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The American Middle Class Is No Longer the World’s Richest

The American middle class, long the most affluent in the world, has lost that distinction.

While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades….

The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.

LIS counts after-tax cash income from salaries, interest and stock dividends, among other sources, as well as direct government benefits such as tax credits….

kalm wrote:If you're a top earner, but not if you're middle class or the working poor. I think we can all agree that a thriving middle class raises all ships.

Supply side fail...

(The entire article is a good read.)

The American Middle Class Is No Longer the World’s Richest

The American middle class, long the most affluent in the world, has lost that distinction.

While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades….

The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.

LIS counts after-tax cash income from salaries, interest and stock dividends, among other sources, as well as direct government benefits such as tax credits….

http://www.nytimes.com/2014/04/23/upsho ... .html?_r=0" onclick="window.open(this.href);return false;

houndawg wrote:I was in New Zealand in January. The average kiwi has a better standard of living than the average American, sad to say.

OL FU wrote:I read it but am having a difficult time following the supply side fail argument (which of course isn't surprising). We have been under a "supply side" tilted economy (probably less so than most realize) since the 80s. The article doesn't really say ( or maybe I missed it) when the decline started. But I would imagine the middle class trending downward has been more of a this century issue. And supply side generally is more than tax policy, it is also less regulation and government intrustion, so while we are still under supply side when you compare to 70% marginal tax rates, we have been trending away from supply side since about 1990.

So Enlighten me.

Cluck U wrote:

houndawg wrote:I was in New Zealand in January. The average kiwi has a better standard of living than the average American, sad to say.

You and klean should get a room. He met 3 Russian women (two who weren't Russian, but the details really don't matter)...you were in New Zealand in January. That's a LOT of acquired knowledge of the world; surely enough to make accurate broad generalizations about Russian women and the New Zealand middle class.

GannonFan wrote:

OL FU wrote:I read it but am having a difficult time following the supply side fail argument (which of course isn't surprising). We have been under a "supply side" tilted economy (probably less so than most realize) since the 80s. The article doesn't really say ( or maybe I missed it) when the decline started. But I would imagine the middle class trending downward has been more of a this century issue. And supply side generally is more than tax policy, it is also less regulation and government intrustion, so while we are still under supply side when you compare to 70% marginal tax rates, we have been trending away from supply side since about 1990.

So Enlighten me.

Details, details, stop it with the details. We live in the era of big, bold, (and ultimately inaccurate) headlines. Details such as what you bring up are just distracting from the black and white and polarizing conclusions the original poster was trying to put forth.

89Hen wrote:Kalm, what exactly are you proposing?

[youtube]http://www.youtube.com/watch?v=OoqI5PSRcXM[/youtube]

kalm wrote:

GannonFan wrote:
Details, details, stop it with the details. We live in the era of big, bold, (and ultimately inaccurate) headlines. Details such as what you bring up are just distracting from the black and white and polarizing conclusions the original poster was trying to put forth.

Butthurt right out of the gates on this one I see.

OLFU:

The study goes back 35 years. The middle class could have been in decline before that. In fact the article does cite Harvard economist Lawrence Katz who states that we have been in decline since 1960. And yes, some of this decline can be attributed to post WWII competitive advantages we had over other countries and the inevitability of those countries catching up.

But the rate of decline of the lower classes has certainly trended ever more downward since 1980 and the wealth in the highest brackets has increased while productivity from those lower classes has also increased.

You are correct regarding Supply Side being about more than tax rates, and we went through a massive deregulatory period of the financial industry in the late 1990's.

Bottom line, we still have relatively low tax rates, relatively low levels of regulation, relatively low levels of education and child care subsidies and a thriving upper class that has benefited immensely from these policies which is supposed to spread the wealth downward. They've had 30 years to do this.

Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation. The same measure, by comparison, rose about 20 percent in Britain between 2000 and 2010 and 14 percent in the Netherlands. Median income also rose 20 percent in Canada between 2000 and 2010, to the equivalent of $18,700.

kalm wrote:Bottom line, we still have relatively low tax rates, relatively low levels of regulation, relatively low levels of education and child care subsidies and a thriving upper class that has benefited immensely from these policies which is supposed to spread the wealth downward. They've had 30 years to do this.

89Hen wrote:

kalm wrote:Bottom line, we still have relatively low tax rates, relatively low levels of regulation, relatively low levels of education and child care subsidies and a thriving upper class that has benefited immensely from these policies which is supposed to spread the wealth downward. They've had 30 years to do this.

I guess I was right in what you propose.

OL FU wrote:

89Hen wrote: I guess I was right in what you propose.

and I think the question isn't whether there is a trickle down with lower taxes on the rich, the question is will imposing higher taxes on the rich trickle down.

OL FU wrote:I read it but am having a difficult time following the supply side fail argument (which of course isn't surprising). We have been under a "supply side" tilted economy (probably less so than most realize) since the 80s. The article doesn't really say ( or maybe I missed it) when the decline started. But I would imagine the middle class trending downward has been more of a this century issue. And supply side generally is more than tax policy, it is also less regulation and government intrustion, so while we are still under supply side when you compare to 70% marginal tax rates, we have been trending away from supply side since about 1990.

So Enlighten me.

JoltinJoe wrote:

OL FU wrote:I read it but am having a difficult time following the supply side fail argument (which of course isn't surprising). We have been under a "supply side" tilted economy (probably less so than most realize) since the 80s. The article doesn't really say ( or maybe I missed it) when the decline started. But I would imagine the middle class trending downward has been more of a this century issue. And supply side generally is more than tax policy, it is also less regulation and government intrustion, so while we are still under supply side when you compare to 70% marginal tax rates, we have been trending away from supply side since about 1990.

So Enlighten me.

I'm not so sure there's any mystery to what's happening. The American Middle Class was strongest when our manufacturing base was, far and away, the most productive in the world. We fancy ourselves an "investment society" today and we have sent manufacturing jobs overseas. Our middle class has suffered. I believe everything else is secondary to the loss of our prominence as a manufacturing society.

houndawg wrote:

JoltinJoe wrote:
I'm not so sure there's any mystery to what's happening. The American Middle Class was strongest when our manufacturing base was, far and away, the most productive in the world. We fancy ourselves an "investment society" today and we have sent manufacturing jobs overseas. Our middle class has suffered. I believe everything else is secondary to the loss of our prominence as a manufacturing society.

This.

The country peaked for the middle class in the early 70s before everybody's mom had to go to work so the family could make ends meet.

JoltinJoe wrote:

houndawg wrote:
This.

The country peaked for the middle class in the early 70s before everybody's mom had to go to work so the family could make ends meet.

See, we can get along.

In order to correct this problem, our federal government needs to do the following:

(i) Reform the tax code significantly; cut the tax burden on the middle class, without increasing the tax burden on the investment class.
(ii) Provide significant tax code incentives for the creation and maintenance of manufacturing jobs in targeted industries.
(iii) Significantly cut federal spending, including defense and social entitlement programs. Our national debt is nearly 100% of GDP. While that is not an all-time high, it is way above historical norms. We need a serious plan to reduce debt to about 40% of GDP and accomplish that within a decade.

JoltinJoe wrote:

OL FU wrote:I read it but am having a difficult time following the supply side fail argument (which of course isn't surprising). We have been under a "supply side" tilted economy (probably less so than most realize) since the 80s. The article doesn't really say ( or maybe I missed it) when the decline started. But I would imagine the middle class trending downward has been more of a this century issue. And supply side generally is more than tax policy, it is also less regulation and government intrustion, so while we are still under supply side when you compare to 70% marginal tax rates, we have been trending away from supply side since about 1990.

So Enlighten me.

I'm not so sure there's any mystery to what's happening. The American Middle Class was strongest when our manufacturing base was, far and away, the most productive in the world. We fancy ourselves an "investment society" today and we have sent manufacturing jobs overseas. Our middle class has suffered. I believe everything else is secondary to the loss of our prominence as a manufacturing society.

Karl Marx was supposed to be dead and buried. With the collapse of the Soviet Union and China’s Great Leap Forward into capitalism, communism faded into the quaint backdrop of James Bond movies or the deviant mantra of Kim Jong Un. The class conflict that Marx believed determined the course of history seemed to melt away in a prosperous era of free trade and free enterprise. The far-reaching power of globalization, linking the most remote corners of the planet in lucrative bonds of finance, outsourcing and “borderless” manufacturing, offered everybody from Silicon Valley tech gurus to Chinese farm girls ample opportunities to get rich. Asia in the latter decades of the 20th century witnessed perhaps the most remarkable record of poverty alleviation in human history — all thanks to the very capitalist tools of trade, entrepreneurship and foreign investment. Capitalism appeared to be fulfilling its promise — to uplift everyone to new heights of wealth and welfare.

Or so we thought. With the global economy in a protracted crisis, and workers around the world burdened by joblessness, debt and stagnant incomes, Marx’s biting critique of capitalism — that the system is inherently unjust and self-destructive — cannot be so easily dismissed. Marx theorized that the capitalist system would inevitably impoverish the masses as the world’s wealth became concentrated in the hands of a greedy few, causing economic crises and heightened conflict between the rich and working classes. “Accumulation of wealth at one pole is at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole,” Marx wrote.

A growing dossier of evidence suggests that he may have been right. It is sadly all too easy to find statistics that show the rich are getting richer while the middle class and poor are not. A September study from the Economic Policy Institute (EPI) in Washington noted that the median annual earnings of a full-time, male worker in the U.S. in 2011, at $48,202, were smaller than in 1973. Between 1983 and 2010, 74% of the gains in wealth in the U.S. went to the richest 5%, while the bottom 60% suffered a decline, the EPI calculated. No wonder some have given the 19th century German philosopher a second look. In China, the Marxist country that turned its back on Marx, Yu Rongjun was inspired by world events to pen a musical based on Marx’s classic Das Kapital. “You can find reality matches what is described in the book,” says the playwright.

kalm wrote:

GannonFan wrote:
Details, details, stop it with the details. We live in the era of big, bold, (and ultimately inaccurate) headlines. Details such as what you bring up are just distracting from the black and white and polarizing conclusions the original poster was trying to put forth.

Butthurt right out of the gates on this one I see.

OLFU:

The study goes back 35 years. The middle class could have been in decline before that. In fact the article does cite Harvard economist Lawrence Katz who states that we have been in decline since 1960. And yes, some of this decline can be attributed to post WWII competitive advantages we had over other countries and the inevitability of those countries catching up.

But the rate of decline of the lower classes has certainly trended ever more downward since 1980 and the wealth in the highest brackets has increased while productivity from those lower classes has also increased.

You are correct regarding Supply Side being about more than tax rates, and we went through a massive deregulatory period of the financial industry in the late 1990's.

Bottom line, we still have relatively low tax rates, relatively low levels of regulation, relatively low levels of education and child care subsidies and a thriving upper class that has benefited immensely from these policies which is supposed to spread the wealth downward. They've had 30 years to do this.

BDKJMU wrote:

kalm wrote:
Butthurt right out of the gates on this one I see.

OLFU:

The study goes back 35 years. The middle class could have been in decline before that. In fact the article does cite Harvard economist Lawrence Katz who states that we have been in decline since 1960. And yes, some of this decline can be attributed to post WWII competitive advantages we had over other countries and the inevitability of those countries catching up.

But the rate of decline of the lower classes has certainly trended ever more downward since 1980 and the wealth in the highest brackets has increased while productivity from those lower classes has also increased.

You are correct regarding Supply Side being about more than tax rates, and we went through a massive deregulatory period of the financial industry in the late 1990's.

Bottom line, we still have relatively low tax rates, relatively low levels of regulation, relatively low levels of education and child care subsidies and a thriving upper class that has benefited immensely from these policies which is supposed to spread the wealth downward. They've had 30 years to do this.

Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

I'm not so sure there's any mystery to what's happening. The American Middle Class was strongest when our manufacturing base was, far and away, the most productive in the world. We fancy ourselves an "investment society" today and we have sent manufacturing jobs overseas. Our middle class has suffered. I believe everything else is secondary to the loss of our prominence as a manufacturing society.