This article had so much stupidity, and it was so publicized, that it actually motivated me enough to blog.
Read the article for yourself, but the basic premise is a common one: the middle class is disappearing, the economy is becoming top heavy, panic panic panic.
There are plenty of analyses to show the middle class is as robust as ever, but I’d like to jump straight into the data presented and give my take on how each one can be interpreted and reinterpreted.
Here we go:
• 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
This shouldn’t surprise anyone. Does anyone think more people owned stocks fifty years ago? Besides, there’s no reason to assume owning stocks is somehow the best way to estimate quality of life. Lots of people happily live their lives in comfort undreamed of by our ancestors. All without owning stocks.
• 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
I think this stat just represents how bad this recession has been, especially when unemployment, underemployment and discouraged workers are taken into consideration. This stat just proves recessions cause fiscal hardship. Which we all knew.
• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
Check out the article I linked to above for a better look at these numbers. I’ll just say income growth is good, and if 44% of the “income growth” (percentages are easy to take out of context) are spread amongst 99% of the people, good. As long as just about everyone is experiencing some income growth.
• 36 percent of Americans say that they don’t contribute anything to retirement savings.
I thought SocSec was there to save us? A third of people aren’t saving for retirement right now. But over the course of there lives, what percentage of people have put away some retirement savings? Probably most. And of those that don’t, how many of them have assets like houses and cars and other material goods when they retire? Few people in the US are totally unprepared for retirement, if one-third of our seniors were in the streets, starving, I’d think we’d notice it.
• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
And a staggering 43% (as of the 2000 census, number roughly estimated) of Americans are under the age of 29. As much as it would be nice to have tens of thousands of dollars saved up before I turned thirty, it’s just not happening.
• 24 percent of American workers say that they have postponed their planned retirement age in the past year.
“In the past year” Thus proving the recession hit everyone pretty hard.
• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
Can’t we just agree the recession was bad? Our society misallocated a trillion dollars in capital into housing, then we spent a trillion dollars trying to “stimulate” ourselves, thus misallocating another trillion dollars.
• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
Luckily, a big drop in housing prices should help us here.
Just a thought: Ever think people are spending more (as a % of income) on housing because they have more extra income to spend? Wouldn’t this be a good sign then?
• For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
Housing prices fall, housing loans go into default, houses are foreclosed on, banks take back houses. And guess what? It’s not like the banks want those houses. They don’t need those houses. They’re stuck with them because a bubble burst.
• In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
Fine. Rich people are obnoxiously rich. This doesn’t mean poor people got poorer. (and maybe, just maybe, the global economy explains the growth in executive pay)
• As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
A small piece of a big pig is a pretty good meal. Especially when the pig keeps growing, even as you eat it.
• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
I admit it, I’m getting bored. Big pig. Little piece a good meal. Pig still gets bigger. Our poor people are really fat. Etc Etc.
• Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
Stupid? Sure, maybe. I dunno. Stolen from the middle class? don’t think so.
Ever notice how statistics dealing with this middle class topic have nothing to do with the middle class?
• In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
Okay, ya got me. I agree. Federal workers are overpaid.
• The top 1 percent of U.S. households own nearly twice as much of America’s corporate wealth as they did just 15 years ago.
Not sure I care.
• In America today, the average time needed to find a job has risen to a record 35.2 weeks.
Tell me about it. Man, it sure would be nice if the government did something about this.
• More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
Those bastards shouldn’t have jobs at all. America doesn’t need “service”
• or the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
Notice how this number isn’t given as a percentage?
• This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
Those goods still need to be shipped across a very large ocean at great expense. So it’s not such a huge advantage.
• Approximately 21 percent of all children in the United States are living below the poverty line in 2010 – the highest rate in 20 years.
Not a middle class thing. again. Sad, yes. This housing crisis sure affected a lot of people in terrible ways. But this has nothing to do with the middle class disappearing.
• Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
Something that has nothing to do with the middle class, again.
• The top 10 percent of Americans now earn around 50 percent of our national income.
Yet, somehow, there’s still pig leftover for the rest of us. Thank God.
The author of the article doesn’t make any suggestions for fixes, but he does hint at favoring protectionism (high tariffs and taxes on imported goods) which just hurts consumers more. He also complains about the government. So he might be half right. If the government stops making it so hard to start a business, and worse, stops making it so hard to make money with a small business, the better off we’ll all be.
However, he is very wrong about the middle class.
Filed under: Economics