Saturday, September 1, 2012

The Thirty Year Assault on the Middle Classes

Changes in the Middle Class 1983-2010

A national Pew Research Center survey has found that, since 2000, the middle class has shrunk in size, fallen backward in income and wealth, and shed some of its characteristic faith in the future. Interviews with 1,287 adults, describing themselves as middle class—adults whose annual household income is two thirds to double the national median, ie $39,418 to $118,255 in 2011 dollars, incomes adjusted for household size and scaled to a three person household—were combined with with data from the US Census Bureau and Federal Reserve Board of Governors.

85% of these middle class people say it is more difficult now than it was a decade ago for them to maintain their standard of living. Of this 85%, 62% say much of the blame lies with Congress, 54% say it is with banks and financial institutions, 47% say it is with large corporations, 44% with the Bush administration, 39% with foreign competition and 34% with the Obama administration. Just 8% say a lot of the blame is with the middle class itself.

For the first time since the end of World War II, in the decade 2000-2010, mean American family incomes in all income levels declined. But this middle income level is the only one that also shrunk in size, a trend that has continued over the past four decades:

  • in 2011, it included 51% of all adults
  • in 1971, it included 61%.

The fall in this level of the middle class was by some getting richer, and some by them getting poorer.

The higher income level:

  • in 2011, was 20% of adults
  • in 1971, it was 14%.

The lower income level:

  • in 2011, was 29% of adults
  • in 1971, it was 25%.

But in this 40 year interval, only the higher income level increased its share of national household income. It now takes in 46%, up from 29% four decades ago. The middle tier now takes in 45%, down from 62% four decades ago. The lower tier takes in 9%, down from 10% four decades ago.

For the middle income level of the middle class, their loss of wealth is worse than their loss of income. The median income of the middle income level fell 5%, but median wealth (assets minus debt) declined by 28%, to $93,150 from $129,582. During this period, the median wealth of the upper income level was essentially unchanged. It rose by 1%, to $574,788 from $569,905. Meantime, the wealth of the lower income level plunged by 45%, albeit from a much smaller base, to $10,151 from $18,421.

These figures plainly show that most of those considering themselves middle class are being conned by the state, academia and the media. Frankly, they are poor! Even what is the middle level of the middle class is not really well off, and that wealth is declining, leaving only the truly middle class, those who are well off by any standards, albeit not in the megarich class, are getting richer.

The reason is plain in this figure from the Pew Survey with some annotations.

40 Year Class War of the Rich on the Middle Class and the Poor

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