The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it
My comments below don't necessarily negate this conclusion, but I have serious skepticism about using THESE PARTICULAR stats to "prove" this it.
Here are the statistics to prove it:
Let's slow down here just a bit and analyze these statistics objectively without a 'proof' of something in mind...you know, the way SCIENCE is supposed to be done.
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.
I was going to comment on all of these one-by-one, but I realize that to save time and space, I can lump them together.
ALL of these COULD mean that the middle class has less money; or, it COULD mean that the middle class is making certain lifestyle choices that on balance trend away from planning for the future and investment. Based on what I see, and analysis I read and hear, I think the latter is an important component that "your" conclusion above ignores.
There are many middle class Americans over the last 20 years that have lived beyond their means and extended their debt. Just because one is middle class does NOT mean one can live like the uber-rich. But that's the cultural mindset that has taken hold. Cars, homes, toys (Harleys, boats, atv''s, campers, vacation properties), have not been 'in reach' for most middle class people historically, but in the past 20 years or so, accumulation of these things (multiple instances) has occurred to the extent that money is spent now rather than saved, or worse...borrowed against future savings.
There is no clear cut conclusion in those stats, at least as far as causality goes. It feels good, I suppose, to lay 100% of the blame on the evil business people who are trying to maximize profits; but reality is, while some blame does lie there, a good bit lies at the feet of greedy, materialistic middle class Americans who just plain old don't know how to manage the money they *DO* have.
Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
See above. If you spend 10-20 years living high on the hog and laughing/bragging about all the 'stuff' you have (and have not really PAID for in a spiritual way - NO, signing a loan at the bank is NOT paying for something, nor is using a credit card), bankruptcy may be the only out when it comes time to pay The Piper (the evil banks that loaned the money the first place).
Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
The housing costs have risen because people got loans to buy ridiculously expensive houses and, well, 'whatever the market will bear.' Now, I feel real estate developers are about as close to the nexus of 'economic evil' as many here think of general big business, and the developers certainly don't help matters.
But, the bottom line in the bottom line. I agree 100% that greed is the underlying problem here, but I maintain that it is equally the greed of the BUYER that has led to this. Okay, so I am being a bit simplistic here (we don't want full economic dissertations on the board, so I am trying to be fairly brief), but if middle class people, say those with combined household earnings of around 100,000 per year, did not go out and try to buy $500,000 homes (for whatever reason), developers would not have been able to push the prices that high.
I think it is a very sad statement of US economics how much houses have risen in price / sq ft in recent years, but an equally sad indictment on the square footage people have bought. Again, I reiterate - what does a couple really need to squander their life savings on a 3000 sq ft house for?
(I'm not trying to be the arbiter of what people can and cannot buy with their own money, but if you are borrowing from a lender, it's NOT your OWN money! That's my point).
Debt, even housing debt, = slavery.
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.
Again, that's by choice. Those banks did not make all that money in a vacuum. They had customers who freely gave them that money (in the form of interest on loans and investment of their own money ... by taking risk in other words).
What is the repayment ratio on a 30 year mortgage? It's something well over 50% in most cases, so on a $300,000 loan, you pay close to $200,000 in interest alone. Further, most mortgages are set up so that you pay mostly interest initially; that way, the bank gets their money even if you sell the house after 5-7 or even 10 years. At that point, about the only equity you have is the down payment (which has generally LOST value do to inflation).
Why would most folks DO that? You are throwing money away...money that COULD be put away for a REAL down payment on a house 5-10 years later so you (a) borrow less, (b) pay less interest (c) can finance for a shorter term (so the repayment ratio is less).
But no...most middle class Americans have not taken this approach (we didn't, either). Most buy a house with no real savings for a down payment and combine that with buying more house than they really need/can afford and I ask you...
Is it any wonder the banks have all the money now?
The greed of the consumer (to own that big fancy house in that 'special' neighborhood, for example) is a BIG part of the problem. All of it? No...things are not that simple. But, this factor should not be underestimated in importance.
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.
And more companies ARE global with MUCH higher gross revenues. Companies have diversified tremendously since the 1950's, so management is much more complicated. I think there is merit in examining this statistic for causative factors, but I urge a bit of caution in making a blanket comparison to the 1950's to now.
The business landscape is COMPLETELY different.
In other words, a mailroom staffer or secretary's job has not changed much, nor has a welders or some other 'line' employee. But the job of the upper management has gotten MUCH more complex (in part to increased legal and regulatory interference) and competitive. Maybe this is a factor, maybe it isn't. I offer it only as food for thought.
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 nations wealth.
Devil's Advocate: So What?
*IF* the bottom 80% of Americans had more than enough money to live a reasonably healthy lifestyle, would this stat be a problem?
Is the issue one of equality? Or, is this meant to imply that 80% of Americans are in poverty? I mean, again, SO WHAT?
It does not bother me that there are people that earn/have more than I do...I have enough. This statistic on its face is nothing more than an attempt to incite 'class warfare' and has by itself no meaning.
A much more meaningful statistic is the poverty rate, which in all age categories has DECLINED since the 1950's:
So, if less people are in poverty than 50 years ago, more people have access to the middle class. It does not matter if the upper class has grown faster (which I would think would be taken as a POSITIVE thing).
In other words, the presentation (as given by the conclusion "the rich get richer and the poor get poorer") of this statistic suggests that the SAME people who were rich in the 1950's got richer, while the middle class shrunk. But the opposite is true. MORE people (those who USED TO BE middle class) became upper class rich, and fewer people are in poverty...have moved from poverty to the middle class.
Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
Again, so what? That's a contract issue between and employee and an employer. Who cares?
In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
Okay, this is a BIG problem. That money has to come from somewhere...that is, those private sector workers. This trend cannot be sustained. This is the economic version of a perpetual motion machine.
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.
Why is this a problem? The top 1% have the money to invest in corporate wealth...the middle class should be SAVING FOR RETIREMENT, or SAVING for buying a house they CAN afford, or generally living within their means.
Is this another jab toward 'equality'? This is like saying "people with more money have more money."
In America today, the average time needed to find a job has risen to a record 35.2 weeks.
If the private sector is over burdened with taxes and undue regulation, one cannot be surprised when said private sector chooses not to spend the assets it still has control of on hiring employees.
Also, PART of this (how big a part I don't know) is the issue of "the job I want." Some people are not working at all vs waiting tables, hammering nails, digging ditches and the like to get SOMETHING coming in.
Our government has made it clear in at least the last year, probably the last six years or so, that there are strong incentives to NOT work. Extension of benefits, calling unemployment a time to get back to exploring 'leisure' (I don't recall the exact words used), etc, are not conducive to motivating people to get to work at SOMETHING.
There are people who lollygag for a significant percentage of the time they can receive benefits, then seriously look for work as those benefits get closer to expiring. I have one such person in my family...he's admitted it to me. "Why should I work, when I can get paid to do what I want for 13 weeks (or whatever)?"
This stat assumes serious job hunting during those 35 weeks, and I question that. Sure...some do. But a lot do not. I'd like to see a serious, properly done study that examines that, but it would be fraught with error due to self reporting nature of the research.
More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
This kind of stat is often quoted to indicate how bad things are (as a political football). Doesn't this include all the low wage jobs teenagers have (fast food, movies, etc)? What was the state 10 years ago, or 20? Has it changed much?
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.
There are some VERY real problems with the food stamp program. A couple of years ago, they were ADVERTISING food stamps to get people to go on them. If it has grown, perhaps it is in part due to that curious bureaucratic phenomenon of an agency or department to work hard to show its worth...
Are they giving food stamps to illegals now? If so, how long has that been going on?
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.
So, the minimum wage laws are the problem? I thought so, too.
American COULD have those jobs for those wages...but they won't. Again, part of this is a lifestyle issue...Americans want jobs to pay for toys (cell phones, spinning shining wheels on cars, video games, etc) rather than basic essentials.
There are VERY real cost of living differences between China/Cambodia and the US...A Cambodian working for 22 cents per hour buys food; again, Americans want "more" than that.
Cue "Evil Materialism Music."
Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.
Ah, another good class warfare case study. If true, this stat is very sad. But PART of this is the fact that wealthier people tend to make better lifestyle choices across the board (diet/nutrition, living conditions, etc), including WHEN TO STOP HAVING CHILDREN.
It is a sad fact that welfare benefits go with children and some people game the system in this way. More children means a bigger check each month - and not all (if any, in some cases) of that money actually gets to the children.
There are very real statistics that show number of children is negatively correlated with income, with sharp changes at or near the poverty line used for welfare benefit calculations.
Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
YEA!!! Let's celebrate this! MORE PEOPLE are becoming millionaires! That is wonderful for them; I wish them the best.
Oh, wait, I forgot...we must all be equal so trout out the class warfare propaganda again....
The top 10 percent of Americans now earn around 50 percent of our national income.
Unless you are saying that more people are starving to death because they are unable to feed themselves, this is indicative of NOTHING.
Oh yes, I get it...class warfare. If someone else "has," I must hate them because I perceive myself as a "have not."
Marx would be proud of whoever compiled this list; it is straight from the manifesto, if a little modernized.
(AHD, I don't assume this is YOUR list, conclusions or comments...it does appear as an article you copied from somewhere, but I gather you agree with the conclusions/comments?)