Engyo
Prince of Dorkness!
The Vanishing Middle-Class
Posted 7/27/2010 6:06 AM CDT
In my opinion, what made this country great, a shining city on a hill to borrow a phrase, is a strong middle-class. But over the last 30 years, with an acceleration particularly in the last 10, the American middle-class has been shrinking. A growing income inequality caused by tax cuts which mostly benefit those at the top, stagnant wages, and the outsourcing of manufacturing jobs are largely responsible. A few facts and figures:
* In the United States, two-thirds of the income growth during the boom of 2001-2007 went to the top 1 percent of the population. That is about a 60 percent increase in the average income of that segment of the population, while there was a 6 percent increase for the rest of the population.
Unemployment in the country as a whole today is 9.5 percent to 10 percent, but in the bottom 40 percent of the labor force it is 17 percent, while in the top 30 percent it is just 4 percent...the borrowing boom of the 2001-2007 period primarily benefitted the wealthy, while the impacts of the crash and austerity measures will affect primarily the lower and middle classes.
Exhibit A, the recession is over on Wall Street:
“Five of the largest banks on Wall Street -- Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley -- increased their total headcount in the first quarter, the first three-month jump since the start of 2009...The five banks posted combined net income of $16.2 billion in the first quarter, and three reported record fixed-income trading revenue. It was the highest combined profit for the banks since the second quarter of 2007.”
Exhibit B:
* According to a study by a professor at the University of California, the average American household lost an astounding 36 percent of their total wealth. But the top 1 percent households lost only 11 percent. So the net result is that the wealth distribution is even more unequal than it was it was before the financial crisis.”
* In the past three decades, the income of the richest Americans quadrupled, while the income of the lowest ninety percent actually fell. Today, the median wage is lower than it was in the 1970s, even though productivity has grown by nearly fifty percent.
* The richest four hundred Americans were worth an average of about $13 million each in the middle of the century, using today's dollars. Now they average over $260 million each.
* The ratio of executive salary to the average paycheck during the mid-twentieth century was about thirty to one. In the last decade it has ranged from three hundred to over five hundred to one.
Also in the mid-twentieth century the top marginal tax rate was 91% as opposed to the 35% of today. Do you think maybe executives were putting that money back into their businesses and hiring people, instead of outsourcing the jobs to Bangladesh for 30 cents an hour and stashing the cash in the Cayman Islands, or buying a fourth vacation home?
* The top 10,000 wage earners in the United States have a median annual income of $50 million and assets of $350 million—an increase of 550% since 1978. That top 0.01% paid 120 billion in taxes in 2009—just over 20% of their income.
* Of every dollar of real income growth that was generated between 1976 and 2007, 58 cents went to the top 1 per cent of households.
* An analysis of income-tax data by Congressional Budget Office found that the top 1% of households own nearly twice as much of the nations corporate wealth as they did just 15 years ago.
Finally, from post-WWII to the late 70's union members averaged about 33% of private sector employees. Today that number is less than 8%. I don’t think it was just coincidence that about the time union membership took a downturn worker’s wages started to stagnate and the income gap began to widen dramatically.
Chron.commons | Chron.com - Houston Chronicle
Posted 7/27/2010 6:06 AM CDT
In my opinion, what made this country great, a shining city on a hill to borrow a phrase, is a strong middle-class. But over the last 30 years, with an acceleration particularly in the last 10, the American middle-class has been shrinking. A growing income inequality caused by tax cuts which mostly benefit those at the top, stagnant wages, and the outsourcing of manufacturing jobs are largely responsible. A few facts and figures:
* In the United States, two-thirds of the income growth during the boom of 2001-2007 went to the top 1 percent of the population. That is about a 60 percent increase in the average income of that segment of the population, while there was a 6 percent increase for the rest of the population.
Unemployment in the country as a whole today is 9.5 percent to 10 percent, but in the bottom 40 percent of the labor force it is 17 percent, while in the top 30 percent it is just 4 percent...the borrowing boom of the 2001-2007 period primarily benefitted the wealthy, while the impacts of the crash and austerity measures will affect primarily the lower and middle classes.
Exhibit A, the recession is over on Wall Street:
“Five of the largest banks on Wall Street -- Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc. and Morgan Stanley -- increased their total headcount in the first quarter, the first three-month jump since the start of 2009...The five banks posted combined net income of $16.2 billion in the first quarter, and three reported record fixed-income trading revenue. It was the highest combined profit for the banks since the second quarter of 2007.”
Exhibit B:
* According to a study by a professor at the University of California, the average American household lost an astounding 36 percent of their total wealth. But the top 1 percent households lost only 11 percent. So the net result is that the wealth distribution is even more unequal than it was it was before the financial crisis.”
* In the past three decades, the income of the richest Americans quadrupled, while the income of the lowest ninety percent actually fell. Today, the median wage is lower than it was in the 1970s, even though productivity has grown by nearly fifty percent.
* The richest four hundred Americans were worth an average of about $13 million each in the middle of the century, using today's dollars. Now they average over $260 million each.
* The ratio of executive salary to the average paycheck during the mid-twentieth century was about thirty to one. In the last decade it has ranged from three hundred to over five hundred to one.
Also in the mid-twentieth century the top marginal tax rate was 91% as opposed to the 35% of today. Do you think maybe executives were putting that money back into their businesses and hiring people, instead of outsourcing the jobs to Bangladesh for 30 cents an hour and stashing the cash in the Cayman Islands, or buying a fourth vacation home?
* The top 10,000 wage earners in the United States have a median annual income of $50 million and assets of $350 million—an increase of 550% since 1978. That top 0.01% paid 120 billion in taxes in 2009—just over 20% of their income.
* Of every dollar of real income growth that was generated between 1976 and 2007, 58 cents went to the top 1 per cent of households.
* An analysis of income-tax data by Congressional Budget Office found that the top 1% of households own nearly twice as much of the nations corporate wealth as they did just 15 years ago.
Finally, from post-WWII to the late 70's union members averaged about 33% of private sector employees. Today that number is less than 8%. I don’t think it was just coincidence that about the time union membership took a downturn worker’s wages started to stagnate and the income gap began to widen dramatically.
Chron.commons | Chron.com - Houston Chronicle
