The Fate of the Middle Class

The latest Atlantic Magazine has a very informative article on the demise of the middle class in America. (“Can the Middle Class Be Saved?” by Don Peck.) Recently I’ve read lots of statistics about how the rich are getting richer and the rest of us declining, but this analysis is a lot broader and deeper. The trends are linked not only to income but to marriage and divorce rates, to cohabitation, and (very strongly) to education levels.

(I’ve written about this before, here, and in other postings.)

The Atlantic article is long, but well worth your time. The issues are probed deeply. The prescriptions are not so convincing, unfortunately.

Here are a few quotations:

“Since 1993, more than half of the nation’s income growth has been captured by the top 1 percent of earners, and the gains have grown larger over time: from 2002 to 2007, out of every three dollars of national income growth, the top 1 percent of earners captured two. Nearly 2 million people started college in 2002—1,630 of them at Harvard—but among them only Mark Zuckerberg is worth more than $10 billion today; the rise of the super-elite is not a product of educational differences.”

“”By the 2000s, the percentage [of moderately educated couples, with a high school diploma but no college degree] in ‘very happy marriages’—identical to that of college graduates in the 1970s—was also nearing that of high-school dropouts. Between 2006 and 2008, among moderately educated women, 44 percent of all births occurred outside marriage, not far off the rate (54 percent) among high-school dropouts; among college-educated women, that proportion was just 6 percent.”

“Thirty-nine percent of children born to parents in the top fifth of earners stayed in that same bracket as adults. Likewise, 42 percent of those whose parents were in the bottom fifth remained there themselves. Only 6 percent reached the top fifth; rags-to-riches stories were extremely rare.”

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2 Responses to “The Fate of the Middle Class”

  1. jayemptyjay Says:

    Half of the increase in GDP has been captured by the top one percent of earners—help me understand this (I’m not playing dumb…I just don’t get it):

    • Did those people “capture it” as in steal it? or did they produce it? or did they “capture it” as a result of producing it?
    • Who are those people? I’m guessing people like Bill Gates, Steve Jobs and Warren Buffett would all be in the top 1%
    • So, if I follow the argument, people like this were responsible for 50% of the increase in GDP since ’93 and as a result, were among the top 1% of income earners
    • That leads me to ask, if a group of people can produce so much of the increase in our country’s GDP, what income percentile ought they be in? Should they be in the 50th percentile? If so, then what would the top 1% of earners be rewarded for? Producing no growth? Why would we want to reward people handsomely for producing no growth?
    • Or let’s take the corollary question: how much GDP growth should we expect to see coming from the lowest 50% of earners? Zero, I think. People who earn below the median are generally not going to be the ones who have the drive, the expertise and innovative ability to increase GDP.
    • So, we’ve accounted for 51% of earners and 50% of GDP increase. It looks like the other 49% of earners were responsible for the other 50% of GDP increase. That’s why I say I don’t see the problem.
    • I guess if you could state what percent of National Income Growth the top 1% of earners (producers) deserve, I might be able to follow the argument a little better.

    • timstafford Says:

      You can get a picture of the problem by imagining an even more extreme case. Suppose 99% the new wealth in a society was created by one person, with everybody else creating 1%. One might suppose that the society was unbalanced. In kleptocracies of the developing world, this is the kind of situation that pertains. A rich elite controls all the wealth. Democracies are associated with a broader sharing both in productivity and reward. The right balance is a matter for debate, but there’s reason for concern when a smaller and smaller share of the population makes more and more of the money. Yes, arguably they are very productive and deserve reward. If you believe that, that question shifts to what is wrong with the rest of the society that is so notably unproductive.

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