America’s Middle-class Meltdown: Core shrinks to half of US homes - FT.com
. . . because the lower, and middle classes in America are becoming wealthier.
So, what is the focus of the FT story?
"The prevailing view that the middle class is being crushed is helping to feed some of the popular anger that has boosted the populist politics personified by Donald Trump’s candidacy for the Republican presidential nomination. “The middle class is disappearing,” says Alison Fuller, a 25-year-old university graduate working for a medical start-up in Smyrna, Georgia, who sees herself voting for Mr Trump."
Ok, we already knew The Donald has zero understanding of economics, trade, immigration, and his positions show his ineptitude. But what is the problem with journalists? They are equally as stupid. And the Keynesian economists? Hmmmm, let's go with venal.
The middle class is indeed shrinking, as is the lower class, but the shrinkage is going into the upper class. So, exactly what is bad about this? Only a journalist, or a politician could become confused by such a simple issue.
Here is a graphic representation of journalists on the hunt for a story. Amazing! There is more after the break!
"While Democrats and Republicans have vowed to revive the middle class, they have not settled on the term’s meaning. Pew divides the population into two lower groups, the middle, and two upper tiers. Pew defined the middle as being a household income from two-thirds to double the median. For a three-person family, that is $41,869 to $125,608 a year."
Oh joy, allowing our political class to "fix" this problem will likely lead to all those people in the upper class being in jeopardy of being returned to the middle class. As if the de-wealthification of America is a positive thing. Please politicians stay out of this. The economy is working as intended, and making us real Americans wealthy. Don't screw this up you stupid bag of hammers.
I was going to fisk this issue, but Mark Perry, a smarter and better looking duffer than I, has already done so, with the able assistance of Scott Sumner.
America’s middle-class has been shrinking, but it’s because so many middle-income households have become better off
TheMoneyIllusion » America’s “middle class” shrinks, as many move into the upper middle class
Scott spots a problem.
"Do you see the problem?
The main reason that the middle income group has shrunk is that more and more Americans have incomes above the (arbitrary) cut-off point, and fewer and fewer are either “middle income” or poor. The middle class is shrinking because we are becoming better off."
Head over and read both posts, they are worth you time. You will hear about this issue throughout the campaign season, and the journalists will invariably be wrong, as wrong as the candidates. Spend a few minutes now, so you know what is really happening.
"The top two chart above, featured on CD last December (“Charts of the day: Another look at how America’s middle class is disappearing into higher income households“) supports what Scott is saying, by showing that America’s lower-income and middle-income households have declined as a share of all US households between 1967 and 2014, while the share of high-income households keeps increasing.
Specifically, the top chart shows three income groups: a) low-income households with income of $50,000 and below (in 2014 dollars), whose share of US households declined from by 11.4 percentage points from 58.2% in 1967 to 46.8% in 2014, b) middle-income households with income between $50,000 and $100,000 (in 2014 dollars), whose share of all households declined by 5.2 percentage points from 33.7% to 28.5% between 1967 and 2014, and c) high-income households with income of $100,000 and above (in 2014 dollars) whose share increased by a factor of more than three times (and by 16.6 percentage points), from 8.1% in 1967 to 24.7% in 2014.
The bottom chart shows three slightly different income groups: a) low-income now described as households with incomes of $35,000 and below (in 2014 dollars), whose share of US households declined from by five percentage points from 38.7% in 1967 to 33.7% (in 2014 dollars), b) middle-income, now described as households with income between $35,000 and $100,000 (in 2014 dollars), whose share of all households declined by 11.6 percentage points from 53.2% to 41.6% between 1967 and 2014, and c) high-income households with income of $100,000 and above (in 2014 dollars) whose share increased by a factor of more than three times (and by 16.6 percentage points), from 8.1% in 1967 to 24.7% in 2014 (same as before).
Bottom Line: Over the last nearly 50 years, one of the most impressive (and unreported) gains for US households has been the three-fold increase (from 8.1% in 1967 to nearly 25% in 2014) in the share of high-income US households earning $100,000 or more per year, which accounts for the declining share of low-income and middle-income households (by two different measures). Yes, the ranks of the middle-class have been shrinking over the last generation or more as the Financial Times points out. But as Scott Sumner reminds us, and as all three charts above show (despite the Financial Times’ misinterpretation of the income trend), America’s middle-class shrinkage isn’t best described as a “middle-class meltdown” — rather, it’s been more of a “middle-class uprising,” as average US households have become better off by moving into higher income groups over the last 50 years."
This is a simple issue, it is easy to see what is going on if one only looks at a graph, but the journalists, candidates, and the Keynesian economists either can't understand these simple charts, or they are intentionally lying to you. Remember that when you hear this issue.