The Middle Class Is Dying in America
Summary
The middle class in America has officially fallen below 50% of the population.
Income disparity is hindering the recovery as 99.9% of the gains funnel up to the top 10%.
Families that take home less than $50,486 after taxes plunge deeper into debt each year.
Here's why the economy isn't recovering:
According to the latest PEW Poll, the middle class has gone from 61% of the population to less than 50% of the population in the past 4 decades and, even worse, now make 33.8% less income share than they used to. The bottom 30% make the same 9% of the national income they made back in the 70s - so the poor are still poor but the middle 61% used to split 62%, so 30% for 30% of the middle class. Now, 50% split 43% or 25.8% for 30%.
That means that we now have double the amount of people (70M) making the same 9% of all income in the lowest bracket (the fastest growing group!) and we have 50% more people in the middle class fighting over a pie that has shrunk 33%. Who has gained from all this? Do you really need to ask? The upper class ($125,609/yr to join this club), has grown from 20M to 50M working people and their share of the income has grown from 28% to 49% - all at the expense of the 190M people who are less fortunate.
That's why you (and most of my readers are in the "Upper Class") think "everyone" is doing better - because 50M people is probably everyone you usually associate with. Middle Class people make $41,869 a year - how far away from your salary is that? Can your family live on $41,869? If so - you must be middle class and thank goodness you have that skill because I don't even think my kids (13,15) could live on that!
As you can see from this handy chart - the average American family cannot live on $41,869 because the average family spends $50,486 AFTER TAXES and that's with a magical $17,115/yr house and $2,929 health care. So the average family has to have two working parents and, of course, the average family just slips further and further into debt each year and it never gets paid off because they sure don't get raises that keep up with inflation, do they?
My kids (not to brag) are both honors students but that's in part because we spend more like $1,000/yr on books, not $100 and we have spent way more than $1,000 on tutors and other educational experiences and we've gone on trips that have broadened their horizons and they've had the best health care (my oldest daughter was premature) and we drive the safest cars - these are all the tiny ways that the rich are able to give their children every advantage in life over the kids who have just $100/yr to spend on books, etc.
As a bleeding-heart liberal parent, I don't allow my kids to think for a minute that they don't lead privileged lives and of course we donate those books and toys and clothes etc but there's only so much individuals can do to balance the scales. That's a function of Government and, since Nixon and Reagan shifted the balance to favor the rich - this country has become insanely imbalanced, with the top 50M people (20% of workers) making 50% of the money. That's wrong!
And that's just the INCOME gap. Clearly people in the bottom 80% have no chance to save any money and are generally in debt up to their eyeballs so the WEALTH of the nation has tipped almost entirely into the hands of the top 10% (see graphic) and that is a number that is increasing rapidly.
Jeff Bezos (AMZN) alone, for example, got $29.5Bn richer this year. $29.5Bn is more than the ENTIRE GDP of 69 (out of 200) countries on this planet. Iceland, for example, has a population of 323,000 people and a GDP of $14Bn, Bahamas has 377,000 people and a GDP of $9Bn. $29.5Bn would make 300,000 people $98,333 richer or it would make 10M people about $10,000 richer. And this is the problem - our failure to redistribute that wealth through taxes means that the middle class, who buy from Bezos, transfer $29.5Bn to him and Bezos, who doesn't spend $29.5Bn a year, simply adds it to his pile of money. That money doesn't "trickle down" on anyone - it is simply taken from the poor and given to the rich - over and over again.
This all sounds like great fun if you are one of the rich (especially if you are an Amazon stockholder) but the reality is you are killing the goose that lays the golden eggs - the US Consumer!
It's not just Bezos, of course, according to Forbes, the 400 richest Americans ($1.7Bn minimum to make the cut, $5.8Bn average) are sitting on $2.34 TRILLION. That's quite a lot of money for 400 people, don't you think? Had we, for example, taxed them 35% more (70% top rate like we had before Reagan) that would be $800Bn worth of social programs that could have been funded and they would STILL have an average of $3.77Bn left after those "outrageous" taxes were paid.
Do you think Jeff Bezos would refuse to work if the Government took back $10Bn of his $29.5Bn? I'm not saying we should put a 70% tax on everyone - just the people who make more than $100M a year and corporations who make more than $1Bn a year. That little change would balance our entire budget without costing the 190 middle class and poor workers one penny and it wouldn't even cost 49.9M of the 50M upper class workers a penny - just the ones taking home more than $100M per year.
If we don't find some way to redistribute money back into the system, the top 0.01% will own an ever-growing share of the wealth of this nation while the bottom 90% spiral further and further into debt to support this insane system of Corporate Welfare and Welfare for the Super-Rich that we have going on now.
The reason our economy is stuck in low gear is because none of the growth benefits are going back to the people who buy things - they are going to the people who buy stocks and houses and boats and to Companies who buy back their own stock and stash the money overseas to avoid what little taxes they are paying now.
This has to stop, people!
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