If you examine the graph very carefully it becomes clear that almost all of the negative trends are a result of the great recession. The author should have used 2007 as the starting point for negative trends rather than 2000. The situation has actually improved since 1987. In 1987 the lower income percentage was 40% vs 34% in 2013. The middle and upper classes rose from 60% to 65%. Hopefully as the great recession fades into the past, the situation will start to improve. I have noticed for many years that people on the Left and the Right like to cherry pick their data in order to score political points. Be especially aware of what year is picked as the starting point. For instance: conservatives like to pick 1998 when the subject is global warming
This looks encouraging. While the middle and lower classes shrink, the upper income group grows proportionally. All the talk I've heard is that the middle class is dropping into poverty but the actual data sugges the opposite.
Comparing "households" across time can be misleading, because the size of households may change; and have in fact changed. Smaller households are on the rise. Smaller households tend to have smaller incomes than larger households. See the Census Bureau's "America's Families and Living Arrangements: 2012" here: http://www.census.gov/prod/2013pubs/p20-570.pdf.
On page 5 there is a graph of households by type 1970-2012. From 2000 to 2012, households made up of either one man or one woman rose from 25.5% of all households to 27.5%.
While married couples without children have risen as a share of all households (only slightly), households made up of married couples with or without children has gone down, from 52.8% of all households in 2000 to 48.7% in 2012.
"Other family households," which includes single-parent households, has gone up from 16% of the total in 2000 to 17.8% of the total in 2012.
The average number of earners per household is falling. For that reason, looking at "household" income over time offers little insight.
On page 5 there is a graph of households by type 1970-2012. From 2000 to 2012, households made up of either one man or one woman rose from 25.5% of all households to 27.5%.
While married couples without children have risen as a share of all households (only slightly), households made up of married couples with or without children has gone down, from 52.8% of all households in 2000 to 48.7% in 2012.
"Other family households," which includes single-parent households, has gone up from 16% of the total in 2000 to 17.8% of the total in 2012.
The average number of earners per household is falling. For that reason, looking at "household" income over time offers little insight.
3
One thing I am curious about is the definition of income and where the authors get their information. Their charts start in 1967, a time when there was not an earned income credit or 401k plans, for example. It would be helpful for me to understand their methodology so I would have some confidence in their numbers. Another thing I am curious about is the effect of immigration on these numbers. I would suspect that new immigrants from Latin America tend to be over represented in the lower third and immigrants from China and India tend to be over represented in the middle and upper tiers.
This analysis is unfortunately not very useful, as it uses arbitrary cut-off points that don't reflect what people generally mean when they say "middle class." You can talk about lower, middle, and upper, but the division that actually matters is poverty (lower), working income-based financial security (middle class), and then wealth/asset-based financial security. Properly understood, then, middle class isn't a fixed income range - it's a set of households defined by their financial security. I admit there's fuzziness toward the top end of the middle class, many of whom would protest they are not wealthy even as they send their kids to expensive private schools and take expensive foreign vacations. But we can agree that, if you are living paycheck to paycheck and any financial set-back would cause a spiralling disaster, you are not middle class.
Consider that, in the 60's, you could be a member of the middle class, send your kids to college, and buy a lakehouse for summer vacations and your golden years of retirement (starting at 65) funded by Social Security and pensions.
Are you seriously suggesting the proportion of households that can afford to pay for college, take vacations, and is financially ready for retirement, not only increased from the 60's to the year 2000, but saw ever more people becoming so wealthy they didn't even have to work? Ridiculous.
Consider that, in the 60's, you could be a member of the middle class, send your kids to college, and buy a lakehouse for summer vacations and your golden years of retirement (starting at 65) funded by Social Security and pensions.
Are you seriously suggesting the proportion of households that can afford to pay for college, take vacations, and is financially ready for retirement, not only increased from the 60's to the year 2000, but saw ever more people becoming so wealthy they didn't even have to work? Ridiculous.
2
Great post.
FAFSA claims I have the money to pay $30,000 tuition per year for my children because we earn $100K. Taxes and healthcare alone knock that down to $70,000. My husband and I have no retirement. You cannot count a house and social security, we could never live on that. Well, you get the numbers, the gov't says I can live on $40,000 a year and conjure up a nice retirement.
I know my hold on the middle class is tenuous.
FAFSA claims I have the money to pay $30,000 tuition per year for my children because we earn $100K. Taxes and healthcare alone knock that down to $70,000. My husband and I have no retirement. You cannot count a house and social security, we could never live on that. Well, you get the numbers, the gov't says I can live on $40,000 a year and conjure up a nice retirement.
I know my hold on the middle class is tenuous.
5
You might be interested to know that in NYC that $40 K would barely cover your housing and food costs. Studies like this one are an absurdity. The top 1% get their money from investment payback/income. They don't even have to work. Talk about living off the work of your ancestors. That they pay half of all taxes is misleading since they own more than 90% of the nation's wealth! To my logic they by right (morality) and fairness (ethics) ought to pay way more than half.
We need to tax ALL income in a progressive fashion. Income taxes alone can be applied to all households and only they can raise the monies needed by society for schools and roads and other infrastructure. Excise taxes and VAT taxes are destructive and punitive, keeping the poor poor and allowing the super wealthy to live off the labor of others as "investment" income.
We need to tax ALL income in a progressive fashion. Income taxes alone can be applied to all households and only they can raise the monies needed by society for schools and roads and other infrastructure. Excise taxes and VAT taxes are destructive and punitive, keeping the poor poor and allowing the super wealthy to live off the labor of others as "investment" income.
1
I was surprised to see that the lower class still exists. I don't think I've heard a politician mention them since the turn of the century.
I guess they're not worth talking about.
I guess they're not worth talking about.
1
50% above poverty is fine, but $100,000 at the high end is far too arbitrary a delimiter for any kind of serious analysis. Comparing a variable lower bound to fixed upper bound is bad practice. It is far too easy to manipulate the conclusions drawn from such a comparison. The high-end delimiter ought to also be defined as some percentage of the same benchmark. Why not define it as 10 times the poverty level? Even choosing the high watermark as some arbitrary percentile of the aggregate incomes in the country makes more sense to me. Choose whatever percentile you want: 60th, 75th 99th, etc. The problem I have with $100,000, is that it gives no sense of perspective, frame of reference, or comparison to a variable lower bound.
2
Picking 100% is acceptable only for those who are math challenged.
$100000 is the top 20th percentile in the US. (and in NYC etc)
Anyone who thinks being in the top 20% is being in the "middle" needs to go back to 6th grade math.
The true middle - the median at the 50th percentile - is that $50000ish household income.
$35,000 in household income is the 36% percentile.
SO go that far to the other side of the median (around the 65th percentile) and the household income is $75,000.
That $35000 -75,000 is the TRUE middle class in economic terms.
$100000 - the top 20th percent - isn't even close.
$100000 is the top 20th percentile in the US. (and in NYC etc)
Anyone who thinks being in the top 20% is being in the "middle" needs to go back to 6th grade math.
The true middle - the median at the 50th percentile - is that $50000ish household income.
$35,000 in household income is the 36% percentile.
SO go that far to the other side of the median (around the 65th percentile) and the household income is $75,000.
That $35000 -75,000 is the TRUE middle class in economic terms.
$100000 - the top 20th percent - isn't even close.
1
These charts make it easy to spot. Bush and the Republicans engineered a boom and bust on a scale not seen for over 80 years.
There is a reason they call it a depression. It is descriptive of a widespread drop in buying, building and the paying of wages. By the end of a depression wages and prices will both be lower in real terms. Generally wages will fall faster and stay down longer than prices.
This is applauded by men like Rand Paul and Paul Ryan as the invisible hand of the market and is cheered by Ayn Rand disciples everywhere as 'creative destruction'.
If you are planning on voting for any of the current crop of Republican hopefuls in 2016 get used to it. It can happen again.
There is a reason they call it a depression. It is descriptive of a widespread drop in buying, building and the paying of wages. By the end of a depression wages and prices will both be lower in real terms. Generally wages will fall faster and stay down longer than prices.
This is applauded by men like Rand Paul and Paul Ryan as the invisible hand of the market and is cheered by Ayn Rand disciples everywhere as 'creative destruction'.
If you are planning on voting for any of the current crop of Republican hopefuls in 2016 get used to it. It can happen again.
4
Why not use 'medium' income as the 'middle'? The definition of middle, is medium. In our complicated economic system, income goes far beyond wages. With all the government hand outs, tax deductions and offsets, income shifting, income deferrals, 'income' is a very misleading term. There is no doubt income and wealth mobility has occurred at and increased, and will continue to take place and grow in the demographic of married, college educated people. It has always been the way. Actual precise measurements are really not necessary, you can feel it in the 'culture' you keep. Rising and falling is relative to the wealth you can retain and grow. Poor is defined by those looking for ore and more government hand outs. That segment will continue to grow as politicians seek to win favor with that group. Political income redistribution is game.
Coolhunter, the income redistributed by Republican philosophy is always from the bottom up to the top, from the salaried man to the investment man. Money making money that is taxed lower than labor making money is punitive in a developed nation because it destroys the demand basis for a vibrant economy. Over the long run the investor class is simply sucking the life out of the economy since capitalism depends upon the "exchange" from one person to another. Not much of an "economy" when one person buys a Tesla and most people use the bus.
The handouts at this point in time are going to the investment class and in the long run they will move their money to other, more up and coming nations with more people who can consume, leaving our own as an OK but no longer vibrant economy. It has happened elsewhere. It is actually how Britain lost its preeminence to the US at the beginning of the 20th century. Read "the Betrayal of American Prosperity" by Clyde Prestowitz who used to work for the US in its trade policy. Determining who is part of the middle class is nowhere as important as the how and why of its size and where the movement is and why. This study doesn't begin to touch on the underlying problems of inadequate economic thinking and understanding amongst politicians. They aren't even asking the right questions, let alone having any answers. FYI also: the amount of money going to poorer citizens has GONE DOWN tremendously in 6 years. The handouts are to the 1%.
The handouts at this point in time are going to the investment class and in the long run they will move their money to other, more up and coming nations with more people who can consume, leaving our own as an OK but no longer vibrant economy. It has happened elsewhere. It is actually how Britain lost its preeminence to the US at the beginning of the 20th century. Read "the Betrayal of American Prosperity" by Clyde Prestowitz who used to work for the US in its trade policy. Determining who is part of the middle class is nowhere as important as the how and why of its size and where the movement is and why. This study doesn't begin to touch on the underlying problems of inadequate economic thinking and understanding amongst politicians. They aren't even asking the right questions, let alone having any answers. FYI also: the amount of money going to poorer citizens has GONE DOWN tremendously in 6 years. The handouts are to the 1%.
1
These numbers are completely meaningless. What they should is that share of the population that can be classified as lower-income has increased over the past 6 years (since the start of the recession) where as the share of the population that can be classified as upper has shrunk. The share of the population that can be deemed middle-class has been shrinking since data has been collected.
This does not at all show mobility however. We do not know if people are falling in or out of the middle class or if more people are entering the population in a given income level.
As for the break down by age group, education level, race and marital status - well duh nothing new to see here.
This does not at all show mobility however. We do not know if people are falling in or out of the middle class or if more people are entering the population in a given income level.
As for the break down by age group, education level, race and marital status - well duh nothing new to see here.
2
So the lower and middle class is shrinking and the upper class is increasing.
2
No, the upper class is shrinking as well. People in the upper class have fallen to the middle class and people from the middle class have fallen to the lower class, which is the only group growing in relative terms.
2
That's not what the data says at the top of the column.
From 1967 to 2013:
Lower Income 40% to 34%
Middle Income 53% to 43%
Upper Income 7% to 22%
From 1967 to 2013:
Lower Income 40% to 34%
Middle Income 53% to 43%
Upper Income 7% to 22%
1
I know that sometimes totals don't add up to 100% exactly because of rounding, but the difference in these three graphs is confusing because each of the changes is small (important, I get it, but less than 4%), and the final numbers add up to sums that are different by 2% (total in 2000 = 101%, total in 2013 = 99%). So despite the fact that the middle-income and upper-income brackets drop by 2 and 3 percentage points respectively, some of those disappear in the final numbers, and the lower-income bracket goes up by 3% instead of the total 5% of change in the other two brackets. With such small shifts, maybe it would be good to go an extra decimal point to clarify?
1
Let's see more around the borders, for example in the $100,000-150,000 range. It's not a clear break, but income $150,000 and, say, $400,000 (not to mention the 1% at more) is a big difference. What is the "curve"?
4
Did you control for education in these analyses? As the variable that seems to be driving most of the variance, it is likely confounding several of the other analyses including, potentially, race and family status.
1
There is a chart on the effect of education. What is also interesting to note is the high income/lower education group which are likely to be entreprenuers.
3
Lori, some of them are probably entreprenuers but most are probably older and therefore started work when an education wasn't as necessary or they inherited or work for the family farm/business/investments.
3
Lots of reasons!
Not to diminish the suffering of transgenders, but when the best Obama and Hillary can say about the American worker is "raise the minimum wage" and NOTHING about creating AN ACTUAL WELL-PAYING JOB, is it any wonder Trump is as popular as he is? Hillary refuses to deliver any environment for job creation, all she can do is parrot "better pay for minimum wage workers!" and expect us to marvel at that stroke of brilliant oratory. As long as Hillary gets the job SHE wants, she has no interest in any of the rest of us.