What can be done to save the American middle class? Can the middle class be saved or will some sectors of the middle class be absorbed into the very lower upper class & other sectors of the middle class be absorbed into the lower socioeconomic classes?
I fully believe the Middle class is here to stay. We still have many in America that are intelligent enough, innovative enough, and have the drive to go after the American dream. Not all will settle, just some...
A good topic to consider for the coming changes during the Biden Administration.
The total population of what is considered the middle class in the U.S. has remained fairly stable since 2010 (51% of American adults lived in middle-class households in 2019, which is the same as 2011).
However, income disparity continued to increase in the U.S. during this same time period.
Those living in higher-income households made substantial income gains, while the financial gains of those in the middle class (in addition to those in lower-income households) were comparatively non-existent.
One has to consider that all numbers and researches that I can reference are PRE-PANDEMIC. I have a feeling, that there may be a few million more that have slipped out of "Middle Class" existence in the past 12 months or so... or they will very shortly after all the unemployment checks and stimulus checks run out.
Prior to 2011, the American middle class had been shrinking for several decades. This downward trend, beginning in 1971, had resulted in a 10% drop in the share of adults in the middle class.
Also since 1971, we have had a great many things occur, from the Dollar going off the Gold Standard, to many Unions being destroyed by the impact of globalization and the passing of agreements like NAFTA.
Another BIG change in what constitutes "Middle Class" pre-1971 most "Household Incomes" were the result of ONE person's income. In today's America "Household Income" is often two salaries of two working adults trying to support a family.
The median income of middle-class households increased by 6% between 2010 and 2016 from $74,015 in 2010 to $78,442 in 2016 while the median incomes of those in upper-income households fared much better during this time period: their median income increased from $172,152 to $187,872, an overall gain of 9%. [PEW Research]
Now, one has to consider those percentage raises to inflation, or should I say the devaluation of the dollar.
In 2020 35% of all dollars in existence were created that year. So we will have to wait to see how that actually impacts the dollar's value, however one should expect that it will mean the buying power of that dollar goes down drastically.
In essence, a Candy-bar that used to cost you $1.00 in 2019 might cost you $1.75 in 2022.
So while income may rise slightly, those gains are wiped out by inflation, and in fact, are not keeping up with the devaluation of the dollar.
I would expect this trend to worsen in the years ahead, the decline in the wealth share of the "Middle Class" and the rise of income inequality creates an adverse climate for economic growth, necessary to reverse the destruction shutting down the economy has done to many businesses.
This is because the decrease in the incomes of lower and middle-income families in the U.S. results in a decline in overall consumption as a trend of conserving rather than spending occurs.
The bulk of the stimulus money (the trillions doled out) has gone to financial institutions and pet organizations, which has made the rich far richer, and the pittance of stimulus money given out to the people will mean nothing compared to the long term harm the devaluation of the dollar will have on their lives.
How are you defining "middle class"? It used to be the center portion of the national population - are you changing that to an income range picked from the sky rather than from the statistics of what the middle of the country earns?
I am getting those figures from the latest PEW research efforts, dated before the pandemic.
Let me simplify... what you MAKE doesn't matter much if it doesn't BUY you anything.
Being a Millionaire won't mean a thing if it costs you a hundred grand to buy a week's worth of groceries.
A Nation's real wealth is in what it can produce, goods and services.
If you have a Million dollars, but can't go to the store and buy a loaf of bread because there is none available, having that money means nothing.
If you have a million dollars, but can't go out to eat, can't go to the beach, can't live the life you want to because they have shut down the State you live in, your money doesn't mean much if you are a prisoner in your own home.
While people in this country are squabbling over 'Equal Rights" and other social issues, the economy is being crushed and the dollar devalued at a rate not seen since Germany or Venezuela just prior to their economies collapsing.
Then how does PEW research define the middle class?
In simplistic language, it used to be the center two quartiles of the population income. Or some other, similar figure - perhaps the center 3 quintiles. As such the middle class population cannot decline without a decline in the overall population.
But now it seems it is defined by (using your thoughts) how much one can purchase, with that "how much" being a semi-random number chose because it makes the point the speaker wishes to make. It might be a 5 room home or a 20 room home, depending on whether the speaker wishes to claim it is falling or rising, but it has nothing at all to do with the middle of the population. Not even with what the middle of the population can buy - only what the speaker has decided they should be able to purchase.
PEW is straightforward...
PEW says that in 2011 the average Middle Class income was $50,000
PEW says in 2018 it was $53,000 for a 6% increase
What I am adding, is that the valuation of the dollar has declined faster than the wage increase.
Therefore, Middle Income wages are worth less, despite a 6% increase.
This is going to be compounded drastically in the coming years because there has been an increase of dollars in circulation, to the sum of 35% of all dollars in existence being created in 2020.
Eventually those dollars will flow into our daily lives, making a $2.50 loaf of bread cost $5.00, $2.50 gallon of gas cost $5.00, etc.
What I believe we will soon see and are beginning to see today with various unemployment and stimulus incentives is the breakdown of poor-middle-upper class molds, to a masses and upper-class system.
Poor Middle Upper
$25,161.00 $78,624.00 $186,151.00
Was the old break down
$100,000 - $200,000+
Will be the new reality, right now we have a few million Americans making more staying home than they could going to work, I expect this trend to continue, and we will have more people living off government handouts than ever before.
That type of reality in turn, will make the value of the dollar go down, and the prices of goods go up. The more the government takes over, and the more people that are dependent on the government, the quicker the collapse of an economy comes.
"PEW says that in 2011 the average Middle Class income was $50,000 "
Not what I was asking. Pew may have defined middle class as a range of people averaging $50,000...or they may have defined it as the center quintile of incomes, which happens to average $50,000. One ends up defining middle class as a hand picked wage without regard to whether it represents the center of the population, the other IS the center of the population. With the first the number of "middle class" people can definitely fall, with the second it is impossible to fall unless the population falls.
I would counter the "Middle Class" is considered a "Quality of Life".
There was a time "Middle Class" meant one person in the family going to work, and that person was able to provide a Home, Transportation, Health Coverage and Food.
In more recent times 'Middle Class" was defined by household income which more often than not required two working adults in the Household to provide a Home, Transportation, Health Coverage and Food at a certain "Quality of Life" level.
Trying to quantify "Middle Class" by Income alone, or more importantly, by percentage of income growth, is a fallible measuring stick.
One that doesn't take into consideration the facts that a House that cost $70,000 in 1970 cost $300,000 in 2020. Or that a gallon of gas that cost .90 cents in 1990 cost $3.00 in 2020.
The Dollar has lost buying power, therefore the amount of money a household has to bring in, to maintain the quality of life provided to someone considered "Middle Class" decades ago has gone up considerably.
Pardon me for interjecting. Pew Research defines the middle class as that between 2/3 of median and twice median. However, different scholars use different methods such as quintiles while another uses range above poverty level.
That's the answer I was looking for!
Wonder what their rationale is for shifting the "middle class" away from the middle of the population. Sounds like an arbitrary choice for what they consider necessary income to be considered "middle", meaning it will slowly flow upwards according to political views on poverty but without regard to the reality of living costs.
I don't think I'm making myself clear; I'll try again.
Using https://www.ssa.gov/OACT/COLA/central.html for data, the median (as opposed to average) income in the US was $26965 in 2011. There are approximately 132,000,000 households in the US; let's define "Middle Class" as anyone in the range of that median number +66,000,000 to -66,000,000 households. Some will earn more than the median, some less, but the average will be close to the median income, and the middle half of the population is defined as "middle class". A quarter is "upper class" and a quarter is "lower class".
Do the same for 2018, and the average earnings of the middle class is $32,838 (median for the entire population).
The difference between the two is $5,873 - the amount income of the middle class rose during the period 2011 to 2018. That's a 22% rise in income, before inflation. Using https://www.usinflationcalculator.com/, what needed $1 to buy in 2011 took $1.12 to buy in 2018; an 11.6% cumulative inflationary figure. The income of the middle class thus rose by 10% (22%-12%).
You're saying that Pew says the middle class earned $50,000 in 2011, but where did that $50,000 come from? Picked from the air? Chosen because it sounds good? Was it used to define who the middle class is without regard to the general population? It certainly does not represent the earnings of the center half of the population in 2011! Or in 2018, either.
Actually the $50k was a rounded number chosen for the ease of demonstrating a 6% increase and what it meant.
However your own link shows "2018 50,000.44" as the average median for net compensation.
Which I am glad you linked to because I hadn't even considered the impact taxes can have on a person's income. A person in NY or CA pays 8% or more in State Income tax, while a person in FL pays NO State Income tax.
As for the second link of inflation, please, did you notice the opening block of information.... cumulative rate of inflation 2575.5% from 1913 to 2021.
And... we haven't felt the impact of 35%... THIRTY FIVE PERCENT... of all dollars in existence being created in 2020!
And.... you can expect that type of dilution to continue in 2021 with Biden's plans to fund trillions dollar loans for the IMF, and more stimulus checks, etc. etc. the dollar won't be worth HALF what it was come 2022 that it was worth in 2018!
Do you understand this, or do you think the Middle Class making either $50k or $26k or whatever amount you want to choose is going to be able to have the same QUALITY OF LIFE when their money is worth HALF what it was just a couple years ago?
Middle class is dependent upon the components of salary earned per year + the number of people per household. What is middle class for 1 person is vastly different from what is defined as middle class for a family of four. For example, $150,000 per annum for a family of 4 is considered middle class while $45,000 per annum for 1 person is considered middle class.
"Actually the $50k was a rounded number chosen for the ease of demonstrating a 6% increase and what it meant."
Not according to tsmog - he indicates that it is the average income of people from 2/3rds of median income to double median. It makes sense, and will give close to the $50,000 Pew claims. The only question is why they chose to shift the "middle class" (as determined from income) from the middle to something much higher.
Inflation, the lowering of buying power, is always accompanied with an increase in wages. That increase usually lags, but it does catch up. Given that, the massive influx will not do nearly the harm that you're portraying it will, though I WILL grant that it will cause considerable damage. Quality of life may well fall some, but not so much as to put us all in the poorhouse. That $50k, or $26K, becomes 100k or 52K. There will always be a small loss, I think, but it isn't much...after a few years - the initial years of runaway inflation do hurt.
Don't forget that inflation (both prices and wages) actually helps some people; after going through the double digits of the 70's/80's, I watched as my mortgage fell to a much lower percentage of my income, and I wasn't alone. For those just buying it shoved them out of the market, but if a mortgage was already in hand it helped.
Taxes; some states are higher (NY, Ca., some others) but the whole story isn't in state income taxes: sales, property, even the "fees" charged for auto registrations all come into play (my state charges me an extra $100 per year because I have a plug in hybrid). And when they do those high states, and the low ones, aren't quite as bad. Bad, but not as bad as they sound. Oregon, next door to me and where I have family, doesn't have the 6% sales tax I do...but I couldn't afford their property taxes. I'd have to live in a tent!
As for inflation since 1913, I would take note that our standard of living now was simply off the radar in 1913; inconceivable that people could live the way we take for granted today. That 2600% inflation did not prevent the standard of living from going up, and going up beyond anyone's imagination.
This is a fair point.... however.
During the last 3 decades (prior to Trump) wages stagnated, how that differential was made up for many homes was two incomes providing where in decades past only one was required.
What I am certain of... is that at no time in our history was 35% of all dollars created in ONE YEAR.
It took roughly 100 years to create the number of dollars in circulation that existed in 2019. It was a slow devaluation, single digits a year at worst.
This 35% is historic and will have impacts more akin to what I have stressed than anything in our past history that you can look back on.
Not sure of that 35% figure. Sounds like you are saying that the total wealth of the nation rose by 35% in one year; while it certainly rose, it was nowhere near that 35% figure.
What am I misunderstanding? You mention "dollars in circulation", but they didn't print that money; it was all on paper, just as is the vast majority of the wealth in the country.
Its very simple.
https://www.investmentwatchblog.com/35- … this-year/
https://www.reddit.com/r/CryptoCurrency … have_been/
This is the type of information you can be sure CNN and the like will never be discussing. I'm sure there is far more important things to discuss, like whether the McDonald's arches are a racist symbol.
I am not saying the wealth of the nation rose by 35% I am saying the dollar was devalued by 35% which ultimately when all those "new dollars" circulate back into the "real economy" it will be... and you will see this over the next year or two, with continually rising prices on most goods and services.
I am so pleased to see you post this information when I started seeing articles on the Fed Reserve printing so much cash I found it shocking and really disturbing that TV media was not covering this scary info.
No wonder I misunderstood; there is a huge difference between "I predict a devaluation of 35%" and "35% of all dollars created in ONE YEAR."
You may be right, but I highly doubt we'll see inflation of 35% in the next year or two, or even in the next decade. Possible, with Democrats borrowing and spending like crazy, but unlikely.
If you drastically increase the number of dollars in circulation, eventually, the value of the dollar will depreciate that amount (or close to it).
History has shown a slow deprecation of the dollar, and that happens to coincide with the slow increase of dollars in circulation.
This was not a slow increase, this by mid-2021, will likely be a 50% increase of dollars in circulation in 18 months time. Not only historic, you would have to go back to the Weimer Republic's devaluation, or the Venezuelan depreciation in 2016, to find an equitable example, or at least an example of where this could lead.
The collapse does not happen in one day, or one year, but the foundation for that collapse is being put in place as I type this, and if the dollar continues to be devalued at this pace, its collapse is all but certain.
Middle class does most of the work and pays most of the taxes.
I was middle class rich like between the top 7% to 1%.
Now middle class poor top 25% and feel just, right.
Would not want to be ever lower then the 50% poorer.
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