Wednesday, January 18, 2017

Disappearing middle class?

The Myth of the Stagnating Middle Class
Excerpt: The American middle class is disappearing. We hear it from everybody. Senator Bernie Sanders (D., Vt.) focused throughout his campaign on what he termed the “disappearing middle class” — disappearing, Sanders said, thanks to income inequality. Sanders explained, “If you have seen a massive transfer of wealth from the middle class to the top one-tenth of 1 percent, you know what, we’ve got to transfer that back if we’re going to have a vibrant middle class.” From the other side, Donald Trump has echoed the same message: “The American worker is being crushed. . . . The great American middle class is disappearing.” ... In actuality, the American middle class has been doing just fine. In 1967, 33.7 percent of all American households earned between $50,000 and $100,000; by 2014, that number (in constant 2014 dollars) had fallen to 28.5 percent of American households. That means the death of the middle class, right? Wrong. It turns out that everybody just got wealthier. In 1967, the households earning an annual income of $50,000 or less constituted 58.2 percent of all Americans; as of the end of 2014, just 46.8 percent fell into this group. And while only 8.1 percent of American households earned more than $100,000 a year in 1967, today, 24.7 percent do. That’s not a collapsing middle class. That’s a growing upper middle class. By the same token, in 1971, 61 percent of American households fell into the middle-class income tier; just 50 percent did in 2015. Where did those 11 percent go? They nearly all went to the upper-middle or highest income bracket: Just 14 percent of Americans households were in that category in 1971, but 21 percent were in that category as of 2015. And as Edward Conard points out, three of the four percentage points moving downward come from Hispanic immigrants, meaning that the rest of America saw a massive increase in wealth.

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