Thursday, September 9, 2010

The Middle Class in America Is Radically Shrinking.

Increased government regulations and meddling is resulting in the destruction of the middle class. If you are part of the favored elite, things are just fine. If you are savvy, you can still do well, but for the person who simply expects to climb step by step via salary to a better life, things are not so good.

Michael Snyder has put together a list of the changes that indicate the middle class is shrinking. Note that much of the shrinkage of the middle class comes in sectors where the government has put in programs to "help":

• 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.

• For 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.

• 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.


  1. I think the shrinkage of the "middle class" can best be explained by the ravages of inflation.

    The middle class, in the first place, tends to consist of paper-pushers and other low-to-mid-level white collar jobs, jobs which abound during an inflationary period where individuals and companies lose site of true value and real productivity and begin bidding up marginal and make-work activity in a quest to spend all the new-found money on something.

    So, the first stage is that this "middle class" of faux wealthy people (office workers and managers, real estate brokers, stock brokers and wealth advisors, over-sized sales and marketing teams, "human resources" bureaucracies, etc. etc.) appear working jobs that aren't really that useful or productive outside the inflationary context.

    All of these people, meanwhile, hold their wealth in paper terms-- either dollars or in paper titles to wealth such as mortgages, stocks and bonds. The value of these paper titles to wealth get steadily eroded over time, especially the dollars, as the original values are overinflated to begin with.

    Then, as the inflation winds down (due to slowing money growth or an outright stasis or pullback in money growth), a lot of the inflationary businesses are revealed to be bankrupt, the white collar jobs are revealed to be unproductive, etc., and they are eliminated in the renewed search for real values.

    With this elimination goes the people's mortgages (which their now upside down on), their livelihoods (rising unemployment), their paper wealth (falling stock market), while their savings in dollars have already been heavily extracted from to begin with and will be wiped out nearly completely in the reactionary wave of mass inflation to follow.

    Kind of reminds you of that saying, "Live by the sword, die by the sword."

  2. I don't see the pertinence of many of these points for validly demonstrating the "decline" of the middle class:
    - kids below the "poverty" level;
    - what the upper 1% earners are doing;
    - what the top 5% earners have done;
    - what executive pay is;
    - what the "value" of real estate is that banks own, etc.

    Seems more like an attempt to condense the left's politically-correct arguments against business, while leaving out the underlying government causes.

  3. What I don't understand is what people consider the middle class. Clearly if income is the differentiator then anyone earning between $30k and $63k are middle class. Yet, according to our wise overlords running government, anyone that makes under $250k is middle class at best. According to income distribution in the US, that person making $167k is in the top 5% and $250k in the top 1.5%. IMO, this middle class dying crap is mostly to serve the benefit of the politicians that want to scare us into voting for them or against their opponent.

  4. None of this means anything other than their is a revolution and churning back to reality from a government based myth. Despite all the MSM lies and political liers trying to blame this on the free market (basically us ordinary people making a living and trying to live free of the ruling class -thieves) people see the reality that GDP of the nation is obviously a rathole from the taxation and spend spend government and not been on the rise after all these bastard decades, and that inflation has been eating their lunches. You see you can lie to people about CPI and GDP numbers but you can't hide the fact they can't eat when you talk how the economy is recovering. Most tyranny ruling classes will definitely use this information to fund more of the same wealth redistributions in a call to arms, with the end results being a tyranny of Soviet style. Never waste a good mess to give government more power even when government (ruling class of thieves) has founded the mess to start.

    Whats really wrong with this article, it doesn't address that people who make more often spend more. Basically its not what you make but how much you keep that determines your wealth. Granted GM may make more than me in revenue, but I'm still richer. These are going to be rocky times and its going to be the prepared that hurt the least, all the government faithers have a big world of hurt coming, and that includes all the fako capitalist that don't know the first thing about producing items really needed by someone else. A fako chrony capitalist would be something like Ross Perot's government funded operation or for that matter Lockheed, or any other numerous loser defense companies. GM could also be a favorable chrony capitalist corporation along with all medical companies along with you get the picture. The government plans all these entities to operate like USPS which is basically the ideal government loser entity held close the US government chest which still loses money and hires all village idiots but in the rarest situations.

    Nothing please the ruling class more than to talk about your disparaging lack of income, blaming it on the shoulders of a giant that made your rich in the free choice of free market. All the while political demons of red and blue color trying to get you to blame the last bastion of hope and turn fascist or socialist. They say to you...Let me take care of you...Let me lead you...Let me take your money...Because I'm smarter than you...No what you want more than you...And I despise with you the people who haven't given up hope for a free world without me.

    Lets do ourselves a favor and plan for the depression that the government democans and republicrats ruling class has planned for us. Start producing items for one another and investing in our own industry, and tell these pompous politicians NO MORE OF OUR TIME, MONEY, OR BLOOD. Aren't we broken enough?

  5. I don't think the author's intent is to incite class warfare. The two biggest issues hurting anyone trying to come up the economic ladder is inflation and taxes.

    You can't have a vibrant 'middle class' when 50% of their before and after tax income are eaten up by local, state, and federal government. I've lived in a states with and without an income tax; taxes matter and any left liberal who tells you it does not is little more than despicable slave.

    I've dabbled in some stocks and looked at the IRA as well. I'll be screwed out of a substantial percentage of that as well. The tax code puts taxes on interest on savings, a capital gains if you sell 'your' home for a profit, you are supposed to report sources of other income.

    The warfare state does not help either anymore than the welfare state, but progressives and Huffington post liberals have no ideas or policies conducive to wealth creation.

  6. Basing middle class on income is always deceptive. Poor kids have cable tv, cell phones, and $200 athletic shoes.

    As I get older, I see all the stuff as anchors, not benefits. I may not be middle class soon by choice. I would rather drive a banger and work from home than work 10 to 20 hours just for car payments and commuting expenses.

    In short, if I find my Buddha nature, I will naturally consume less and never again be a significant part of that 70% of the market dependent on consumer spending.

  7. Forty acres and a mule isn't a bad prescription for the children of the devastated middle class. The forty acres might take the form of eco-villages where food and shelter would be held in common. The mule would be intensive labor aided by what energy sources and means of utilizing them might be available. The currency, aside from barter, would be self-generated and self-canceling. And no more schools of the kind we're used to.

    True enough, government, at all levels, may have attained total, tyrannical dominance, but a dysfunctional bureaucracy might be unable to enforce its dictates.

    In other words, the post-American yeomanry and peasantry, though poor by current standards, may inherit and then rebuild what may be left of the land mass of North America.

  8. Geography plays a big role in whether you are living a middle class lifestyle. In the areas where incomes are high (like NYC area where I am) taxes are brutal, housing costs are hateful, etc. If you don't make at least 2X the US median household income, you will be living like a poor person: no hobbies, no vacation, car crappy enough to be unreliable, crappy house at best but probably renting, and of course no savings. If you think of middle class the way most folks do (average house, average car, semi-safe neighborhood, adequately funded retirement, etc) then $250k per year is still pretty middle class in my area.

  9. I think the trouble with this is that "class" is irrelevant in this context.

    Way too many people, when observing, for example, that "the top 10 percent of Americans now earn 50 percent of our income," move on immediately to the conclusion that therefore, the top 10 percent must be blameworthy in some way. Or that at least, it's not good for there to be a very wealthy group at the top. Both conclusions are false.

    The tendency to blame the wealthy is only reinforced by resorting to using phrases like "the favored elite." As for me, I would never call the fat-cat pull peddlers, most politicians, and their ilk an "elite." Only if one insists on depicting the whole society as a pyramid with a top and a bottom---and with the top being measured purely in terms of income---could those people ever be thought of as an elite. They are robbers.

    Otherwise, the country is full of many different elites. Certain outstanding doctors, concert pianists, masterful technicians, imaginative and tenacious businessmen---no room to list them all from every walk of life. Most of these people have earned every penny they have, and more power to them, and I wish there were more of them.

    Aside from making the tired old class argument, Michael Snyder (quoted above in the original post) does point out troubling things.

    The huge numbers of Americans working in service jobs: if the economy really falters even further, who are they ultimately going to serve? The paper-thin financial margins on which huge numbers of people are attempting to survive: if the dollar fails or the economy blows up, how are they going to survive further on? The significant number of people who are unable to find work after looking for a long time: if the economy is strangled to the point of businesses not being able to hire, what can be in store for the country? The super-salaries being earned by public officeholders and associated bureaucrats, in comparison to most everyone else: if it's not what you know but who you know (and who you speak to, and in what tone of voice) that alone matters, then nothing remains but strife and misery, and scratching and clawing, as happens in any dictatorship.

    Those things may not trouble some of the posters here, and that's fine, but they trouble me, and I am not immune from them.

  10. I was a bit puzzled with the US$250k figure, but it turns out to be the figure for household income. So a couple where each person earns $125k is among the 1.50% of Americans at the peak of the earnings pyramid.

    Now, in many western nations including the USA, households have reduced in size, in particular single-person households have grown rapidly in numbers.

    So there should be a natural drift in the stats for the last 4 decades that shapes a more steep curve. Just consider that in the early 60s single person households were rather exotic (10%, now more than 35%). Part of the growth of single person households is due to longer living widows.

    How much "decline of the middle class" is thus more evaporation of the larger family with multiple wage earners?

  11. Federal jobs definitely pay more than the private sector and the skills needed are less. That's why I joined them:)

  12. @price
    I agree with you and disagree with with Taylor. I'm not sure from this article how they are defining the "middle class", but, my thinking is that the middle class, by definition, is a person who earns about the average income.

  13. The executive to worker pay ratio is all one needs to look at to understand the problem.

  14. Service economies like ours are doomed to failure. Many service jobs are simply not needed when times get tough. People will wash their own cars, do their own hair, mow their own lawns, pick their own stocks, etc. Lots of these jobs are unnecessary.

  15. For those of you who cannot see the forest for the trees, here is a table of what has happened to textile manufacturing employment in North Carolina from 1996-2006.

    This same scenario has been replicating itself through virtually all manufacturing industries in the US for the last 20-25 years.

    Basically, decent paying manufacturing jobs are disappearing, while every cent corporations save through outsourcing winds up going to CEOs and their executive cronies, while formerly middle class workers are reduced to food stamps and Medicaid.

  16. Most of the so called middle class are like sheep and that been "domesticated" by third rate public schools, mass media drivel/misinformation, consumerism, and an ever burgeoning police state. Some naively think they have a say in how their country, state and local government is run but it's obvious that the political class is doing the bidding of the powers that be such as the military/industrial corporations, Wall Street banksters etc., and these entities don't give a damn about "the people" or what they want.
    Most of the middle class is on a horrendous treadmill that is going faster and faster to nowhere. Trying to keep up with paying bills, raising a family, and just dealing with the myriad complexities of life eat up all the energy and resources of the typical middle class person so that many just want to tranquilize themselves (with pharmaceuticals, idiot TV, alcohol etc.)and cannot effect change or even learn about what's really going on. Basically what we have here is a new world order serfdom that is the very antithesis of the freedom that the original American Revolution brought forth into the world.
    Hopefully, there will be enough (20% ??)people from the middle class that have shaken off the veil of ignorance and will take the appropriate actions to re-ignite the flames of freedom that this country was founded on.

  17. As Warren Buffet has said, 'If there's a class war going on, my side is winning.' Also by Warren, 'Why is my tax rate less than my secretary's?'
    Just a minor comment: about 2/3rd's of all bankruptcies involve medical bills and the great majority of those folks did have health insurance.
    Vashti Winterburg
    Lawrence, Kansas

  18. Maybe a better way to put this is "The Poverty Class is Growing."

  19. Wait`ll you hit retirement. Pay check to paycheck? Shit, you would be really lucky to make it stretch! If you run out of money in 3 weeks you are screwed! It`s payday loans places or dig up something to flog. Ask me-it`s an asshole existance at best.

  20. @Donnie Goodwin Thanks.
    @pointsofhype Consumer spending as a percentage of GDP is another fraudulent government statistic that's intentionally misleading. There's a George Reisman article explaining some of the details at