Don’t Middle in My Affairs

The only thing growing in the American “middle” is our waistline. As American obesity statistics reflect one growth statistic we do not want, the ones about middle class earning power and job growth… even the numbers of people who constitute our middle class… are going the wrong way. The principal social mobility driver (education) is eroding. The numbers of college applications and graduations are falling, unsustainable student debt rising, educational standards in public education continue to disappoint. Few in the remaining middle class actually expect their children to increase their standard of living (most will live less well) over what they have enjoyed.

Compared to comparable developed economies, our middle class simply makes less than it did. “[According to the Luxembourg Income Study Database (LIS), median] per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation. The same measure, by comparison, rose about 20 percent in Britain between 2000 and 2010 and 14 percent in the Netherlands. Median income also rose 20 percent in Canada between 2000 and 2010, to the equivalent of $18,700.

“The most recent year in the LIS analysis is 2010. But other income surveys, conducted by government agencies, suggest that since 2010 pay in Canada has risen faster than pay in the United States and is now most likely higher. Pay in several European countries has also risen faster since 2010 than it has in the United States…

“Three broad factors appear to be driving much of the weak income performance in the United States. First, educational attainment in the United States has risen far more slowly than in much of the industrialized world over the last three decades, making it harder for the American economy to maintain its share of highly skilled, well-paying jobs.

“Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

“A second factor is that companies in the United States economy distribute a smaller share of their bounty to the middle class and poor than similar companies elsewhere. Top executives make substantially more money in the United States than in other wealthy countries. The minimum wage is lower. Labor unions are weaker.

“And because the total bounty produced by the American economy has not been growing substantially faster here in recent decades than in Canada or Western Europe, most American workers are left receiving meager raises.

“Finally, governments in Canada and Western Europe take more aggressive steps to raise the take-home pay of low- and middle-income households by redistributing income… [T]he American rich pay lower taxes than the rich in many other places, and the United States does not redistribute as much income to the poor as other countries do. As a result, inequality in disposable income is sharply higher in the United States than elsewhere.” New York Times, April 22nd.

While sheer numbers of people working may have increased of late in the United States, the numbers are heavily skewed in favor of bottom-end employment in hospitality, food services and healthcare support. “The recession eliminated many mid-wage jobs, leaving moderately educated workers to take low-wage jobs if they can find work at all… While the Obama administration has trumpeted job growth in recent months, the middle class is taking home a shrinking portion of the country's income. Deep job losses in occupations such as construction, information technology, manufacturing and insurance are not likely to recover. Middle-class families also saw nearly 30 percent of their wealth disappear over the past decade, while the cost of goods and services they rely upon steadily climbed.” Huffington Post, June 6th.

The above graphic really illustrates how opportunities here have reduced the basic job opportunities that used to support our glowing standard of living. The global economy has provided better-educated, smartly-priced competition, and the U.S. seems committed to keeping our competitive standards low to save money.

The sheer size of the middle class, as a percentage of the overall populations, has shrunk about 15% over the last few decades. While 50.3% of working Americans were taking home a middle class income in 1970, the Huffington Post reports, by 2010 that number was down to 42.2%.

We used to make fun of Latin America as a land of under-paid stoop labor agricultural and mining workers, digging for copper and harvesting bananas and coffee beans. And while the poverty in Latin America is often dire, their middle class is expanding rapidly. “As the United States grapples with growing inequality and poverty rates that remain higher than in the 1970s, Latin America’s middle class has grown 60.3 percent since 2003, according to the Inter-American Development Bank. During that period, the population living in poverty declined by 34 percent. Altogether, the World Bank puts the middle class at about 30 percent of Latin America’s population.” New York Times, June 23rd.

No one has summarized the dire consequences of tax and regulatory policies that definitely favor the highest income and wealth class in the United States over the balance of the population than one of the chief beneficiaries of that anomaly. “The CEO of Goldman Sachs thinks the economy isn’t doing enough to benefit those at the lowest end of the income spectrum. Lloyd Blankfein, in an interview with CBS, said that income inequality is ‘destabilizing’ and ‘responsible for the divisions in the country.’ Calling it a ‘very big issue … that has to be dealt with,’ Blankfein said that whether or not the economy grows faster, ‘too much of the GDP over the last generation has gone to too few of the people.’” BuzzFeed.com, June 10th.

Blankfein said he would not be surprised if that income disparity continued to widen. Still, we elect folks to Congress who argue for increased tax cuts and reduced regulatory control over this wealthy segment, under the absolutely disproven mythology of trickle down, job creation – which just never, never materialized. One common definition of insanity is repeating past behavior while expecting a different result.

I’m Peter Dekom, and the gerrymandered American electorate continues to send representatives to Congress with the wrong instructions!