother” can afford to hire whomever it takes, to get your vote and to take more from you, as the new workers can (and willingly do) give them cheap, good labor.
What can poor, middle teapublicans give? Numbers at the voting booth, something the ultra rich lack.
What else can teapublicans give?
Who will loose their real estate values, their meager savings, their future?- a massive poor/middle American population.
Who will need to buy “rich brothers” expensive fossil fuel products, rising food products? – a massive poor/middle American population.
Who will loose educational opportunities, chances for their next generation to move forward? – a massive poor/middle American population.
Who will loose their health insurance, their social security, the protection of their natural resources, their food and drugs, their safety, etc?
And finally, who will work for peanuts to barely survive an American massive poor/middle class.
Who will work for $2, OK, who will work for $1?
Do the highly paid PR men, Rush, Hannity, Beck, O’Reilly, ever mention that to “they, the fools.” as they solicit what the “ultra rich” need most – teapublicans votes, to gain political power for the “ultra rich.”
What do the “ultra rich” fear? That one day, the “we,the people,” (who are overwhelmingly the poor/middle class/some upper middles) will combine and join forces to fight against those who are robbing, destroying their country and middle Americas right to exist.
What the hell is all this horseshit about “Middle Class”? What is Middle Class? Nobody can define it, just like Poverty. Middle Class is a term used by politicians to make the WORKING CLASS feel better about themselves. If you get paid per hour wages, YOU ARE WORKING CLASS. If you get a salary and have hours and additional responsibilities piled on you by your employer, YOU ARE WORKING CLASS. So get used to it, and GO TO WORK. You’re not the only ones who have taken a pay cut.
If the pay cut resulted in a lifestyle change (dropping cable/cell phones, canceling a vacation, scrimping on groceries, etc., etc., etc.) you are middle class. If the pay cut resulted in bitching only… you’re not.
Hope that clears up the confusion.
You’re not the only ones who have taken a pay cut.
Wrong question. The right question is, who has NOT taken a pay cut?
What the hell is all this horseshit about “Middle Class”?
A keeper. Right up there with Boehner’s “So be it.”
Big companies have been hoarding cash for 30 years or so.
I totally get your overall point. But I don’t think this is literally correct.
The article you linked to was a bit light on real sources.Actually, it is based on a single study. I’ll withhold judgment until I look at the study.As I recall, the CW on the 1987 crash is it was a crisis of liquidity. And in the late 90s companies were burning through all cash on hand.
Companies *will* invest when they think that consumers are back and buying stuff.
Agreed. Also, they will invest when they fear taxes more than they like hoarding cash.
OK, I think I have it straight now. It is based on the study, which is available only in abstract, and the charts are based on Federal Reserve data.
What bugged me is the Fed data came by way of the Financial Times, and I really don’t know the methodology. It is probably fine, but something bugs me about it.
Any person who looks at any set of data must immediately look at such data critically, even skeptically. That is what I did when cassandra originally posted them. It is not to undermine or discredit the source, the data or the publisher; it is merely to point out that historical context must not be eschewed.
Thus, let me attempt to expalin some of the contextual inconsistencies below (btw, these explanations jumped right out for me when I originally perused the data. I haven’t given any deep thought to it since).
I will start by addressing each chart in ascending order:
The first chart, like any and all charts, takes a <em specific snapshot in time (e.g., the years 1979 to 2007). Look at the lower left-hand line graph. It is at a valley in 1979, but actually is coming down from a higher point. In other words, whether a ‘one-percenter’ earns $350k on avg. in ’79 and in ’07 averages $1.3 million is insignificant in the grand scheme of things.
The ‘one-percenters’ will always be well ahead of the bottom 20 percent and middle 60 percent respectively. In fact, most of the ‘one-percent’ crowd constitute a large percentage of ‘liberals’ as well as ‘conservatives’ and ‘centrists’ alike. Thus, if this wealth inequality is so bad as most on DL profess, why is it okay for George Soros, Warren Buffett and Bill Gates, not to mention the not-so-poor Hollywood elites, to not spin the Capitalism-is-evil narrative?
Because no matter how one looks at it, they all became enormously wealthy (using a well-heard term on here) “on the backs of the middle class.”
And I’m sure without Gates’ vision, risk-taking and can-do attitude, millions of people would not be otherwise employed in good paying private and public-sector jobs. Or if it weren’t for Soros to utilize his unique talent of understanding foreign currency markets, along with realizing the socio-political ramifications of such investments, half or more of all Liberaldom’s largesse would not otherwise have see the light of the day.
Buffett? Too bad Berkshire Hathaway is made up of ‘evil’ corporate interests.
Finally, the 1979 ‘start-point’ is convenient given the aftermath of the 1973 – 1979 ‘stagflation’ years after the OPEC oil embargo and other factors. Likewise, the 2007 ‘end-point’ cuts off the beginning of the worst economic recessions since the Great Depression.
Chart #2:
I love this one! Again, the EPI analysis uses 1947 for its benchmark. What was happening around ’47? Only something called a post WWII boom, where the GI Bill, full employment, the advent of credit to consumers, the early start of mass-produced factory goods on assembly lines, etc.
But take close notice of the 1975 to 1980 mark. What happened? It was the beginning of a technology and innovation breakthrough. Machines were being developed with lightspeed that enabled many industries to reduce their workforce. Now, the work of 4 – 6 humans could be done with one machine.
Most importantly, and this is still true today. Because of globalization, competition and free trade abroad, U.S. engineers and productivity gurus had to evolve to stay competitive. Hence the advent of process, productivity and problem-solving techniques that would forever change the world. The Toyota Production system, Total Quality Management, and Six Sigma methodology, just to name a few.
I happen to be a trained TPS Sensei and had been afforded the opportunity to be trained by the best Japanese process gurus on the planet. Thus, from 1975 – 1980, that’s when the Japanese brought their ‘transplanted’ auto manufacturing facilities to the US in places like Marysville, OH (Honda) and Georgetown, KY (Toyota). TPS, TQM and Six Sigma now envelope nearly every manufacturing and non-manufacturing entity in the U.S.
Finally, with 9.5 percent to 10 percent unemployment (‘Real’ unemployment is actually around 16.9 percent) weighing down hiring the last three years, the poroductivity levels of all corporations are booming! It’s a combination of TPS methodology, computer and software innovation and businesses doing more with less people. It all equals to unparalleled productivity gains vis-a-vis median family wages.
Chart #3:
Again, this chart fails to give a footnote that says: 1947 through 1973 was a boom time rarely seen in modern times. WWII ended with millions of people entering the workforce, Eisenhower began the Interstate Highway system which, along with a new evolving financial tool (revolving and easy credit), people buying low-cost mass-produced vehicles and the ability for products and goods to be shipped virtually anywhere via train, truck, ship or plane.
Also, take note of the two bottom percentiles and their nacent growth. They are the poor, minorities and other citizens who always struggle during down times. Look at today. The unemployment numbers for teens, blacks, hispanics and those without a high school diploma are miles apart from the rest of society. Thus that trend always will be seen (sadly).
Of course in 1973, all hell broke loose. OPEC, oil embargo, stagflation, Watergate, etc. all contributed to a decline from the bourgeoing middle class (again the publisher quietly takes out the 1973 to 1979 data).
Conversely, the 1979 to 2009 ‘snapshot’ conveniently includes three major recessions, an Internet stock market bubble and a recession and housing bubble not seen since the tulip craze of a few centuries ago in Holland.
Chart #4:
This chart is prefaced on mere speculation and supposition. And again, the ‘gulf’ that exists in the 2007 to 2009 section reflects the Great Recession (in fact both lines are trending downward).
Many economists or biased think tank groups can equally cherry-pick charts, graphs and other datum points that show a whole other story. This is where historical context and critical thinking are needed to challenge something that points to a single-cause fallacy, namely the wealthy.
NH, I was talking about the charts linked in the comment Cassandra offered up later on corporate cash. The charts in the post are fine and do accurately represent the trend of wealth flowing from the working classes to the rich.
“Any person who looks at any set of data must immediately look at such data critically, even skeptically”
hell yeah. This one time i saw this “data” that said i needed to cook my chicken for “40 minutes” (some socialist scam) and 375 degrees… obviously some Obamabot acorn member dictated how we should measure temperature….. anyhoo i dont have that kind of time, and 375 is for liberal wimps. Well i set that bad boy to 750 and wouldnt cha know it? my house burned down. damn liberal lie machine.
newshound, you can be as critical as you want about whatever conspiracy you wanna get all lathered up about… the fact is, all these graphs do is put into easy to look at pictures (for the moronic) what is plain as day and can be seen IN ACTUAL PROOF all over the country.
shorter your entire comment “DONT BELIEVE THE LIBERAL MEDIA WHEN THEY TELL YOU THE SKY IS BLUE!!!!”
It is hard not to feel sorry for the gullible Newshound isn’t it? He does not even get the glaring irony of a teabagger pretending to be a skeptic. A real skeptic would spend a few minutes examining his own cockamamy beliefs. And yet, his head if full of the most implausible wingnut nonsense that goes unchallenged day by day and year by year.
no jason, his head is full of “original thought” and “careful examination” of “”””facts”””””
or he is the only american in the last 80 years who’s income has risen at the same rate as inflation and cost of living.
Hate to poop in your cornflakes, Pandora. But if you had to drop your cable and scrimp on your groceries, then YOU ARE DEFINITELY WORKING CLASS. Now get back to work, unless you’re retired or skating on disability.
It’s DMAIC!
I’ve been trained by ravenous seals off the rocks of Santa Cruz and the charts tell me that wealth is disappearing from the bottom 90%.
Oh my. Skating on disability? Quite a revealing comment.
“Now get back to work”
I’m a stay-at-home mom.
It isn’t so hard to be mad at NH — who counters a bunch of well thought out data analysis (using a well known dataset) with a bunch of deflective BS. As if there are people here who wouldn’t be able to tell that he was talking out of his ass and not even addressing the data shown.
He is an idiot, but he has the wingnut deflection strategy down cold. Unfortunately, like wingnuts everywhere, they presume that everyone is as stupid as they are.
You can read that post and know he isn’t a sensei of anything.
Finally, some “original thought” from Newshound. Unfortunately for him, it’s the kind of “original thought” that gets you a D in class.
Thirty years, houndboy, is not a “snapshot.” It is a period of time that encompasses more than a generation. While you list a number of things that happened in those years, you conveniently leave out what was happening in the previous thirty-year period, the one you denigrate as seldom seen before or since: The apogee of American unionization, a marginal tax rate far larger than what we have today and a growth rate unmatched since. Yes, a good portion of that can be chalked up to the after-effects of WWII — but we also used a good portion of the profits rebuilding the rest of the West, in addition to building the interstate highway system here.
In short, you have provided context for the lack of middle-class purchasing growth, but have failed to explain the concurrent continued growth of the highest 1%. Do you really think you’re going to make it into that 1% someday? Is that why you’re a traitor to your class? Or do you just hope to join Delbert as an overseer on ol’ massa’s plantation someday?