My last post in this space demonstrated that the Middle Class in America has gotten larger, not smaller, over time.
I made the point that more and more people are making more and more money even as we keep the dollar values locked into 2008 values:
In 1967 [earliest data available] 83.7% of the families in America made less than $75,000 in constant 2008 dollars.
That percentage in 2008? 59.7%.
In other words, 16.3% of Americans were making $75k or more in 1967. In 2008, better than 4 in 10, or 40% of Americans were making that same money.
And the mean income in 2008? $79,634.00 compared to $49.606.00 in 1967. Not only has the median income gone up, but the % of people making it has gone up as well.
But how does it FEEL today vs. yesterday? Are we able to enjoy a standard of living that is significantly better now than it was then?
Well, I think so:
Let’s take a look at things that might be considered Middle Class living. Compare them to the price then and the price now. Now, some of these things are literal prices, things I took out of catalogs in 1967. Others are CPI valued “baskets of goods”. The point is the same:
Let’s look at the price of a new car. In 1967, the price of new cars was indexed at $49.1. That is, if a car in 1983 had a price of $100.00, that same car in 1967 had a price of $49.1. However, that price isn’t adjusted for inflation. In other words, that 1967 car would cost $316.51 in 2008 dollars. The indexed price of a car in 2008? $135.00! And the car is safer and more luxurious than that car in 1967. The price of a car fell almost 60%!
Food?
In 1967 “Food at Home was indexed at $35.1. In 2008 dollars that’s $225.00. The price of food in 2008 was really $215.00. Food has gone down over time as well.
Laundry equipment? In 1978 [latest data available] it was indexed at $71.00. In 2008 dollars that’s $234.46. The 2008 index? $117. Laundry equipment has gone too.
Now, let’s look at some toys:
Legos in 1967 – $15. In 2008 money that’s $96.69!
Slot car racing set in 1967 – $100.00. In 2008 money, that’s $644.00!
Tape recorder? $59.95 then. That’s $386 in 2008 money.
No folks. It’s better and cheaper to be alive now than then.
More people make more money AND that money buys more things. Things that are luxuries and things that aren’t.
The Middle Class has both grown AND is better off. Recession or no recession!
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Pino –
Enjoyed the series. In part 2 I think you asked if the MC was a target for the rich and powerful (or was it greedy?). Pointing out as you have the increase both the size and the economy of the MC, demonstrates why it’s the first target for progressives, both as a means to more taxes and as a tool to advance new ideas. Yep, a target for the powerful, the rich, and the greedy.
I think you asked if the MC was a target for the rich and powerful (or was it greedy?).
I think it’s a target for the political class; most especially the Liberal. They claim the Middle Class is under siege and being destroyed. Given that almost everyone considers themselves Middle Class, that literally more people ARE Middle Class and combined with the fact that the Middle Class is better off, that tactic rings hollow.
Pure politics baby. Pure politics!
NEW YORK (CNNMoney) — Are you better off than your parents?
Probably not if you’re in the middle class.
Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data.
Meanwhile, the richest 1% of Americans — those making $380,000 or more — have seen their incomes grow 33% over the last 20 years, leaving average Americans in the dust.
Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation,
This may be true, but the total compensation for our workers has improved. While wages have not increased at the rate we might desire, other things have:
1. Retirement accounts.
2. Health care
3. Vacation
4. Sick leave
5. Training
6. Accommodating working conditions
The very rich? They already have those compensations, they can only be further compensated with money.
housing, health care and the cost of higher education have increased much faster than gizmos
Well, houses are massively larger now than before. The other two, you have a strong and valid point. I happen to believe that higher education is the next bubble.
the jobs have left
Companies that outsource jobs grow US jobs faster than companies that do NOT outsource jobs.
those dollars are not being circulated in our economy with the resulting multiplier effect.
Those countries then invest in America.
Nice response, Pino -
Ignoring the compensation obtained by workers over the past few decades through additional benefits is useful when arguing for progressive policies. I was waiting for that type of comment on this article.
“This may be true, but the total compensation for our workers
has improved.”It has barely kept pace with inflation, and your numbers are skewed by the vast increases of the upper 5%.
As far as jobs, the jobs that remain since the exodus of manufacturing are lower paying service related jobs, which is again why the middle class has
“grown”, more are making middling wages with less migrating to higher income quintiles.
PS….housing, health care and the cost of higher education have increased much faster than gizmos, which have had a much greater impact upon middle household income and wealth.
Add to this the fact that those “cheaper goods” are being produced in other countries, the jobs have left and those dollars are not being circulated in our economy with the resulting multiplier effect.
Conned – Let’s check your own understanding – do you have an idea why housing and education costs have outpaced income growth in the middle class? Is it simply a feature of those markets? Or is it because of the intervention of government in both of those markets? I think if you look really carefully, you would find that Reagan was right, “…government is the problem.”
The problem with our increased “wealth” is that we have also perfected the art of buying STUFF. By moving so many things from the “want” side of our personal budget to the “need” side, many Americans have buried themselves in a deep financial hole. Consider the monthly cable bill. In 1967, my family used “rabbit ears”. The rich folks had a roof-top antenna. The picture was not as clear as cable, but it was cheap.
The problem with our increased “wealth” is that we have also perfected the art of buying STUFF. By moving so many things from the “want” side of our personal budget to the “need” side,
This is most certainly true!
Middle Class is now defined more by the “stuff” than the “Dream”.
Entertainment dollars have shifted from outside the home (movie theaters, theatrical plays) to staying at home (cable).
For the middle class, the biggest cost increases are still coming from health care, housing and education. Sure, houses are bigger, but when that is what is being built, that is what is available….and cost per square foot has NOT decreased. More land is not being created.