Thursday, August 8, 2013

The Middle Class Ain't What It Used To Be

This William Galston Wall Street Journal editorial makes two key points about America's middle class. First, members of the middle class may be doing better than their parents did, but the middle class is shrinking:
Four decades later, the middle class share had declined by 10 percentage points to just 51%, while the upper class share increased by six points and the lower class by four. The U.S. income distribution is still a bell curve, but the left and right tails are fatter and the hump in the middle is lower.
This means that the middle class is less economically and socially dominant than it once was. Relatively speaking, more Americans are enjoying affluent lives at the same time that more are just barely making it (if at all). But that doesn't mean the middle class got poorer. During those 40 years, Pew calculates, the median income of middle-class households (adjusted for inflation) grew by 34%. The median grew for the others as well—by 43% for upper-income households and 29% for those with incomes below the middle class. This isn't surprising, because the median income for all U.S. households rose by 32% during that period, from $44,845 in 1970 to $59,127 in 2010. Indeed, 86% of middle-class Americans, and 84% of all Americans, enjoy higher incomes than their parents did.
Second, the current state of events may have some positive elements, but the recession devastated the middle class. Further, Galston points out that the efforts the middle class has undertaken to survive are unsustainable in the post-recession era:
We can argue about how squeezed the middle class was in the decades between the end of the postwar expansion and the onset of the Great Recession. But two things are clear: The coping mechanisms the middle class employed in those decades (fewer children, more hours worked, more borrowing against home equity) are played out, and it will take middle-class households years to recover from the recession-induced blow to their income and wealth. If we cannot restore a vigorously growing economy whose fruits are widely shared, the struggles of the middle class will persist, and our democratic distemper will deepen.
Left unsaid is an acknowledment that no one from the right, the left, or the center has new idea about how to "restore a vigorously growing economy whose fruits are widely shared," so the middle class will continue to struggle.

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