A friend and I were talking about the possibility of the middle class disappearing the other night.
Today the Financial Times has something along these lines:
“The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years.
That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.”
1 comments:
That's interesting. Maybe an effect of globalisation - as the American worker becomes less insulated from lower waged countries, their incomes decline?
And if the total product in the US economy stays the same, or increases - which it should, as there are still the same numbers of people producing the same real output - then the surplus would all go to the rich.
I have no idea whether or not this is the way it's working, but it seems reasonable.
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