More Media Myths...Busted

Everyone knows that the middle class is shrinking and their wages/standard of living is stagnant. 

That myth is so pervasive and yet so wrong.  Unfortunately, that myth is used to justify poor economic policies like higher taxes on "the rich" and restrictions on global trade. 

Here's an analysis that explains the truth better than I can.

Comments

[The Klute]

An analysis brought to you by, interestingly enough, the evilliberalmedia. Give a little credit.

[ron]

REPORT SAYS: “Adjust incomes to take into account this shift, along with increasing employer contributions to retirement savings and to health insurance premiums, and you find that the real middle-class median income has risen 33 percent, or $18,000, since 1979. Of course, that's a third less than the $26,000 that those households would have gotten if the growth had been distributed equally. But the middle class didn't stand still, either.”

MY REPONSE: “Note the caveat offered in the last sentence. Where did the other 67% go? Obviously there was not a equal distribution of the growth of the wealth.”

REPORTS SAYS: “True, fewer people today live in households with incomes between $30,000 and $100,000 (a reasonable definition of "middle class") than in 1979. But the number of people in households that bring in more than $100,000 also rose from 12 percent to 24 percent. There was no increase in the percentage of people in households making less than $30,000. So the entire "decline" of the middle class came from people moving up the income ladder. For married couples, median incomes have grown in inflation-adjusted dollars by 25 percent since 1979.”

MY RESPONSE: "I didn’t participate in the climb to a household ‘bringing in more than $100,000.’ I have two master’s degrees and work two jobs."

REPORT SAYS, “Yes, companies are requiring more co-pays and higher deductibles in health-care plans. But medical costs are also on the rise, and employer contributions for health insurance jumped from 3.5 percent of wages in 1979 to 7.2 percent in 2005, according to the Commerce Department.
Virtually every large company provides coverage and pays more than 75 percent of employees' premiums. The rise in the number of uninsured workers over the past decade comes from cutbacks by small businesses and the self-employed.”

MY RESPONSE: “My wife and I choose to be a single-employed household. I pay $6,000 a year out of my paycheck to provide medical insurance for her. The paragraph doesn’t console me.”

REPORT SAYS: “Inequality is certainly up, but it's the bottom 20 percent of the population, not the middle class, that's really struggling. Just don't tell the presidential candidates.”

MY RESPONSE: “Don’t worry about the bottom 20 percent of the population. They don’t vote, they aren’t really people anyway. They are the slave labor of this country. This is the real truth of this report – and it is an ugly truth. A government (and a presidential candidate) that thinks it can ignore and throw away 20 percent of the population is to be feared.”

[Ademlament]

I opened the link expecting to be wowed, but it reminded me of Wealth and Poverty (the book I am currently reading) where the author is not examining data to come to a conclusion, but rather examining data to justify a conclusion.

If this is your best argument against a shrinking middle class and stagnant wage growth, I think you lost the argument.

The simple fact is that people are working longer, seeing little growth in income and feeling very little stability in their employment situation.

This just goes to show that even the best people are victims of cognitive dissonance (of course I am sure you could accuse me of the same thing...)

[ChrisM]

Not discussed (at least from Greg's summary) is the significant decline of of the US dollar. $US has lost 50% of value against AUD, CAD is now worth more than USD (I never thought this would happen), and EUR has appreciated at least 20%.

[ron]

I see this article made the AZ Republic on January 6, 2008 on the back page of the Viewpoints section.