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The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

So why are we witnessing such fundamental changes? Well, the globalism and "free trade" that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn't tell us that the "global economy" would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

Here are the statistics to prove it:

• 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
• 61 percent of Americans "always or usually" live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
• 36 percent of Americans say that they don't contribute anything to retirement savings.
• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
• 24 percent of American workers say that they have postponed their planned retirement age in the past year.
• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
• For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
• In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
• As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
• Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
• In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
• The top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.
• In America today, the average time needed to find a job has risen to a record 35.2 weeks.
• More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
• or the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
• This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
• Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.
• Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
• The top 10 percent of Americans now earn around 50 percent of our national income.

Giant Sucking Sound

The reality is that no matter how smart, how strong, how educated or how hard working American workers are, they just cannot compete with people who are desperate to put in 10 to 12 hour days at less than a dollar an hour on the other side of the world. After all, what corporation in their right mind is going to pay an American worker 10 times more (plus benefits) to do the same job? The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new "global" labor pool.

What do most Americans have to offer in the marketplace other than their labor? Not much. The truth is that most Americans are absolutely dependent on someone else giving them a job. But today, U.S. workers are "less attractive" than ever. Compared to the rest of the world, American workers are extremely expensive, and the government keeps passing more rules and regulations seemingly on a monthly basis that makes it even more difficult to conduct business in the United States.

So corporations are moving operations out of the U.S. at breathtaking speed. Since the U.S. government does not penalize them for doing so, there really is no incentive for them to stay.

What has developed is a situation where the people at the top are doing quite well, while most Americans are finding it increasingly difficult to make it. There are now about six unemployed Americans for every new job opening in the United States, and the number of "chronically unemployed" is absolutely soaring. There simply are not nearly enough jobs for everyone.

Many of those who are able to get jobs are finding that they are making less money than they used to. In fact, an increasingly large percentage of Americans are working at low wage retail and service jobs.

But you can't raise a family on what you make flipping burgers at McDonald's or on what you bring in from greeting customers down at the local Wal-Mart.

The truth is that the middle class in America is dying -- and once it is gone it will be incredibly difficult to rebuild.

http://finance.yahoo.com/tech-ticker/th ... l?tickers=^DJI,^GSPC,SPY,MCD,WMT,XRT,DIA

Been known for decades.

A lot of this has to do with the stagflation of the 1970s. During that time labor unions were more powerful and demanded workers' pay keep up with inflation. Then a lax monetary policy from the Fed caused inflation to rise, which elevated wages, contributing to even more inflation and wage increases and so forth. The fiasco was a huge embarrassment to the Fed and the federal government. Since then, in the last 30 years, interest rates have been low but inflation has been steady. This was pulled off by putting pressure on wages and boosting profits for global corporations that would pay out profits as bonuses or ship them overseas. Since the 1980s, war has been unleashed on organized labor and the average worker. The average worker has suffered hugely in the last thirty years. Wages are depressed while the cost of living has skyrocketed. The middle class has a predatory financial system, predatory employers, predatory health care system and a predatory government that enables all this.. It's only a matter of time before they are wiped out completely. The shamelessness of our current politicians, the huge influence corporations exert on the government, and the detached nature of the public does not bode well for change.

So you say having a private corporation to loan money to the country at interest when the country can make their own debt free money was an OK decision in 1913 ?

Nice selective revision there Jon.

Actually, it was the oil price shock that caused recession and unemployment, which the government tried to counter with excessive quantitative easing and increase in government stimulative spending (in addition to Vietnam war spending and the failure of Bretton Woods, along with labor contracts) which caused a stagflation wage/price spiral. The theme is quite similar to today - using the wrong tool for the wrong ailment. It was a supply problem not a demand one. Interestingly, what ended up fixing it (along with deregulation) was allowing punishingly high interest rates and pushing the country back into the recession everyone wanted to avoid.

-SS

Wait for Jon to tell us we need more stimuli spending.

I fail to see how the theme is similar today. Currently we have a demand problem and there are more signs of deflation than inflation. On top of that, deregulation was no "fix" -- look where we are today.

As far as any revisionist history goes, it looks like you and I both blamed the Fed. Which brings me back to my point: higher wages can only be demanded by a more organized labor force. Something we do not have today. In fact, the demolition of organized labor in this country has meant falling wages for the middle class. The current median income has fallen 12% since 1972 (adjusted for inflation of course). Despite the enormous growth in GDP over the last thirty years and average productivity up over 50%, wages still fell. Amazing.

Where are you getting your data?



And disposable income, which is what really matters, is up 43% from 1972 to 2005.

Oops. yeah. I was looking at median household income which has risen 12% since 1972, not fallen. The point is that wages have increased slightly while productivity has increased dramatically. Part of this is due to technological advances, but that doesn't explain why the average US worker is more productive than his/her European counterpart. In addition, if you factor in the decrease in average household size from 3.1 people in 1970 to 2.6 in 2008, you account for some of those gains in disposable income.

but at the same time US consumes 50% of global energy and outputs just 20% of GDP...huh ?
Productivity maybe. Efficiency - definitely not.

Its more or less because of better conditions here. I get for example 21 days paid holidays. US gets what 10 days? 14 days?

^ Yeah pretty much... Heck, the French are actually paid not to work, right?

Well.. I dunno about the French paying NOT to work. Are you not confusing paid holidays? or welfare?

I was just joking about the French... IIRC they work the least hours of any other country(avg ~1600hrs/per year for Paris).

Doesnt matter. Fact is that people are making more, and have more to spend and you are complaining that it is still not enough. You wont be happy unless everything is under some union type communal ownership. And even then I am sure you would find something to call unfair.

Not really. This is what I object to: an unbalanced economy that disproportionally favors the extremely wealthy over 99% of Americans. The gains Americans saw in the last 30 years is nothing compared to the exponential growth of wealth for the top 1%. The government is supposed to represent "the people", not just the millionaires.

Its just not fair. I mean we should all just get something for nothing.

Think of it this way, you are better off than most of the world so quit being such a baby.

Oh please, Jon. Not the myth of the evils of deregulation again. Its just SO tired and devoid of even the faintest shred of truth. Big business loves big government, and big government loves big business.

Maybe you could produce a nice graph or something of the number of regulations (and the number of industries regulated) on the federal books since 1970. Or perhaps the cost of compliance of those regs today and then. Or perhaps who were the Presidents who actually created the most regs or did the most deregulating. And lastly the fact is, that the deregulation of the airlines, transportation, and telecom sectors in the late 70's had the most profound positive effects on productivity/prices/and GDP growth of any (even in spite of ) other govt action or policy. Its not deregulation that got us here Jon, nearly the opposite, and is only compounded by the total ineptitude/incompetence of the govt, lawmakers and its regulators to do the job that people/small business are forced to depend on them to do.

And its only a demand problem because people and the government are insolvent under the burden of their debt. It is precisely this misguided/misrepresented/corrupted diagnosis and subsequently misguided policy (and their unintended consequences) focusing on the symptoms of the underlying problem that is the common theme I was speaking of.

And there are loads of inflationary pressures out there. They simply aren't in the gamed CPI and they aren't equal in magnitude or uniformity as all markets and products respond differently to the debasement of currency. It will likely show up in areas where there weren't many middle-classers who live paycheck to paycheck, it will show up in places where the wealthy buy first (real assets - you know, high-end RE, bonds, equities, and top-tier products like boats and planes, art, Aston Martin's and whatever). Where VW's, Chevy's and a case of beer at Walmart might not budge at all or even fall, for a while (we don't tend to buy substantially more milk, eggs, shampoo, TP or cars if were given more $). Do you have any doubt whose assets values are going to rise first and fastest? And besides, inflation is not only experienced when prices rise faster than wages or , it also occurs when prices/costs don't fall as fast. And what have wages done for the last few years and what has the CPI done? How bout the price of a Co-op in Soho, or the upper west side? How bout those bonds/bills you were talking of, or the stock market, or industrial commodities? See any inflation there? And lastly on the flip side of things, has anyone here spent any less on their food, medicine, rents or other bills (quantities/items consumed being equal) ? - cause I sure haven't. The inescapable and irrefutable fact is our $ is worth less today than yesterday, and at the same time nearly everything costs more (at subdued rates or no), along with the costs of doing business are so disproportionate and the disparity only grows, with the middle class and small business forced to consume substandard govt services with an ever-debased currency, ever-increasing tax burden ,and the corporations and government shaping and defining what those services are and their costs. In the end, you can have limited deflation and widespread inflation at the same time - both being the effect of the government and its corrupt and fickle policies and incompetent and negligent enforcement and execution of the same.

The poor/middle classes problems begin and end with the government and its policies and actions.

-SS

Here we go with the generic graphs again.

The system is called market reality. As alluded to in the article U.S. workers are now having to compete with other workers in emerging economies with newer infrastructures. While the U.S. may enjoy some advantages like relative political stability, (believe or not) less corruption and more worker productivity, its not enough to counter labor markets finding a better balance overall. The average worker in the U.S. may meet his Chinese counter part somewhere in the middle. The net effect will be less egregious economic disparity since 99% will be poor, but comfortable enough they will not put their TV remotes down to rise up and kill the rich and steal their sh*t..

If 99% of people are in a given economic condition, can it be considered poor? By what measure? Should it not be considered normal?

Has effective financial regulation increased or decreased in the last 30 years?


If the government is insolvent, why did the interest rate on a 10 year bond hit 2.86%? If you don't like that metric, how about credit default swaps on those very same bonds? In the last month, they have been oscillating around 40 basis points. That means the market rates the likelihood of a US default at four-tenths of one hundredth. The "magic marketplace" clearly doesn't see default as a threat.


Yes, completely discredit the CPI because it doesn't support your argument. It tracks inflation on everything except food and energy, mostly because commodities can (and are) influenced by speculation which could distort the overall picture. You focus only on commercial paper (I am including commodities here because prices are influenced by "demand" in futures) as indicators of inflation. In fact, all it indicates is speculation. In fact, many believe we are entering another food bubble much like the one in 2008. That is not evidence of inflation in the real economy. If inflation was such a worry, why isn't it priced into bonds? The "magical marketplace" get it wrong again? With QE ended, shouldn't bond prices have fallen?

Oh, and if you don't like the CPI, you can check the Cleveland Fed’s median consumer price inflation number or personal consumption expenditure deflator? All signs show trending deflation. Kind of makes sense when the government is the only one spending. If the government stimulus exceeded the demand hole in the economy, we would see inflation. As we know now, it didn't. Most estimates put the gap at $2 trillion, far from the $700 billion stimulus (excluding the AMT patch). This is why we are seeing deflation, there is still a large "output gap".


I agree. I think we have a disagreement on which policies are responsible.

You contradict yourself though. You close on the above quote, but earlier in the same post you stated:

Fixing your comment for accuracy it becomes:
The poor/middle classes problems begin and end with the government and with big business (since they are totally and completely intertwined) and their policies and actions and backroom deals.

that last post was one big quote, SS.. maybe you screwed up the post bbcode?