Beginning of Trump's tax cuts, my weekly pay went up about $38. Every week I take the $40 ($38 rounded up) and I stick it in my cookie jar. I now have almost $2,000 now.
Now what's the problem with Trump's tax cut. Do you democrats plan to cut our taxes even more
Oh I seen Government Revenue is increasing every year and this year as well. That means that you can cut my taxes even more.
That “tax cut”? For me, it’s a $2000 tax increase. At least that’s what my accountant told me to expect. Why? Because I live in a State that has a State income tax, which is now no longer a tax deduction. Thanks GOP. You’ve negatively impacted me in ways I never could have imagined.
2
Other comments have mentioned that the figures in the article don’t include increased healthcare costs. Also not included, apparently, is the higher overall tax burden for many families because deductions were eliminated for mortgage interest and state and local taxes.
3
Okay, we have Insane housing costs, medical costs, drug costs, college costs, low wages, and a collapsing infrastructure. Will the Dem house propose solutions or just go RUSSIARUSSIARUSSIA for another two years? They now have their chance to show they mean Anything and are not the Corporate Captives they've been. Of course, Cory Booker, Big Pharma Hooker, will be against buying drugs from Canada. And infrastructure would give Trump a win. And a higher minwage would anger corporate donors. Looks like it will be all Social Memes and Russiagate again. But I'll be optimistic. The Dems now have a chance to prove themselves or keep pounding a silly conspiracy theory that is no better than birtherism was. We'll see what their First vote will be about. America is watching, DNC.
2
What would be most illuminating is a time comparison of the net national income per capita and it’s distribution across not income bands but wealth bands. Too much economic information confuses collective productivity, fiscal and monetary policies with individual outcomes instead of focussing on the urgent reality that our political system is failing to maintain broader distribution of both income and accumulated wealth. To me it is a moral failing that hard-working people on whom our economy depends are suffering financial strain, while a fortunate few, regardless of how hard they work as well, take for themselves astonishingly large multiples of the average wage and returns on savings and accumulated assets. In the long run it will lead to political collapse as ever greater proportions of the population have ever smaller motivation to maintain the status quo. The politics of greed build a road to strife.
5
Conspicuous by its absence from your analysis is the burgeoning cost of health care. Employee contributions to employer-sponsored insurance plans have soared even as increased "cost-sharing" requires employees to pay more for premiums, deductibles, copayments (euphemistically termed "coinsurance"), and drugs. For those with privately paid plans, out-of-pocket health care expenses tend to be even higher. Bernie Sanders, we need you.
5
Unfortunately you make no mention of the rising costs of health insurance. In particular, the astronomical increases in the gap coverage for those with original Medicare and the outrageous cost of drugs in the US compared to pennies for the same drugs abroad. If one converts the average monthly income increase of $122 gained a month for a typical family that you extrapolate, that works out to a less than thrilling annual amount of $1464. Furthermore it's all in the details. You neglect to mentioned those who have fallen off the map because after years of frustration looking for higher level jobs that they are eminently qualified perform have been forced out of the workforce because of age or relegated to low-level work like supermarket checkout employees.
Mr. Irwin, please let's get real and tell it like it is.
5
As others have mentioned, the numbers mean nothing. Not all of us are rich and have great jobs. Many struggle and worry about barely getting by when they’re older.
We desperately need good job training in this country as careers fade and become automated. We need to help the legions of homeless.
The wealth gap is bigger than ever, wages barely grow and housing is extremely expensive in large cities.
Don’t brag and denigrate others, and understand that those who pose us the greatest harm are home-grown terrorists and criminals, not immigrants.
4
These broad averages are meaningless for most people. Housing costs differ tremendously by geography, as do wages and the costs of many goods and services.
10
The analysis fails to account for the costs from cuts of social services people were using (like education, libraries, police, fire fighters, healthcare, etc...). Also it fails to look at the passing of debt obligations on to future taxpayers which has grown from just over $834,000 when Obama left office to $945,523 (as of today); a $111,500 increase in debt obligation.
So to simply translate, unless you made an additional $111,500 either in income or asset growth since Trump took office, you and every taxpayer in the US has gone massively backwards in terms of overall liability.
8
Upper middle class families in the U.S., compared to say, 30 years ago, send their children to private schools or even “home school”. Crime is down, yet the well off have privately-monitored burglar alarms and video surveillance systems and tend to live in low-crime neighborhoods. The biggest change has come in the cost of health insurance, which has become very expensive here. Even government-subsidized health insurance policy—which many families are not eligible for—carries a deductible/co-pay of many thousands of dollars which can be ruinous for the average family if a hospitalization occurs.
As far as federal debt is concerned, Americans have become numb to the numbers. There is a pervasive feeling that whomever we elect—Democrat or Republican—they are going to incur deficits. For the well-to-do family, U.S. government bonds are a solid investment because the interest and return is guaranteed. But, the interest payments are taking up more and more of the federal budget, which represents a transfer of wealth from the ordinary citizen who doesn’t own bonds to those that own bonds.
In America, the the “self-employed” lawyer, doctor or accountant (or plumber who owns the business) can fully write off as business expenses their health insurance premiums, long-term care insurance premiums, and 20% of their business-derived income (up to certain level, phasing out at $415,000). Mortgage interest is deductible here.
So, for families “doing well” the U.S. is tailor made.
2
Rents within 10 miles of Boston or Denver weren't cheap in 2016 and are more expensive now. The wage increase is not spread out evenly through the population. Of the newly added jobs, how many are filled by people working other jobs concurrently? The price of gasoline, in this major oil exporting country, climbs steadily and exceeds $3 in some places. This country is too big and complex to lend itself to easy economic measure and categorization. But not by a long stretch are lots of people doing better.
7
This is great analysis for middle class but if the economic growth and lower unemployment has delivered a limited benefit for them it would seem to be even less for those earning the minimum wage and receiving food stamps particularly if any raises to $10-15 an hour merely reduce their social safety net benefits. There is no question about who really benefited from the Trump tax cuts which may be why inflation remains low since the marginal propensity to consume for the very wealthy is essentially close to zero meaning little pressure on C and the CPI from excess demand.
3
Neil, as I’m sure you know such factors as rent are determined by where you live, try telling the average Bay Area, Seattle, L.A. or Portland resident their rents haven’t gone up much in the last decade. I feel your trying to prove a false equivalency by comparing 2016 -2018 with presumably the Obama years before that to inform the working class they are no better off under Trump even with the tax break and “ full employment and rising wages”. Yes even in our little hamlet there are numerous job openings, for waitresses, maids and care givers, so yeah it’s rockin out here in the Pacific Northwest, maybe if you’re selling condos to Chinese investors in Portland or are in some sort of “ incubator” hoping to catch the golden ring, but good jobs with benefits and a pension in your future, good luck, that went out with the internet and globalization. Since you touched on interest rates normalizing to the point one might break even with inflation on the few bucks you’ve got left after living on your principle at zero bound rates during the Obama years so to as allow Bernanke and Geithner to bail out their Wall Street brethren I would applaud Trump for getting out of the way of The Fed and let them do a job they should have seven years ago, raise rates to help out Main Street small savers and clawback profits from the fraudulent loan era of Countrywide and Goldman. Democrats threw their base to the wolves, come up with an economic agenda, I don’t care about who uses what bathroom.
5
The unemployment rate is one-third of the story. Another third is the labor force participation rate - has that gone up or down or remained about the same? If down or about the same, it still means the unemployment statistic masks real hardship in the economy. Another third is the quality of the jobs being created - are they mostly well-paid jobs with benefits, or part-time jobs with few benefits. The final third is what's happening to the costs of education and health care that people actually face, not mentioned in this article. Increases in these could vastly offset any wage gains noted here. Trump isn't Trumpeting the economy for good reason - it would ring hollow with huge numbers of voters, while distracting people with fear and hate over refugee caravans many weeks away from the border grabs more attention.
5
@Mark Somehow, I managed to have cited four thirds here. Now that doesn't add-up, does it; but you get the idea! This article far from tells the whole story.
2
The low unemployment statistics do not tell the full story. Many unemployed baby boomers have become entrepreneurs not by choice, but because they cannot get jobs in their field of expertise due to the rampant age bias that exists among most employers. These long term self-employed individuals do not figure into the unemployment statistics because they are technically employed though still struggling or because they have aged out. This situation is bound to get worse not better.
6
I applaud the transparency and modesty of the writer's analysis. I also applaud the many detailed insights offered by informed commenters that helped me better understand the writer's answer to what is an important question. It seems clear his analysis offers the best, perhaps most charitable, case that can rationally be made for any real benefits going to most middle income Americans. It's good to see writers and commenters collaborating so well.
2
@Guy Baehr Agree w/you, enlightening comments equal in weight to that of article: collab rocks.
For some the gain would be eclipsed by the higher cost of health care.
10
I'd like to see a comparison to 2000.
6
In a stock-market and investor driven economy, the middle and lower classes will never get ahead. And monthly jobs numbers, etc. never tell the whole story.
This article begins to get at the truth and reality of the economy.
So, employers now need more workers. In order to get more workers, they need to raise wages. Employers raise wages...and then raise prices on good and service to keep their profits - for investors - high.
Then the Fed steps in to raise interest rates, thereby eating up all of the worker's wage increases, and perhaps then some, especially for middle and lower income families.
Plus, those same workers are also now paying more for goods and services.
All the while the lost wages, pensions, upward mobility, etc. lost by millions of workers in the 2008 crash...have never even been fully recovered.
What's wrong with this picture? And if this picture is worth a thousand words...those words explain why a huge swath of the country is so angry that they will "follow" a divisive, demeaning, unstable leader like Trump...right to the polls.
6
Of course, if you're a middle class homeowner in NJ, NY or California, the $122 would be wiped out by the property tax limit of 10k!
12
You're also using median figures, which means that half of the families make less than $893 a week. If I made that much regularly, my family would be sitting pretty. The reality is that many struggling middle class families make much less. We only consider ourselves middle class because we both have college degrees, although those degrees mean less and less as time marches on.
Another reality is that many people have no idea what they will earn from one week to the next. Hours can be cut arbitrarily, tips fluctuate all of the time, and gig work is extremely unsteady. As a freelancer with twenty years of experience, I know firsthand how unstable work can be. Some months you're innundated, but the drought inevitably arrives. You never know how long the drought will be. All you can do is save as much as you can while you have work, and hope that it lasts until the next big client returns. If it lasts too long, you're stuck living on your credit cards, piling up interest payments.
I've looked for a steady job, but ageism is rampant. I'm fluent in two languages and have twenty years of experience, but I'm not in a profession that is in high demand. I can't afford to go back to school to retrain, because there is no one to pay the bills if I'm not always working. So I keep plugging along, trying to make ends meet and hoping that Congress doesn't take away Social Security and Medicare by the time I am finally eligible. A steady $893 a week sounds like heaven.
12
@Anon Yours is the real story being lived by the majority of America
Why would anybody expect the average of a country as large as ours to have a significant change in a short period of time. Surely some individuals have had their lives changed. They now have a job, or a better job. They are either off public assistance or need less of it. The average will take a much longer time to change, and assumptions are just that.
1
Now retired with a background of working for a fortune 500 US multinational for many years, then running my own consulting corporation, my take is this. The major Multinational was one on the forefront of so called globalization.Aside from thousands of direct labor jobs being exported, starting salaries incorporated in our sophisticated system of hiring at various US campus, started a decline in starting wages, in and therefore drop the cost of associated benefits. If one would now incorporate inflation over many years and taxes, these net income levels, have never been restored, nor will they be. Our major markets were a world wide supplier to the oil and gas petrol chemical industry. A industry that does pay it's qualified employees good wages . That is an exception compared to most direct labor professions. Today Tech corporations pay reasonably well but few are qualified to be involved. No background education or training, so we import of India and China all we can.
2
@Dan Green How to alter this debilitating situation, DG?
It's not hard to find census data that says median income increased 3.1% and 5.4% in the last two years of Obama's presidency and 1.8% in the first year of Trump's presidency. Happy with winning yet?
9
@David E Median of anything is worthless without the distribution, and if it is so easy to find where is your link? I am not that happy with winning yet, because there has not been enough of it, eliminate the obstructionist and the winning will perhaps increase.
2
@vulcanalex I can only laugh when the Conservatives accuse Democrats of obstruction.
3
@vulcanalex AM Joy panel was doing just that this morning.
The simple bar chart is interesting but incomplete if it does not include the growth in debt. I strongly suspect the increase in national debt load could overwhelm the $122 a month 'gain'.
11
Increase in $122/year far exceeds the decreases we were seeing in years prior. Cpntinued annual increases lead to large decade increases. This is how personal finance works. Scoff at what you imply to be small incremental increases, but it beats the pants off of small decreases.
1
@JP - I think you miss the point of most of the commentary. People actually received nothing, in fact, less than nothing. For most people, the paltry increase is a long-term loss in terms of government services and revenue, and the assumption is that the GOP will eventually use it to try and decimate Social Security and Medicare/Medicaid, particularly if the recent stock market bubble deflates. Republican will be pushing austerity, and with even less revenue from the tax cuts, there is only one place they will look to tighten the belt (around our collective necks).
9
@James Igoe
Lots of good comments . Bottom line is, Globalization has powered the so called elites, to an unprecedented level of influence. So few ended up benefiting from so called globalization. We choose to use the term in our society as income equality , or more rightly said, haves and have nots.
4
@Dan Green I agree and the president is trying to restrain and reverse globalism. Thus you should support tariffs and other actions that he is using.
For some it is better to be working poor and get benefits. Free medical care, EBT (food), fuel assistance, free child care, subsidized housing et al.
Lower your expectations and you can receive all kinds of financial help and aid, including higher education. Stay within the middle class and receive absolutely nothing. Only makes sense to take the low road today, just as the all of the economic migrants and illegals do. It doesn't pay to be middle class anymore. Get on the gravy train before it all gets eaten up.
4
@Liberty In
There are less expensive parts of the USA to set up housekeeping than in Boulder. My 33-y/o son just bought a house in Milwaukee for under $140K. He makes $16-/hr driving truck. His wife makes $10-/hr as a childcare worker. It is a nice property in a diverse, working class neighborhood. People who live in NYC, SFO and Boulder and then complain about costs and their diminished standard of living amaze me. Maybe think about moving?
2
@Liberty In
Consider the benefits of living with Mom. Rent free, she'll wash your clothes, and probably will make your bed. If she has a car, you can borrow it when needed. Lots of broke kids do it paying student loans can be drastic as that promised career choice of education is most times wrong.
I’ll take Boulder with it’s costs and diminished standard of living, thank you.
1
A penny saved still remains a penny earned...
5
Let's call it what the Trump Administration calls it "Chump's Change".
12
What middle class?
11
I'll be honest with you. I don't believe any of the federal government's data. It's all fake. That is why we elected the Grifter-in-Chief so he and ONLY HE could tell us the truth.
4
@Steve Beck
If only HRC and Bill were running things most of these current issues would not be issues. Vote for Bernie as an alternative he says everything will be free.
1
This is irresponsibly incomplete without factoring in health care and education. Please revise!
19
Does Irwin realize that the numbers stated in the article don't match what's in his charts?
1
553,000 people in America are homeless and can't afford basic necessities. 40% of Americans can't afford a $400 emergency expense in the richest country in the World.
https://www.statista.com/chart/6949/the-us-cities-with-the-most-homeless-people/
13
@Jacquie
For sure Jacquie, however reality is, that will never change. Large swath of un-employable people who need live off the state. We never have reached the level of a Chicken in every pot. Thousands of undesirable jobs as we can see, are filled by immigrants, jobs Americans refuse to do.
Chump change for your joke vote. What did you expect?
To look at just the last two years misses the point. The middle class has been under attack for decades now. Trickle down doesn't work and under Obama the GOP refused to do anything as well. There was a two year window when they passed some stimulus, far too little though, and they passed the ACA which wasn't that good because it was the GOP plan that allowed for huge profits for insurance companies. Sure, some voters voted for Trump because they thought he would be good for the economy, and he was if you consider the economy wealthy people and corporations. The longer he stays and does nothing for the middle class the more they will realize that they were duped, except if he can get them off on a racist side track, which he trying to do. The middle class was in a bad spot and they still are. The stock market and this "great economy" does almost nothing for them. Trump never planned to help them and he never will. Not that anyone else wants to do anything for them either because you all hate socialism and your version capitalism will just enslave them more deeply. The laws, the courts, the police, the politicians are all there to protect the wealthy who own all of them. And they own the press too.
11
@Chris
Give Obama his due. He legislated a good bathroom policy for schools. He legislated the Drug and Insurance industries to manage Obama Care. Try as one may, Obama Care is not Universal healthcare. A system we simply cannot afford, too much influence of Drug companies , Insurance companies , the AMA, and for profit hospital corporations. Now a major major % of US GDP.
@Dan Green
Maybe YOU should give Obama his due. Not only did he mandate equal pay for women, he stood for fair treatment of all. He respected people, particularly his wife and children and it showed.
The ACA is actually more popular today than it was while he was in office, but there is something decent to be said about making healthcare a "right" rather than a privilege. If every other developed country can do it, the U.S. should be able to figure it out. It wasn't perfect, but it could have been fixed.
Obama stood for clean air and water and the preservation of those things. I have seen pictures of a smoggy LA and prefer not to go back to those days. But that's where Trump is taking us.
Credit card interest rates and variable home mortgages will kill many families. This isn't figured appropriately in the article.
2
I rent: no HOA fees, no upkeep fees, no property taxes, no mortage fees.
I love renting.
2
Assuming Irwin's reporting isn't "fake news" and that the commenters are living in reality, tell me again why does anyone vote Republican who isn't in the top 1%?
What issue could possibly be more important than one's personal finances?
I just don't get it, and I also don't get why Democratic politicians cannot win based on facts, truth, and reality. They don't need to take money from the 1% to get elected if they would develop policies, programs and tax plans that benefit the 99%!
7
@OldLiberal: Because the Republicans don't care for truth, only power, which is why they are running on a platform not that any of their candidates are better, but that all other candidates are worse -- will drive up your costs, shred the stock market, whatever it is you fear, sure, the non-Republican will bring it.
What do they care for democracy? Stalin didn't need it. Mao didn't need it -- in fact, they exterminated it wherever it was found. The Republicans want to do the same but they want YOU to do it for them. Home-made tyranny. LAZY home-made tyranny.
7
I guess any increase is better than none. However, it sort of shows a disregard for working folk that they should be satisfied with the crumbs considering the unprecedented wealth being generated by our economy. The level of income inequality is just extraordinary. The average person, including myself, cannot fathom the true wealth being generated.
6
@Howard Hecht
I am with you. The wealth, the so called elites have amassed is almost beyond comprehension. Stats who they vote for are there to review. What does that tell you? Tells me these influence want circumstances to go back to where they were. Stashing coin in tax havens was a dream come true as was employing slave labor less benefit cost. At least Melinda Gates gives her money away to good causes. Hope Jeff follows suit.
1
I don't see any mention of HealthCare costs.
Quite often a higher % than housing.
Lets add that little $$ to your calculations.
How does it pan out now?
12
@Dobby's sock: My costs tripled. I suspect the same is true across the country. You're being swindled, America. Good and HARD.
6
Your asking why the Republicans aren't doing better because the economy is doing great and have $122.00 more in their pockets? Really? It seems obvious to me. People hate the discourse, the lies, the unchecked power that eminates from this party and loss of democracy. That's why. Its not worth the money. The people that only care about money ask this question but the rest if us look at the bigger picture.
8
The "simple math" doesn't seem to account for the families where unemployed members got a job in the period being considered. Lower unemployment rate isn't just a feel-good idea.
2
@kwb
The author did not include people who became employed or saw a promotion/demotion and such. Many people are far better off than they were in 2016. About 1200 just in my community alone are benefiting from two factories adding a shift in Feb 2017. I have also seen where miners in the Iron Range of MN, northern WI, and the UP of MI are back working again from the Steel tariffs.This means people are needed to transport the ore, turn it into steel, ship the steel and such. If this lasts, it will mean more people will be buying the parts and cars made by my neighbors and hopefully the plants will add another shift if not open a new factory on one of empty brownfields caused by NAFTA.
To many people $100 more a month can be a total game changer. It is enough to reduce the average middle class credit card debt by $1200 a year. That's close to a 25% reduction. Interest rates are going up on CD's and personal bank accounts, which are not included in this story.
When you consider how people might be affected by the tax cut, often ignored are the facts that
* Wage growth is currently the strongest it's been in the past 10 years.
* Many employers have chosen to give out bonuses or to increase the size of current bonuses so, none of that shows up in the wage data.
* For people who didn't have a job previously, the decreased unemployment and increased participation rates are obviously huge impacts. The wage increases there have to be measured as jumping up from zero.
Aside for all of that, these types of articles almost always ignore one of the the biggest gains of a strong economy - increased opportunity. People have money to spens so, start a small business. Or, if you want higher wages, the best way to achieve that is by jumping to another company. This is the best time to take a risk and move on in order to move up.
2
Health insurance costs have risen, taking much of any gain.
9
@Mary
Always will, the whole Healthcare complex is profit driven and a major major % of US GDP. Vote for Bernie in 202 he says everything will be free.
1
Two messages that Democrats should be hammering this weekend:
1. Like every other Republican politician, Trump has only helped the rich and powerful, not the average American.
2. Rather than helping average Americans, Trump is more concerned with forcing his extreme racist views on the entire country.
7
@Dario Bernardini Of those two views, 1, the second 1, is more likely to gain a vote for republicans rather than take one away. The race, fear platform he is running are what many want to hear and believe.
2
@Dario Bernardini
Dario ,check the verified stats from the 2016 election. Who and from what part of the country voted for HRC. Think you find it was Wall Street, Silicon Valley, and Hollywood, and we know where they reside. Hypocrites all. Heck, Harvey Weinstein may have never been prosecuted, he was real chummy with HRC and Bill and donated big time.
You left out the elephants in the room - health insurance premiums and college tuitions.
12
This article is absurd. A few hundred dollars over two years? What does this even mean? What is the relevance of this analysis? How is the average American doing since 2016? Um, pretty much exactly the same: getting preyed upon by credit card companies, struggling to find liveable wage jobs, drowning in health care costs, not qualifying financially for any benefits of a surging stock market, and blaming each other rather than their elected officials. Oh yeah, and being subjected to “expert” analysis like these that tell them their lives are improving because this year they have an extra hundred bucks a month in their wallets.
9
@BBB
Hang tight BBB, a new year is around the corner, and economist get a fresh supply of darts and dart boards. Am originally from Chicago. Many of my friends, are being taxed so badly, retirees have to leave the state.Talk about inflation.
2
If you are interested in who has gained income in the last 50 years, a great reference is:
https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality
This not only has the data (clear charts), but explains the methodology behind its gathering. The bottom line:
From 1946 to 1973, incomes gains were shared among all the income groups. Since 1973, practically all of the gains have gone to the Rich.
I am sure this trend has continued under Trump and perhaps even accelerated.
See my other comment which explains why this is bad for the economy in general,
2
Let's see if we can understand why tax cuts for the Rich or more generally, income and wealth inequality, is bad for the economy. Economists have a concept called the velocity of money. It is the frequency, how often, that money changes hands in domestic commerce.
Here's an example. Suppose the government gives Scrooge McDuck a Billion for advice on the comic book market, If Scrooge puts the bucks in his basement, and forgets about it, that doesn't help the economy at all. That Billion has a velocity of 0. Also, if Scrooge loses a financial bet to Daddy Warbucks, and the Billion moves from Scrooge's basement to Daddy's, that is a change, but the velocity does not change because it is not a useful change. It doesn't affect commerce.
Money going to the Rich has a lower velocity than money going to the non-rich. The Rich spend a lower percentage of their money. What's a guy or gal who already has so many houses he can't remember how many & an elevator for his horse gonna spend his money on? The answer is he is going to use it to speculate.There is a correlation between inequality & financial speculation. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1661746 Speculation is bad for the economy. That money has a very low velocity. AND it increases risk which we have seen in 2008 ain't a good thing.
Since 2007, the velocity of money has plunged. https://fredblog.stlouisfed.org/2016/04/a-plodding-dollar-the-recent-decrease-in-the-velocity-of-money/
2
Yes Neil it would be wiped out by a higher mortgage rate. Also would be wiped out by probably a million other things in life. Uninsured brain surgery, moving 25 miles, a newer vehicle, etc. so help us out, what is your point?
5
$122 per month is crumbs to Democrats, but some Americans actually like having that. It would be even more according to your analysis if the Fed wasn't busy hiking rates every quarter. Somehow they saw fit to keep rates at zero during Obama's Presidency. Trump's Policies + Obama's zero interest rate Fed would really be great for consumers. Democrats are for mobs, not jobs. Republicans are for money of your money in your pockets, Democrats are for your money in the pockets of illegal immigrants.
So basically, middle class families’ financial situations have not changed much. But for some reason, many think that it has. Why is that? Someone has convinced them that the same glass is now half full. A great con job by a great con man.
10
Wiped out not only by higher mortgage rates but also the price of has and the non deductibility of state and local taxes next year Whoopie!
3
@Tom
If, as your location indicates, you are domiciled in SC, unless you give very large amounts to charities it's highly likely the nondeductibility is more than covered by the increased standard deduction. My guess is most South Carolinians see a significant benefit.
I was no fan of Ronald Regan, but to borrow one of his campaign slogans, I would ask every middle class voter to look in the mirror and ask yourself with total honesty, “Am I really any better off economically, physically, mentally or spiritually than I was two years ago? Are my kids any better off? From where I stand, is my country really any better off or is it now far worse?”
Then, go cast your ballot based on your answers. It will be hard for you to go anything but Democratic.
7
There is no mention of SALT and how hard it's hit people who are retired.
3
Great comments. I hope that the Times will use them to generate more articles in the future. Dealing with such large generalizations for the whole country makes it difficult for me to understand what is happening. For instance, if you look at median home costs across the US where the median house costs $158,000 in Jacksonville, FL and in Sacramento, CA is $320,000, how do these discrepancies play out for the middle class?
6
This kind of 'statistical' analysis is just another foil for the truth - this 'upswing' economy is not good for the majority of Americans. I have seen two long standing small business collapse in the last month. One in business for over 40 yrs, one for over 20. A friend who freelances for me just lost his job as a CAD designer. Company who layed him off was owned by a wealthy local family that didn't 'realize' they couldn't afford to open another dealership. It had zero impact on their lifestyle. He and his family are on the verge of homelessness. I have NOT seen my situation change at all since the recession and continue to earn about a 5th of my previous income. I know more people like myself who continue to be underemployed than I care to count. Income inequality and age discrimination continue to be rampant and the rich are increasingly forgetful and disdainful about those who have less and the fairness and equal opportunity this country was founded on. I'm disgusted and exhausted of being underpaid, overworked and disregarded due to my age and I'm sick of hearing how things are better for me. The benchmark is not poverty and oppression. It's my previous earning capacity. Millions more of my fellow citizens feel the same. I hope they remember it when they enter the voting booth this week.
3
@LisaG
I have a few friends who lost their long time jobs to India. They struggle to replace their pay and benefit levels. I look to Radiology and accounting functions to be exported soon.
@LisaG
You are working, be thankful. You could be the next one shown the door. Yes it stinks being over 45 and unemployed. Age discrimination is rampant, I am earning about 35% of what I was pre-Depression 2.0 but I have a job so I am much better off than I was at the end of 2015 when my income was $0. There are still millions of people who do not have a job, mostly due to age discrimination.
2
@LisaG: I hear you, sister. Many of us are sick of being overlooked and ignored by politicians who are supposed to represent us. I cannot wait to get rid of this administration and the politicians who support it. We need affordable education, housing, and jobs that pay enough to allow everyone to live comfortably and save. Not more income inequality. The American people have to stop subsidizing billionaires' lifestyles with tax cuts. It's time to cap CEO and other executive compensation and start redistributing wealth to the people who actually earn it with their hard labor. Let's elect politicians who are brave enough to stand up to Trump and the Bully Billionaires Club.
2
The real costs have been health care insurance. That is not part of this. Seems strange and poor reporting or maybe it’s just bias vs honest reporting. Health insurance in my state has doubled and much more of an increase than mortgage costs.
7
Yes...prices are going up. That’s for sure. However one factor thats been overlooked (and not mentioned in this article) is the Fed. Prices rise because the money supply has rose I.E. QE1,2,3..etc.
I really hope no one is blind enough to think prices rise because of “Those greedy Capitalists.”
Let me enlighten you, back in 2010 when all that money was artificially pumped into our economy it totally distorted our (future) purchasing power. More dollars leads to inflation (hidden tax on the people) which leads to rising prices. My friends...get ready, this is only the beginning for higher prices.
2
Why isn't anyone mentioning these higher raises and paycheck are being eroded by higher inflation. A 2.8% Cola was approved. When a cost of living adjustment is 2.8% a 3% pay raise is nothing to crow about. Some say COLA will be 3% next year so even a 4% growth rate is really 1,1,5% after inflation. To boot we will have added almost 2 trillion 10% to our debt mist what are minor improvements in the unemployment. Even a poor man can live like a millionaire for awhile if he has a credit card.
6
Useful analysis, but remember the ever -rising Federal public debt. We will all be paying for that but mostly future generations with higher interest rates, cut public programs (mainly "entitlements").
But the Republicans know you can fool most of the people most of the time.
2
Peanuts .
Given the astronomical increases in cost of healthcare, prescription drugs , education, mortgages etc , the average middle class American family doesn’t gain a cent from this GOP and trumpian tax cut for the upper class.
The enormous increase of national debt under trump will put a heavy burden on the future of young Americans .
This is not a rosy picture, but a gloomy one .
12
@Inter nos
Good points . Take them up with Silicon Valley , Wall Street , and Hollywood, all core supporters of the Democratic party. 2016 stats show who these influences voted for. Man do they have it made or what ?
@Dan Green, what does Silicon Valley and Hollywood have to do with the cost of healthcare?
And how's the flooding down there in Florida? Are you preparinging for the next Cat 5? People whose home prices are subsidized by federal flood insurance should talk about leeching.
How special.
$122 a month?
I can best that.
Warren Buffett made $29,000,000,000, that's 29 BILLION, for 2017, as he announced in his newsletter to shareowners.
To his credit (no pun intended) he was against the "tax cut" even knowing that he would mightily benefit.
$122?
Versus 29 BILLION DOLLARS?
See for yourself:
https://www.vox.com/policy-and-politics/2018/2/24/17048378/warren-buffett-berkshire-hathaway-tax-cuts
5
Four bucks a day - is that what all the chest pounding has been all about? Dollars to donuts gas prices will spike after the election, wiping out that gain.
Meanwhile the richest 1% owns 40% of the nations wealth - more than ever in the past fifty years. What happened to Trump's Making America Great Again?
https://www.washingtonpost.com/news/wonk/wp/2017/12/06/the-richest-1-percent-now-owns-more-of-the-countrys-wealth-than-at-any-time-in-the-past-50-years/?noredirect=on&utm_term=.334db58c4209
3
Yeah, but as the one male Trump voter I know said on November 10, 2016, as I wrote his final paycheck for the summer said, "HE GOT RID OF HER."
2
My tax returns were over $3000 less in 2017 than 2016 so don't know who's pushing up the average to account for the significant losses.
4
Derivation of a tweet from Morgan Housel:
Interest rates are rising, which is bad for middle-income Americans.
But rates are rising because the economy is growing, which is good for middle-income Americans.
High growth could cause inflation, which is bad for middle-income Americans.
But inflation could boost earnings, which is good for middle-income Americans.
Repeat until crazy.
3
This is a snapshot. Missing are the rends: higher interest rates due to $1.5 Trillion tax cut and higher prices resulting from tariffs. Longer term we can expect even lower productivity due to failure to invest in infrastructure and a dysfunctional immigration policy that is driving talent elsewhere.
8
I guess the age of Carville is over. "It's the economy" when in comes to voting no longer matters much. The acceleration of all the economic numbers, 7 years into a recovery, is staggering over the past two years. Per capita overall growth has doubled, meaning the time it takes for per capita income to double is halved. But no one cares. I think people are willing to give up a lot of their standard of living, i.e. to have the after tax living standard of Europeans, in exchange for a better sense of economic fairness and civility. Also they are fed up with all the advances brought on by the massive wealth creating tech industry, and would gladly exchange going back to 1980's technology for more equality and civility. It's time America became France. Vote Democrat on Tuesday !!!
13
Under Trump's watch, national debt topped $21 trillion for first time ever.
In 2017, President Trump fraudulently pledged to eliminate the national debt "over a period of eight years."
But for the first time in history, the national debt surpassed $21 trillion in March 2018 as Trump and the GOP painted the toenails of the rich a finer shade of gold on a middle-class credit card....to be paid by you and me later with higher interest rates, higher income taxes and future recession.
The Grand Old Pirate Congress passed a $1.5 trillion tax cut bill and a two-year spending deal which, together, are expected to drive the deficit and debt further upward. The Committee for a Responsible Federal Budget estimates annual deficits could top $2.1 trillion per year in the next decade, which would send the national debt soaring even higher.
https://www.cbsnews.com/news/under-donald-trump-national-debt-tops-21-trillion-for-first-time-ever/
Reverse Robin Hoods For A Brighter, Whiter, Bankrupt Tomorrow
Welcome to Trump University's Consumer Fraud Campus.
Enjoy your worthless degree and moral, economic and intellectual bankruptcy.
Tuesday, November 6
VOTE
31
@Socrates - Some folks are never happy regardless of th improvement in the economy.
1
@DEWaldron
If the government is not only raising your taxes YUGELY by taking away your SALT deduction and attacking the sector in which your family income is earned, why on earth would one be happy. That is my family's situation, and you better believe I am made.
House seat here flipped, and what is more a state Senate seat that had been Republican in the 41 years I lived hear just flipped as well.
I have to assume that many of Trump voters look at the lower unemployment numbers and supposed data on how the recovery has progressed and assume that it must be true, just not for them because many of them still appear to be mired in the recession.
15
The report of inflation, much like the unemployment figures, is questionable. It depends on who you count, and what you buy. Just this week, Delta increased my luggage charge by 9%. I choose to buy mostly organically food whenever I can, and that cost has increased more that other food. My orange juice and cereal preferred choices JUST recently down-sized their box and content sizes, a stealth increase.
Granted I can buy a laptop for way less, but I'm not buying a bag of laptops every week; I'm buying fresh fruit and vegetables, dairy products.
My city just raised my water bill by 25%.
Have you gone to the dentist lately?
Come on guys: try some real people in real scenarios and then tell me wages are up, taxes are down.
33
@maryann, one of the fallacies of measuring household spending is what is it they are actually measuring?
Are they measuring price changes or CAPACITY OF SPENDING? So if people cut back or make substitutions to less desirable choices in order to make up for increases elsewhere, is that desirable?
I am pretty sure that utility rates and food prices have gone up more than the surveys say. It makes sense since higher energy prices filter through to EVERYTHING over time.
I question how the extrapolations since 2016 were made and whether the surveys performed under the current administration are even true.
7
@maryann
Hi Maryann: This may or may not be helpful to you but it was to me so I thought I'd share. Delta charges nothing for 2 luggage pieces if you have their AMEX credit card. I got rid of another cc and applied for the Delta card for this reason. Depending on your spending and travel needs this may be useful to you.
1
Interesting breakdown of expenses. However, ever rising health care costs is not mentioned. Neither is the inability to save for retirement which previously had been given a boost with companies offering pensions. On the piddling middle class average income we are expected to also pay out of sight college tuition.
22
@lillianphilbin, rent in most cities have also risen much, much faster than the reported average as well. I guess if you live in the middle of nowhere your rent may not have gone up.
The cost of healthcare is the 800 lb gorilla no one wants to mention.
5
I would like to know what is projected in the coming 1 to 2 years. as the tax cut weakens for most of us and as the mortgage deduction is cut AND the tariffs kick in, I would think most of us will do considerably worse.
probably, just in time to blame the Democrats as usual.
14
My property taxes just went up 6.23% in this Red county in the Red state of FL. In addition, the fire department will now be funded by a separate $151 fee. So, the county will get $500 out of my pocket than last year.
14
@Rich Murphy - This a typical effect of tax cuts,especially at the federal level. They end up in resulting in reduced revenue sharing and the state local governments are left holding the bag. They, in turn, make up the lost revenue with either somewhat regressive sales tax increases or, more often, highly regressive "fees" and excise taxes. Fees are a specialty of republicans. The have little impact on the wealthy and they can claim they didn't raise taxes. My state, Michigan, decided to almost double car registration fees. These fees are based on the price of a car when it's new, not its current value or weight. You will pays $200 or more per car per year even if you drive only a few miles per year. Its sound like your state and/or local government is using the same playbook.
6
@Rich Murphy, I noticed how Irwin skipped over that too. As home prices rise, real estate taxes and insurance costs rise along with it. In the past 2 years, such costs could have easily risen 20% or more along with property values.
4
This is what happens when you have giant federal tax cuts. People still want services and infrastructure, such as roads, schools, police, firefighters, and hospitals. Demand for those things is not going away any time soon. So the Republicans are simply passing the buck for tax increases onto states and municipalities. Like Florida, Texas also loves to brag that it has no income tax and "business-friendly" low corporate tax rates, but we have extraordinarily high property and sales taxes to compensate. Texas also refused to expand Medicaid and has the highest maternal death rate in the country, equal to that of many third-world countries. Nothing to brag about there.
1
My out of pocket health care costs have gone up, my premiums have gone up and my access to providers has been shrunk down to almost nothing.
We also collectively own our debt, public lands, military and other public institutions which are being sold off to private companies at a rapid rate. We are holding more debt and own less public institutions.
Consider the huge increase in military spending. Our military personal is now over 60 percent private contractors and most of the spend is going to private manufactures who's profits aren't returned to the public sector. The volunteers, the public portion of our military is shrinking while the spend and debt laid on to taxpayers is rapidly increasing.
The deficit spending is going to private companies and being financed by a combination of tax, debt and inflation.
20
Correct in part. A better dataset would be this one on wage increases. https://www.bls.gov/news.release/pdf/realer.pdf. It shows real hourly earnings for non supervisory up about 0.4%. What is missing from the article is two other groups. We are median income retirees with no debt (50k per year combined retirement income). The tax cut gave us roughly $30 a month increase that was immediately eaten alive by health care and insurance. The other missing group is that top 10%. The same tax policy foundation analysis found that just for wages alone, the tax cut was worth twice as much in after tax income on a percentage basis and their incomes rose twice as much as the middle class. When you add in investment income, the benefits of the tax cut to the top 10% was almost 4 times higher on their after tax income percentage increase.
15
@tom: Good point. It's interesting to keep in mind, though, that the tax benefits to the top 10% doesn't translate into support for the Republicans. In fact, just the opposite is true for women with college degrees who disapprove of the Republicans by a huge margin (men with college degrees are still slightly more supportive of the Republicans than not).
Further, the group who are most behind the Republicans - White, non-college degree people, are those who have gained the least from the tax cut (and, in fact, will end up paying more once some of the tax benefits are eliminated in a couple of years).
12
One thing always strikes me as missing in reports of tepid wage growth. Yes over the past decade or two my wage growth has been minimal, way less than my father's when he was the same age and in the same industry, and at times mine has been negative because my employer was hurting.
But many of us get better at what we do every day at work, we are an asset that appreciates in value. Despite continuous improvement, training, advanced certification, and wealth of experience, the market exerts a downward pressure on our wages, almost equal to our gains.
Except for the executives, of course.
22
Housing costs continue to rise in a number of areas such as NYC, DC, SF and Seattle.
Affluent people (including non-residents and investors etc ) continue to dominate housing.
Middle or moderate income people lose housing and are forced further out, with longer commutes.
A huge stressor on daily life.
There are also plenty of people with 2 or 3 jobs.
25
Well, inflation is coming but so are the robots, so it is the wrong kind of inflation. A series of trade wars have increased the input cost of lumber and metals, some of which are not available domestically.
And the biggest war with China is yet to come. Trump and his minions have flooded the financial media to confusing messaging to placate the various constituents, so to keep the stock market afloat, at least until next Tuesday.
Could the market implode after the midterm election? It's anyone guess. On one hand, they don't have to feed the Navarro's nationalists; on the other hand, so what if the market tanked if the Republicans retained control with a chance to cut entitlements?
In the mean time, the robots are coming. So the higher input cost will be offset by productivity gain via mechanization. It is inevitable but the prior administration has tried to encourage the work force to the higher food chain level. Not this one. If you want to be a coal miner, stay a coal miner, Trump told people. He loves uneducated voters!
After the trade war with Canada, even if MCUSA would replace NAFTA, the homebuilders might not reduce their prices simply because they don't have to pay lumber tariff anymore, did the airlines give the travelers back the fuel surcharge when oil price collapsed?
Welcome to the brave new world, or back to the roaring 20s
9
This is a very thorough analysis, I would hope that middle class workers would take the time to explore these issues in depth. But how do you give a realistic picture without considering the ever rising cost of college, and health care which is the number one issue among American workers being squeezed financially?
35
@RH good points. The working and middle classes are more than likely worse off if those are factored in.
14
The 2-year chart with spending/income changes is interesting.
I think it might be helpful to add a similar chart showing for the two years before Trump was elected (i.e. the last two years of the Obama presidency)
It will also be helpful to show how the new tax laws impacted "spending" (i.e. tax bill) differently in blue states and red states
6
What stands out in this analysis, is that for the middle class, rising interest rates, higher gas prices, and inflation have virtually rendered the tax cuts ineffective, while adding 2 trillion to the deficit. The deficit will further cause inflation and interest rate hikes, lowering the standard of living for the middle class.
Rent and home price increases are regional. They have gone up a lot in california. Even techies making six figure salaries can't afford a home in silicon valley. A home is increasingly unaffordable for the middle class. The analysis also does not account for many major expenses such as rising medical premiums and prescription drug prices, rising student tuition, the higher costs for homeowners due to limits on the salt deduction imposed by the gop tax bill, and homeowners association fees(for home owners), and higher travel expenses because airlines have raised their fares.Property taxes have also risen by 2-4 percent for homeowners, since 2016. The S and P 500 grew by about 22 percent a year between 1/2009 and 1/2017 including dividends. After the hammering it took in october, it has produced barely 11 percent after dividends which is significantly worse than before. The SALT deduction limit added by the GOP and changes to tax brackets have increased taxes for many homeowners in blue states.
Dump the GOP. They are the party that made business owners and farmers, a small minority, richer, at the expense of the middle class.
43
You should have done two versions of this -- one for states with high SALT levels and one for others. My taxes have gone up about 40% (SALT, HELOC interest disallowed, loss of personal exemption, etc.), offsetting any minor savings elsewhere. And I am solidly middle-class by anyone's definition.
27
@Seabiscute I'm glad you brought up the SALT issue. In my family's case, the new lower tax rate will not cover the increased tax resulting from the removal of the SALT deduction. This will cost us several hundred dollars in increased taxes. While not catastrophic, it is an example of the failure of the tax bill to aid all members of the middle class.
23
done on purpose to punish blue States and cobble their financial strength. it's a first to see taxes deployed in this way.
7
@Seabiscute - sorry, I'm not familiar with that acronym. What is a SALT level? Thanks.
Why are we not talking more about Automation? We are replacing well-paid jobs with mediocre jobs in the service industry. It is difficult for people over 50 in IT, etc. to get a new job at anything like their old salary. Baby boomers are retiring from very good jobs and the new jobs are often paying 1/3 what those old jobs paid. It seems to me that our Lobbyocracy is at a huge disadvantage in mitigating these challenges. Who will buy the nice homes as baby boomers downsize, let alone the McMansions? "Enlightenment Now" by Pinker is optimistic about the world, not so much about the US. The middle class seems much healthier in other countries than the US. We can't even fix healthcare. Are any of you optimistic?
43
@Frank Walker One thing I have noticed over the past 30 years as I turn 63 is that government and public education workers have their pay, pension, and health care protected despite all the trends you mentioned. I am an IT professional and topped out in 2002 and am now out and just barely got kids through college, etc. My public sector equivalents have continued to thrive, get raises, and are looking at pension far more than my son security and 300k IRA will provide and will get to continue to get paid to the end
12
@Arthur--there is some truth to that, though I would argue that for many in the public sector, that their wage gains have been eaten up by health costs, etc. What you don't mention is that many in the public sector accepted jobs with lower pay precisely because they tended to have better/more secure benefits.
17
@arthur
I am one of your dreaded government workers. I'm 58 years old. I have a graduate degree. I earn $17.51 an hour as a public librarian. Yes, I have a pension, but did you know that for many public workers those pensions are in lieu of Social Security and not on top of it? That hardly qualifies as a pension. And I pay more into it than you pay into SS (and will lose part of it should I ever get to retire due to the "Windfall Protection Act" and my long career as a private sector employee paying into SS. The requirement for full SS is going to be raised to 35 years, I guarantee it. And I have 34. Google it.). I do not avail myself of the healthcare benefits offered by my government employer because it would take up a huge chunk of my paltry paycheck; instead I'm on my husband's retiree policy, which he has as a result of a long career as a union-represented employee in the private sector. It costs a lot less and is better coverage. I will not be eligible for healthcare coverage as a result of my public sector job if I ever retire; it's not even an option.
Yep, I'm thriving. Like a queen.
Government workers are your friends, neighbors, family, and taxpaying citizens. What I can never understand is why people like you seem to want those friends, neighbors, and taxpaying citizens to have a lower standard of living. How does that help you? In my county you wouldn't notice the difference in your taxes even if the entire library tax was eliminated; it averages $15/year.
59
The middle class are more likely to be educated and know what's going on in politics - so the hollowing-out of the middle class and reducing of their finances and influence helps rich elites' ability to do what they want, take what they want, and get what they want - without awkward questions from a no-longer relaxed and comfortable middle class who are now more likely to be focused on their work struggles and shrinking finances.
26
I suggest you pay a visit to Seattle, San Francisco, and other metropolitan areas where housing costs continue to skyrocket and renters are being forced out of their homes. Factor in ever increasing health care costs, double the price of a barrel of oil over the past year. Toss in the phaseout of the federal tax deduction for payment of state taxes. The elimination of programs to ease the crushing burden of student debt.
Wages have supposedly increased by about 0.6% over the course of a year, adjusted for inflation. Whoopie! Don’t spend it all in one place, chum!
Over the same timeframe, after-tax corporate profits are up over 20%. Productivity is flat to declining. The federal deficit has ballooned, which in turn inevitably will mean rollbacks in all sorts of programs that contribute to the standard of living of all Americans. Rebuild infrastructure? With what, acorns?
All to line the pockets of the rich with a big fat ‘tax relief’ package.
There is no ‘economic miracle’ here. It’s just more supply-side flim flam. That theoretical $122 a month is already long gone.
78
@chambolle
How many wars and conflicts are you in and how much are they costing America? That money could be used for schools, bridges, clean water, etc.
7
@MKS
We don't do healthcare and infrastructure here. We do non-stop, absurd and unnecessary wars. Sad...but true.
4
Wow, poverty with a little bit of sugar. No matter, simply bait and switch, the bait a tax cut, the switch as increased plutocracy and health care costs, with eventual decreases in government services. Who needs roads? Who needs retirement income? Who needs education? Who needs help with health care costs? Who needs tax collection? Who needs clean air and water?
52
@James Igoe
BAM—you nailed it. And some of these bait and switchers (lots of folks ar forgetting that the bottom rate of federal tax is now 12% not 10%, offset temporarily by an increase in the child tax credit, which the anti-tax repubs initially fought) make no bones about their view that “Roosevelt and Johnson ruined America” and social security and Medicare have to be destroyed.
5
This was a nice beginning; now let's add some of the very important aspects of the economy that were not mentioned: (1) male labor force participation rate is falling - not rising (better indicator than employment rate); (2) budget deficit is rising - estimated to be over a trillion a year for the foreseeable future (interest on the debt will be the same as the military budget - basically throwing away money); (3) if Republicans hold congress, they are coming after your Social Security, Medicaid & Medicare; (4)recession coming in late 2019 or 2020.
51
Yes, the tax cut resulted in an increase of about $70/month for household. But rent went up $250 so it did absolutely nothing except blow up the deficit.
32
$122 a month for the so called middle class... IF it even exists. Is worth what? The cost of a trip to the supermarket? THIS is the fantastic economy of 2018?
59
Wow, poverty with a little bit of sugar. No matter, simply bait and switch, the bait a tax cut, the switch as increased plutocracy and health care costs, with eventual decreases in government services. Who needs roads? Who needs retirement income? Who needs education? Who needs help with health care costs? Who needs tax collection? Who needs clean air and water?
8
$122 a month is a rather paltry gain for two years on a middle class income. I am assuming those making less than an average middle class income, have lost a lot of ground due to government and employer reluctance to increase wages. It would be nice to see the comparison for lower and higher class income earners. By the way, in real time, my groceries have had price increases anywhere from 1% to as high as 6% for individual items, just this year!
31
I don't remember the comparative analysis of what happened to the top 10, 5, 1 and 0.1% in the same time frame. That comparison would be most informative.
28
@George N. Wells
You mean "telling", as in exposing the mindless avarice of these creatures passing as human.
4
A lot depends on where you live. The US really can't have one 'inflation rate' because it is so large. Gas prices have risen more like 25% here in Silicon Valley. Rents have risen 10-15%, not 3%. Groceries are about the same as they were a year ago, but up 5% or so, very much depending on what you buy. Restaurant food is up more. Home buying costs are already astronomical, completely out of reach for a typical 'middle class' family, unless there are two low six-figures salaries in that 'middle class' family. Home costs are up 15-20% in this area, and combined with interest rate increases if you are unable to pay $5000 a month mortgage payments, and put $300K or $500K down, you are not buying even a small house. So the inflation rate in Silicon Valley is more accurately 8% or 10%, or so, depending on what you measure. Things typical 'middle class' people spend their wages on, that's about right. Add in the predictable future attempts by Republicans to cut Social Security and Medicare to offset their Trump "Tax Reform" caused rising deficits, and the typical 'middle class' family here is falling further behind, and can't look forward to retirement either.
37
So middle income is still middle income. The employment picture means families have a much lower chance of dropping out of middle class when a wage earner loses a job. In addition some families can move up when they add a wage earner or stop supporting an adult child. And time will tell whether riding the stock market is a ticket to wealth or not. It could be a good thing that those without a lot of money are not taking risk.
1
This analysis factors in credit card and mortgage debt but not student loans and what people pay towards their portion of employer health care plans. All four of these have significant impact on income. Add to this the "must haves" for living a contemporary life - the smartphone, the data plan, internet access, computers etc. Gas prices are mentioned but not rising mass transportation costs (including tolls, etc.). When all this is added up that extra $122 is long gone.
47
Imagine a fixed amount of money that slowly inflates over time, maybe a couple percent per year, say two dollars in a hundred. If broadly felt among the masses of people, say 90% of them, not much changes.
Now imagine there's two percent growth among a nation of 325 million, but that the top ten percent enjoy the bulge, that 32.5 million get much of the absolute value of the two percent growth. Instead of the money being spread out evenly, year after year, to all the nation's citizens, it's captured by the top ten percent.
That's the source of inequality in our political economy, and that's why most people disagree with Pollyannastic assessments where we're to feel happy with $122. Others pointed out that healthcare costs are massive and have gone missing in the above analysis, and I'd like to point out the obvious: gas prices inflating so incredibly high out to be the lead off for the article and warrant at least a few paragraphs as the most important crushing cost to our daily lives no one is able to avoid. Such inflation is stridently regressive, and that point alone merits mention.
How about an article that for once takes our side? One that discusses the economic issues and points a finger at the politicians, bankers, CEOs and their hierlings for intentionally managing a system that they alone benefit from? They control the leavers of power, we the people do not. They abuse the system they control and every time we vote, we vote to put more of them in control.
83
@Chris Thank you for a breathtaking analysis. My first thought when I saw the headline was “middle class?”
There isn’t a middle class anymore
6
Nice try but miss. How about health care premiums and out of pocket costs? There's no middle class relief, truly there's no longer a middle class.
75
I don't have to look far to see the reality. We live nearby within 10 minutes of driving to both daughters and their families. My sense tells me that lives is not that good. Both my daughters and son-in-law have decent jobs but ok salary (in my opinion). They will suffer greatly if anyone loses his/her job. The mortgage, living expenses, and expensive kids education are very significant. They just barely get by with the current economy. The bottom line is that the outside world is very competitive, and our government has so far failed to prepare our future generation in future challenges.
54
@Usok true but is one family member is employed by govt or public ed with seniority, health care and pension the family is ok. If non govt person loses job then health care ok, pension ok, half of total income ok and unemployment good for 6 months until new job. A far lower way to fall than if both in private sector. I see this all the time, if a man(usually) loses IT job(for ex) but wife is a teacher (for ex) they really don't sweat it
1
Somebody finally got it—sort of. Health care costs rise on average about 7.5% per year. In other words: see the tax cut? No darn tax cut, but an increase by gutting the ACA (left in place sort of).
Substantially increased government borrowing+tariffs=higher interest rates and inflation. The tax cut did nothing more than shift wealth from the middle class to the ultra wealthy. I live on an IRA, holding both stock and bonds, and let me tell you, bonds have decreased in value as interest rates have risen dramatically. My accounts have posted a gain of a whopping $2,000 year to date.
Our economy is on the brink of disaster while Trump fiddles.
81
Dr. Irwin, Without saying so directly, your article is an excellent criticism of macro-economic indicators used to tell us how the economy affects everyday lives of most people. Given their limited utility, why don't economists insist on a set of new metrics, augmenting GDP, employment rate, stock market trends, etc. with indicators at the level of individuals? By critiquing the standard metrics, you have raised an important new question - what should the individual level indicators be? I am looking forward to an answer and to their widespread use. Thank you.
36
@dt, every single number should be reported as BOTH average and median. Median would tell you where the majority of Americans are and the difference with the average will give you an idea how skewed the numbers at the top of the pyramid are relative to everyone else.
5
But even the so-called "good news" is not really so good. Take that 29% increase in the stock market. This year the market increase is teetering near zero. Last year the market was up but what happened? The biggest corporate tax cut in history.
How big? Well, if the tax rate (federal and state) for a US corporation used to be about 39% and is now about 25%, then after-tax corporate earnings went up about 23% just based on the corporate tax cut alone (75/61 = 1.229). Assuming constant P/E ratios, that should translate into a 23% increase in stock prices. Throw in say four percent for reinvested dividends over almost 2 years and you are about at a 27% increase. All of which consists of reinvested dividends and tax cuts paid for by increased deficits and tax increases in individuals. And no, those corporate tax cuts have not paid for themselves.
So even the "good news" is largely a steroid-induced illusion. That is one reason the market is basically flat this year and even with immediate expensing of machinery and equipment we are not seeing a surge in investment in this country. The so-called "Trump boom" has a very hollow ring. He knows it--after all, he has been a con man all his life--so he prefers to talk about a so-called "caravan" 1000 miles away than focus on the actual state of the economy.
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@Bob - Nice argument, The trouble with it is that the old REAL corporate tax rate was nowhere near 39%. Now it could be that the new REAL corporate tax rate has the same ratio to the old REAL corporate tax rate as the nominal rates, but that sure ain't clear to me.
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@Len Charlap completely agree, the "old" REAL cor. tax rate minus a swath of deductions landed corporations in the 22% arena for the "real" rate paid...and business investment spend plummeted i 2nd qtr, not yet known with 3rd, while the$250B in tariffs will be more realized (with expenditures by manuf. or perhaps direct to consumer spend) by end of 1st qtr '19.
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@Bob
Stock market prices vary widely and randomly in both food and bad times. You can't just save your argument for down periods, and when you don't sell the market moves are only on paper.
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Should of done a comparison with corporations and those over 250,000 per year and increase in National debt per household. Would see who got real benefit and who got the debt generated by the tax cut for the rich and corporations.
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I keep asking - is it just me? When I go use the irs.gov calculator it revealed that my withholding was way too low. Zero deductions. Combined income less than $150,000. Taxes and mortgage interest just barely above the $10,000 limit. Result is that both of our employers were withholding too little. How many people have checked this? I think there could be a big January surprise for many taxpayers. It will be too late to change their vote then.
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@Catherine R It's absolutely not just you. My accountant had sent a letter to his clients back in June, advising us to use that calculator to confirm that our then-new federal payroll deductions were sufficient. It seems that some companies are exaggerating the federal tax withholding savings in order to make the situation look better for employees. My employer deducted the correct amount, which is how I know the "middle class tax cut" is a joke (the laughable $20/mo doesn't even cover higher gas prices). It's going to be rough on families expecting their usual refund, only to be slapped with a tax bill in April.
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@Catherine R
Mine too. I earn $36K as a public librarian. My husband's pension, which is taxed as wages since it is an actual pension and not a do-it-yourself-pension like a 401K, is about equal. We have no other income and can no longer itemize deductions as our house is paid off, so we file the most basic tax returns. This makes it beyond easy to figure our future income and taxes. I did the 2018 W-4 worksheet as soon as it became available. The result? I had to have an extra $50 per pay period (2 weeks) withheld just to break even.
The "tax cut," which appears to have been more of a reduction in withholding than an actual tax cut, originally netted me an illusory "extra" $30 per pay period, or $15 per week. Now I'm in the hole.
I don't feel sorry for anyone who was stupid enough to vote for those who perpetrated this "tax cut" upon the nation and then were even more stupid and did not re-figure their own withholding. They'll get no sympathy from me when they start whining and crying in early 2019.
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@Catherine R, spot on! I have the same situation and not one news article has addressed it yet. We will owe that money next year plus some. On top of that our employee healthcare premium went up over 20%. This article skips all the pertinent information.
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My mom taught me to save as much as I could and then spend what is left. I always lived well below my means. This helped me retire early. Investing in the stock market and assuming that saved money was off limits did the rest. Without savings it is impossible to ever retire without worry. The American dream is alive to those that know the secret of having savings. The got-to-have-it-all-now American economy may not like your choice, but you will savor it in comfort later.
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@Bella
Living below one's means is a great goal. However, it is critical to remember that the ability to do this depends on having a wage that will accomodate essentials with enough leftover to save. I don't care how thrifty you are, you can't amass a sizeable (or even any) nest egg if your salary is below a certain level.
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Sure you can save if you actually have disposable income. Most American families can’t even pay all their monthly bills.
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@Bella I take it you haven't had to use money intended for savings on a disabled or chronically ill child's therapies which weren't covered by insurance, or care for an elderly relative developing dementia and needing full-time watching, meaning either you quit your job or you pay someone to stay with them. My neighbor's husband developed early dementia, so even with the ACA most of his care wasn't covered, and group homes had an older age requirement. His wife quit work, lived seven agonizing years as his caretaker, and watched him die while their savings was depleted. Medical bills used to be the top cause of personal bankruptcy in this country. The ACA cut that in half, but it's still a problem, and likely to surge again as the GOP destroys the ACA bit by bit.
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All things being equal, the methodology used to arrive at the middle-class financial benefit, of $122 per month is reasonably accurate.
What's ignored here, aside from the costs of trying to secure and maintain health care, insurance premiums, drugs, emergency room visits, and all other such normal life expenses, is the reality that the massive expansion in the orchestrated wealth creation of the 01%, a creation which used as its core principle, its core tenet, that anything more than the monthly improvement of $122 in the breadcrumb allocation, would be unconscionable, from the .01 perspective, and even worse, it would be an acknowledgement that our Masters, these wholly rapacious avaricious devourers of our lives, were weakening in their resolve to maintain their decades long war of subjugation.
Yep, as a preamble to a discussion on inequality, my thoughts are a start ...
And, by the by, if the idea that the publication of this data might in some way take the edge off, and/or mollify, the palpable anger abroad in this land, I think nothing falls flatter.
It will be interesting to see how many comments this report garners.
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Then take what's happened in the last year and extend that view over the past several years of this "economic boom" where wages stagnated or started lower as many people reentered the job market post Recession - in a land of lost nest eggs - and a truer picture emerges. In particular, while average apt. rents in the past year have stabilized, over the past five years they skyrocketed, especially in urban areas.
A normal economic expansion this length would already have had wages outpacing inflation year after year. Promotions would be common, resulting in real personal earnings growth.
Meanwhile, Wells Fargo, Goldman Sachs, etc. etc. - there are still rampant stories of financial deceit by Wall Street.
There's a disconnect and that's why nobody is running on the economy.
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I think this vastly understates how harmful the tax "cuts" have been to the middle class. My 96 year-old mother, who owns her retirement unit and a modest sun-belt condo will have her deductions for state/local/real estate taxes capped at $10k, and pay much more in tax as a result. And as others will point out, health care and education inflation wildly exceeds over-all CPI rise. And then we need to add the rising costs of the exploding deficit, courtesy of Debtor Donald's gift to himself and his fellow Forbes 400 members, which will very shortly affect all of us, first through higher interest rates, and then through higher taxes.
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@dave the cap on those deductions, along with the increase in the standard deduction was the best thing about the tax plan...
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@Jim: But, it hurts people in high tax states like California, New York, New Jersey, and Massachusetts. It was seen as the "Red" states punishing the "Blue" states for political purposes.
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@Jim Blue states are better off by almost all measures (economy, education, jobs, environment, civil rights, etc.) and they subsidize substantially the red states. The limit on deductions for state taxes was simply retribution and bad policy.
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I appreciate the information in the article. It would be helpful to see the same numbers for upper income households over the same time period.
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How about age and marital status? Consider education, day care, home health care and other medical costs as well as food, shelter, transportation and one sees expenses that affect parents of young children or adolescents very differently from seniors on fixed incomes. Do the current figures take into account those affected by recent climate disasters such as hurricanes, floods, fires?
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So for those with money in the stock market, wealth increased by 25% (19k$ vs 15k$) and net income increased by say 3% (assuming average wages of around $45k/yr). What's wrong with that? It's better than the previous 8 years had been - no?
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@deedubs--The problem, as is stated in the article, is that most in this population have little to no exposure to the stock market. So if you are in the middle 20% and have significant stock market savings, good for you. But on average, middle class folks don't
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@deedubs - It's basically exactly the same as the last 8 years. Those of us with assets in the stock market had enormous gains, far outstripping gains in wages. That's how it was under Obama and it's exactly how it remains under Trump. Only difference is Trump will eventually wreck the economy either by deregulation of banks, loss of growth though loss of trade or loss of growth through loss of immigration. Who really thinks we won't have a recession in the next 2 to 6 years?
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@deedubs that's been debunked so many times it's tiresome. Republicans didn't like the Obama years so they felt the economic performance was poor. look at any chart and you see a steady rise from bottom left to upper right. there's a spike for Trump's election in stock charts, which fell back to trend.
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Health care cost increases and school tax increase along with STAR Rebate decrease have been totally omitted. Both of those numbers swamp the $122 theoretical number.
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It is astonishing that there is not a word here about health care costs (insurance plus out-of-pocket), certainly a big and rapidly increasing component of middle-class budgets. Nor is there any consideration of income differences between the upper and lower halves of the middle class. I suspect these are quite considerable across the wide range of middle class incomes, as has been shown in analysis of middle class income shifts in Latin America.
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@Robert--It seemed to me that it was the middle 20% spoken of here, and those folks would be the true middle class.
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@Susan yet the writer didn't define the demos of this middle 20% with core details on where they live, avg. age, occupations/fields, etc.
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Reading this excellent piece goes far to explain why the 'robust economy' pitch isn't getting traction with Republican candidates. The net gain of $122 a month is clearly fragile and for many just not there. Thanks.
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@Jimmy -- One under-insured visit to an Emergency room, or one unexpected car breakdown will wipe out that $122 a month for the next year or more... no surprise Trump's "Tax Reform" is nothing Republicans can run on for the midterms.
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@Jim Brokaw It would take most people more than a year to pay off an ER visit. I fell and broke four bones last year; was in the ER for seven hours, got x-rays and casts. Bill was over $10,000. That's without complications or needing later surgery or having to be admitted to the hospital.
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