Tough time to be stuck in the middle
A new pamphlet from A Century Foundation, "The Middle Class at Risk," paints a gloomy picture of economic life for most Americans. Its 50 pages are chocked with statistics, culled from a variety of sources, that provide interesting comparisons with the two previous generations.
The report's conclusion: "The oft-cited middle-class squeeze is real, and the economic realities are unmistakable. Families are working more hours for less money. Their costs are going up. Life is riskier. Those at the top are doing better while the majority in the middle is stuck.... These are no confusing anomalies or blips on the radar, they are trends. Without change, the economic arc will continue to bend in a distinct direction: a direction that will diminish the American middle class."
Some highlights/lowlights from the pamphlet:
- Workers' hourly wages, adjusted for inflation, have been roughly stagnant from 1987 to 2005, at around $14 per hour.
- Today, the median annual earnings for a full-time, male worker are $41,670 per year, nearly $800 less, adjusted for inflation, than a generation ago.
- In 1980, nearly 40 percent of workers were participating in reliable, defined-benefit pension plans. Today, the number is about half that.
- The odds that any given worker today will suffer an involuntary job loss are 28 percent higher compared to the 1970s.
- Sixty-nine percent of private-sector workers had employer-provided health insurance in 1979; in 2004, 55.9 percent did.
- Nearly half of American families have less than $10,000 in net worth, and the ranks of this group have been slowly growing.
- In 2000, married couples with children worked 500 more hours annually than they did in 1979. Sixty-seven percent of all working parents say they don't have enough time to spend with their children.
- In the period of economic growth from November 2001 to July 2006, corporate profits grew nine times faster than workers' wages. During other post-war periods, wages and salaries grew at an average annual rate of 3.7 percent, while corporate profits grew at a 6.8 percent annual rate.
- Between 1979 and 2001, the top 5 percent of wage earners saw their incomes increase more than four times faster than the middle 60 percent of earners - 79.6 percent to 17.8 percent.
- Members of the middle class that earn income from working pay twice the tax rate of someone getting income idly. Today, the top tax rate on capital gains and dividends is 15 percent (down from 20 percent before the Bush tax cuts) and the tax on large inheritances (only assessed on estates worth more than $3.5 million) is set to be eliminated in 2009. At the same time, the top tax rate for workers who get their income from paychecks is about 30 percent, when both payroll and income taxes are added together.
- Middle-income workers pay 12.7 percent of their earnings for Social Security and Medicare payroll taxes, plus federal income taxes that average 10.7 percent. This adds up to a 23.4 percent federal tax rate on a typical worker's wages. At the same time, someone who lives off investment income instead of earning wages pays a federal tax rate averaging just 9.6 percent.
- As family wages have stalled or dropped in the past two decades, family members have worked more. It is this increase in total family work hours, led by women joining the workforce, that helped drive family income upward over the 1970s, 1980s and 1990s, even as hourly wages have stagnated.
The report's conclusion: "The oft-cited middle-class squeeze is real, and the economic realities are unmistakable. Families are working more hours for less money. Their costs are going up. Life is riskier. Those at the top are doing better while the majority in the middle is stuck.... These are no confusing anomalies or blips on the radar, they are trends. Without change, the economic arc will continue to bend in a distinct direction: a direction that will diminish the American middle class."
Some highlights/lowlights from the pamphlet:
- Workers' hourly wages, adjusted for inflation, have been roughly stagnant from 1987 to 2005, at around $14 per hour.
- Today, the median annual earnings for a full-time, male worker are $41,670 per year, nearly $800 less, adjusted for inflation, than a generation ago.
- In 1980, nearly 40 percent of workers were participating in reliable, defined-benefit pension plans. Today, the number is about half that.
- The odds that any given worker today will suffer an involuntary job loss are 28 percent higher compared to the 1970s.
- Sixty-nine percent of private-sector workers had employer-provided health insurance in 1979; in 2004, 55.9 percent did.
- Nearly half of American families have less than $10,000 in net worth, and the ranks of this group have been slowly growing.
- In 2000, married couples with children worked 500 more hours annually than they did in 1979. Sixty-seven percent of all working parents say they don't have enough time to spend with their children.
- In the period of economic growth from November 2001 to July 2006, corporate profits grew nine times faster than workers' wages. During other post-war periods, wages and salaries grew at an average annual rate of 3.7 percent, while corporate profits grew at a 6.8 percent annual rate.
- Between 1979 and 2001, the top 5 percent of wage earners saw their incomes increase more than four times faster than the middle 60 percent of earners - 79.6 percent to 17.8 percent.
- Members of the middle class that earn income from working pay twice the tax rate of someone getting income idly. Today, the top tax rate on capital gains and dividends is 15 percent (down from 20 percent before the Bush tax cuts) and the tax on large inheritances (only assessed on estates worth more than $3.5 million) is set to be eliminated in 2009. At the same time, the top tax rate for workers who get their income from paychecks is about 30 percent, when both payroll and income taxes are added together.
- Middle-income workers pay 12.7 percent of their earnings for Social Security and Medicare payroll taxes, plus federal income taxes that average 10.7 percent. This adds up to a 23.4 percent federal tax rate on a typical worker's wages. At the same time, someone who lives off investment income instead of earning wages pays a federal tax rate averaging just 9.6 percent.
- As family wages have stalled or dropped in the past two decades, family members have worked more. It is this increase in total family work hours, led by women joining the workforce, that helped drive family income upward over the 1970s, 1980s and 1990s, even as hourly wages have stagnated.
posted by Randy Bergmann at 12:02 PM
6 Comments:
Are the working poor doing any better because they have to pay higher sales taxes?
Remind me, Mr. Bergmann, what political party here in New Jersey is responsible for increasing the sales tax from 6% to 7%? More importantly, how many of those legislators that voted to increase the NJ Sales Tax will the Asbury Park Press endorse in the upcoming general election? Given the APP's longstanding policy of almost always endorsing every incumbent, I find your newfound concern for the plight of the poor and the middle class to be rather disingenuous.
You're wrong, anonymous. The APP has overwhelmingly endorsed Republicans, encumbent or not. Just look at the last set of local elections: the APP endorsed every single Republican with the exception of Brian Unger, the Green Party candidate.
Those statistics tell me one thing: that the corporate world is getting everything it wants and more at our expense. Washington is so infatuated with the corporate world AND IT'S LOBBYISTS that the middle class continues to get burned no matter how much we complain about it. Further, the "free market" crowd sees this top-down economy as the solution to our problems so they're deaf to our complaints. Reality is, the "free market" crowd IS the corporate world and they're very good at convincing working people to vote against their own best interests.
Regardless of party affiliations and partisan politics, the illustration by Bergman confirms what we already felt. The rich ARE getting richer and the poor poorer. Cause? A general drop in our overall character and values. We scream about taxes, but don't vote in elections. We believe in far fetched schemes promised by candidates because they hurt less (remember Whitman playing with pensions?)than practical and long term solutions. Too much of things that are 'fast' and not enough things that last.
The question that is begging to be asked is: Is the fact that we don't vote in elections our failure or their success? When we don't vote, the status quo is maintained and those in power stay there so they have quite an interest in our not voting. Is that their goal? Certainly we are to blame for our lack of insights and maintaining too much trust, but don't you think (as I do) that deep down inside they know what rewards them best?
Of course the middle class is earning less, there are 20 million illegal immigrants driving wages down.
Did the reporter take all these statements as fact and actually check this organization out for political bias?
I remember the late spokesman for the homeless during the Reagan administration claim 3 million people were homeless, while it was nowhere near that number.
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