A few exerpts:
The median household income of Americans in 2011 was $49,103. Adjusted for inflation, the median income is just below what it was in 1989 and is $4,000 less than it was in 2000. Take-home income is a bit less than $40,000 when Social Security and state and federal taxes are included. That means a monthly income, per household, of about $3,300. It is urgent to bear in mind that half of all American households earn less than this. It is also vital to consider not the difference between 1990 and 2011, but the difference between the 1950s and 1960s and the 21st century. .....
The basics might be available at the median level, given favorable individual circumstance, but below that life becomes surprisingly meager, even in the range of the middle class and certainly what used to be called the lower-middle class....I should pause and mention that this was one of the fundamental causes of the 2007-2008 subprime lending crisis. People below the median took out loans with deferred interest with the expectation that their incomes would continue the rise that was traditional since World War II. The caricature of the borrower as irresponsible misses the point. The expectation of rising real incomes was built into the American culture, and many assumed based on that that the rise would resume in five years. When it didn't they were trapped, but given history, they were not making an irresponsible assumption.
If upward mobility is no longer a possibility for all, then what does our society become?
This is an interesting article, and considering my family is placed in the middle class category more or less, I remember talking to my parents about this. Their level of income between the two of them was much more than it is today, and just recently, because of Obamacare, they have started to see more cuts in their paychecks. No longer upward mobility? Once you hit rock bottom, the only way is up. Maybe it wouldn't be terrible if we have to experience a loss of take-home income, in order for us to experience an increase. We cannot expect to keep moving upward in an economy like ours.
ReplyDeleteImportant note to consider in addition to this article-- While median household income has dwindled and declined in the past decades, the incomes for the most wealthy families in America have only increased! The most wealthy people in America have only gotten richer in the past 3 decades!
ReplyDeleteNow, what to do about this obviously depends highly on one's economic ideology. Many in America would like to raise taxes on this small higher echelon of citizens. As Britain, France, and various other Eurozone countries are now attempting themselves, perhaps this approach will prove fruitful in the coming years.
However, this is certainly another portion of America that still believes in the Reagonistic, Zombie 'Trickle-Down' approach.
Our recent fiscal cliff 'solution' decided mainly to take the more liberal-minded approach. Increasing taxes for those that make more than $400,000 ($450,000 for married couples), is a partial win for this more avant-garde ideology. But its effectiveness is yet to be seen.
Will this really do anything for our country's entire "median household incomes"?? Unfortunately, probably not. But we must remember, it is not economists who walk amongst the white pillars of Washington. Instead it is the sheepishly grinning politicians from all walks of life (and levels of academia), that make decisions for our country. Instead of whole-hearted approaches to our financial problems, 'bi-partisan', half-assed agendas are typically the only type allowed through.
The NYT recently had a great series of articles on The Agenda where they look at many of the different possible economic explanations for middle class stagnation.
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