The Shrinking Middle Class in America

[MrFun]

We'll just keep whistling in the dark, and ignore the problems we have in America. Everything is fine.

[Kidlicious]

I think there is a bigger problem than people getting poor. It's people getting stupider.

[giblets]

After accounting for inflation, median household income has increased slightly over the past couple decades, so at worst the middle class is only getting poorer in a relative sense, and that's only if the increasing costs of healthcare aren't a product of improvements in quality.

[Hauldren Collider]

Also, I know Kidicious is usually wrong, but people aren't getting stupider. Better nutrition has actually, iirc, resulted in marked improvements in intelligence over the last century. I don't have data on hand immediately to back up my claim but someone else can google it since I'm lazy.

[Fake Boris]

After accounting for inflation, median household income has increased slightly over the past couple decades, so at worst the middle class is only getting poorer in a relative sense, and that's only if the increasing costs of healthcare aren't a product of improvements in quality.

But households are more indebted, too.

[Al B. Sure!]

I realize gribbler is referencing real median household income and not real mean wages but as I showed before...

Real income hasn't actually improved from the 1970's although real total compensation has. It is possible that adjusting for quality improvements in goods, that the purchasing power of income today is greater than it was in the 1970's, however, it should be noted that the BLS DOES, contrary to what Kuci and KH said, account for this in their CPI, although the effects may or may not be significant and they may or may not be reflective of the actual living standards improvement brought about by the quality improvements.

However, one thing to keep in mind is that productivity has increased substantially since the 1970's. I don't have the statistics, but it would not surprise me if the growth in productivity has outpaced the growth in real total compensation. In that case, workers now would be getting paid relatively less for the same productive output, even with greater real total compensation.

Then there was the point KH made about low wage earners being less susceptible to the effects of inflation because of cheaper foreign-made goods becoming staples BUT this is not necessarily so or a strong point, as I argued earlier. (One thing I did neglect to mention is that inflation helps those who owe fixed-rate debt but while this might at first be an indication that the poor would benefit from inflation, it is more likely that the poor are debt financing with credit cards that are almost always variable-rate)

The point is that there are a myriad of variables working here and there's no real way to conclusively state that free trade has harmed or helped average American workers. It's a mixed bag. No 'prove beyond a shadow of the doubt' stuff that the author of the original article claimed to indicate.

[Whoha]

After accounting for inflation, median household income has increased slightly over the past couple decades, so at worst the middle class is only getting poorer in a relative sense, and that's only if the increasing costs of healthcare aren't a product of improvements in quality.

That is because the average number of workers per household has gone up.

By the way here is the graph of manufacturing wages in the US.

[Dinner]

As long as we're on the topic of the middle class disappearing and the numbers of the poor increasing... The NYT discusses some interesting social research studies which tell us exactly what we already knew. Namely, that white majorities in America are ok with welfare as long as it is white people who get it but as soon as it becomes clear that blacks or hispanics are getting it instead of white people instantly support for welfare drops to nothing.

http://www.nytimes.com/2007/04/29/business/yourmoney/29view.html?pagewanted=2&_r=1

[Jaguar]

Also, I know Kidicious is usually wrong, but people aren't getting stupider. Better nutrition has actually, iirc, resulted in marked improvements in intelligence over the last century. I don't have data on hand immediately to back up my claim but someone else can google it since I'm lazy.

http://en.wikipedia.org/wiki/Flynn_effect

[OzzyKP]

As long as we're on the topic of the middle class disappearing and the numbers of the poor increasing... The NYT discusses some interesting social research studies which tell us exactly what we already knew. Namely, that white majorities in America are ok with welfare as long as it is white people who get it but as soon as it becomes clear that blacks or hispanics are getting it instead of white people instantly support for welfare drops to nothing.

http://www.nytimes.com/2007/04/29/bu...ewanted=2&_r=1

[MrFun]

As long as we're on the topic of the middle class disappearing and the numbers of the poor increasing... The NYT discusses some interesting social research studies which tell us exactly what we already knew. Namely, that white majorities in America are ok with welfare as long as it is white people who get it but as soon as it becomes clear that blacks or hispanics are getting it instead of white people instantly support for welfare drops to nothing.

http://www.nytimes.com/2007/04/29/bu...ewanted=2&_r=1

But there is no such thing as racism in America.

[Kuciwalker]

Real income hasn't actually improved from the 1970's although real total compensation has. It is possible that adjusting for quality improvements in goods, that the purchasing power of income today is greater than it was in the 1970's, however, it should be noted that the BLS DOES, contrary to what Kuci and KH said, account for this in their CPI, although the effects may or may not be significant and they may or may not be reflective of the actual living standards improvement brought about by the quality improvements.

The evidence that it does so insufficienly is really, really obvious: you can buy stuff with $500 today that is so much better than stuff you could get with $100 40 years ago that they defy comparison.

The idea that real quality of life has been stagnating for decades is absurd.

[Al B. Sure!]

Earlier in this thread I pulled up the political platforms of some Klan organizations and along with the whole anti-free trade stance they also notably were in favor of welfare and social programs as long as they are not given to those groups without the white Protestant work ethic.

Anyway, no one wants to criticize my points and breakdown why I'm wrong? Don't go around talking about free trade is making people poor when indications are that it's having a very negligible net effect either way.

Finally got the productivity comparison:



So real total compensation mirrors growth in productivity and mostly stays in step but, as you can see, during the 1990's and later 2000's, productivity outpaced real total compensation. Interesting that productivity outpaced real total compensation both during the booming 90's and the recession 2000's.

Still, looks like for the most part, real total compensation has kept pace with productivity with some recent exceptions. These exceptions might be of some concern, however, if they are reflective of a new trend. I assume the introduction of computers and computer automation, not free trade, is the reason for this disparity. Workers are producing more than ever but not getting paid to reflect that, even when considering total compensation.

[Al B. Sure!]

The evidence that it does so insufficienly is really, really obvious: you can buy stuff with $500 today that is so much better than stuff you could get with $100 40 years ago that they defy comparison.

The idea that real quality of life has been stagnating for decades is absurd.

I'm pointing out that the BLS has been accounting for quality improvement for several years now in their CPI calculations. As I said over and over again, these hedonic adjustments may or may not be significant and may or may not be sufficient to reflect changes in quality, however, they are what the presumably intelligent economists and statisticians at the BLS feel is adequate.

Kuci, you also have to consider what the basket of goods consists of. Can you say that the quality of bread, eggs, fruit, clothing, etc. has improved at all since the 1970's? I suspect that these basic staples have greater weight in the representative basket than high-tech gadgets or automobiles that have had significant quality improvements.

[Kuciwalker]

AS, that's precisely the point. The basket of goods available contains entirely new products, some of which are now almost considered necessities because they are so useful (cell phones, internet access).