The Middle Class Is Shrinking
The middle class is shrinking in Colorado & across U.S. as incomes fall.
Middle-income households in metro Denver shrank from 58 percent of the population in 2000 to 53 percent in 2014, according to a report released by the Pew Research Center.
That shrinkage didn’t come primarily from households moving into higher income brackets, but rather from more households moving into lower-income ones.
“We still have a lot of people who are middle income. But I can understand the reason for concern,” said Gary Horvath, a Broomfield economist. “The recovery, in terms of income, hasn’t been strong.”
Metro Denver’s share of upper-income households increased 1 percentage point to 25 percent, while lower-income households rose 4 percentage points to 22 percent, according to Pew.
The trend toward a smaller middle class is a national one and has been underway for four decades, but sluggish economic growth has exacerbated it.
A lot of the shrinkage is natural. It is due to people retiring and making less as well as splitting up and making less. There is a correlation to the level of income, and single headed households. At present, over 65% of homes in the US have single households.
Often, 1 person, 1 paychevk= less income. When my husband retires, his SS will be around less than 1/8 our present income.
If we were to divorce, My income alone would push me into the lower classes and his would be great until he retired.
SusanMerc -- Obviously, Thom also speaks about it.
I know several people in my age bracket - mid 30s - that have given up on even trying to make it into the middle class. They've adopted a "Tiny House" lifestyle. No kids. Tiny House. Dual income but dead-end jobs. Starbucks barristas is a popular one. Spend their extra money on "experiences".
They don't own cars. They use Uber. They don't rent hotels when they travel. They use Air BnB.
They may night be "middle class" in the traditional sense. But they're happy.
It is not that people do not wish to talk about the poor. It is that the solution cannot be handouts.
When the majority of a workforce is younger and traditional, you have a burgeoning middle class and can should read more viable social systems. When that majority is retiring, and the population has less viable workers, and more homes are broken up and headed by singles, you have decreased incomes, more poverty and as people retire, or divorce the incomes drop drastically.
Government assistance is not the answer because that assistance has to rely on worker incomes and a large portion of incomes are retirees.
My income will be reduced drastically in 3 years to almost 1/10 of what we have now (if I count savings being spent also)
The dominant population (including those of European descent in Europe) have a fertility problem. The Europeans entered a human pop decline in the 1990s, this has shut down entire villages and industries as the "workers " that the next generation relies on does not exist.
Ergo, less workers to take care of and finance elderly and handicapped subsistence.
When a person retires, most experience a huge shift in income as do those who divorce.
We can't afford to take care of, or handle huge amounts of the population needing government care and Europe and England (where I was born) know the socialism Americans want to embrace is in the long term, a FAILED model.
This is why many Nationalized services have become privatized now, including more private health insurance schemes.
Most Americans look to European socialist models and actually have NO IDEA of what they are trying to emulate or how it can be achieved.
1. You cannot have large socialist programs, and still have the adjunct industries to that program be private.
2. OBAMAS Healthcare program will fail. You cannot have private hospitals, surgeries and no regulated caps on Healthcare services and education expenditures and private education and capitalists Healthcare programs.
For socialism to work, top to bottom the programmes must be government controlled and regulated.
Bernie Sanders, idea of discussing the shrinkage was taxing more, then spending it on capitalistic ventures.
For instance, he wants free college education but the federal government does not cap the costs of universities, colleges or private schools.
With no cap, who will pay the 150k per year bill to go to Harvard? How does the Fed government enforce caps when it is each STATE that dispenses scholarships and the private sector who control costs.
Put another wsy..we are getting older, more dysfunctional, and our coffers are almost empty. CHOOSE 1: either we address the environment, bring in more labor like Europe to increase the payers of taxes and foot the bills for social security and helping the special needs....., federalize all education and cap salaries for ALL jobs as well as mandate a living wage and promotion/salary system, Police the world and have a lot of military presence, Control most industry, Fix the social programs in lieu of economic growth, or nah.
JUST 1...we cannot afford to do more than 1 and the 1 we choose might make all the rest impossible.
My husband is Dutch, so we used to live in Holland. We were required by LAW (even in the 1980s) to buy Rivage insurance for health as well as pay into the public one based on our income.
There is no free lunch, not even in socialism, and Bernie is an old time politician, offering bottomless handouts..but that purse has been almost empty since the Bush days.
They simply redefined their happiness parameters. Every generation has done this. The days of excess are over. Now the public live vicariously through the lifestyles and antics of the rich and famous, or like you said, live for experiences.
QueenB -- I searched the site of Gary H. I could not find anything relating to what Thom says. However, I only spent about 20 minutes. In the numbers I looked at Gary was quoting average incomes. How can a real economist not use medians?
The median wage of male workers has dropped (inflation adjusted) by $726 since 1973. The median wage of female workers has dropped $1154 since 2007.
It seems those numbers are why the middle class is losing members -- not single headed households or retiring.
Queenbthatsme: "The days of excess are over"? ...Not for everyone. Paul Ryan was spotted recently polishing off two $350 bottles of wine. I'm not sure how much he shared? That's the same good ole Pauley who robs from the poor and middle class and gives to the rich!
Presently the days of excess for the top one percent are excessively well! In the United States we haven't seen this kind of income disparity since just before the Great Depression.
If you think the middle class is struggling now, just hope and pray that the Democratic platform endorsed $ 15.00 and hour minimum wage does not become a reality. The inflationary effects would be devastating to middle and upper middle class families, and would destroy the lives of seniors living on fixed incomes. Eight years of Obama have not been kind to the middle class. The Affordable Care act hurts middle/upper middle class workers who make too much for subsidies, and will hurt them even more if the Cadillac Tax on existing health care goes into effect. Obama turned his back on workers who wanted to unionize by not pushing for Card Check when he had a Democratic House and Senate. He pushed for fast track trade agreements that will harm US workers, and is willing to sacrifice coal and oil workers for the sake of windmills and other energy pipe dreams. If O'Bamas executive order allowing illegal immigrants to get work permits had not been put on hold, American workers in construction, manufacturing, transportation and other good paying jobs throughout the country would be further impacted by the wage reducing/displacement impact of illegal immigrants who could now work any job in the country (with a few exceptions), with the blessing of the government and the elimination of any stigma attached to hiring illegals. Our political leaders should focus on strategies that help the middle class, not further burden them downward redistribution of wealth schemes. While the "compassion" of a nation may be measured by the naive by how it treats its poor, the survival and well-being of a nation clearly depends on how well its middle class does. The last 16 years have harmed the middle class immensely, abetted by the absolute negligence of the last two administrations.
If the solution is not recognizing that the right to life requires access to basic neccessities, which civilization and their economies ( and governments ) areresponsible for providing, then grab a gun and start killing people, because natural law has built in programming for all "life" to survive and reproduce. It doesn't require "permission" and success is determined by doing.....civilization and governments interupted this process by promising something better than the "natural order"......and in 1776 it "declared" that to secure these rights, governments were instituted among men.
Bernie, did not think his positions through, because he is essentially thinking on infinite growth lines, but he also didn't suggest Harvard should be free, he said, state schools....like U Mass, UCLA, etc. Providing free education at every level, is both easy and cheap......since it can all be done digitally. This doesn't help Harvard, or the "permission to play" system, but it will educate those who desire it.
"Inclusive sustainability" is easily achieved.....providing all 330 million on the 2010 census with a $1000/mo basic income from cradle to grave would run 3.9 trillion, or about 22% of GDP......but obviously, this would be much lower......not all are citizens, nor would it be required by all.
Now, this program would only be needed for 30 to 35 years.....and since we are required to completely tranform "civilization" during this time frame....to a renewable energy and sustainable future, at every level, the economic stimulus to do so....as well as clear individual sustainable goals, will have no problem being successful.
Or we can keep doing might makes right....you choose?
Cost of housing is going up much faster than income in Denver.
Tom D -- I agree with most of what you say. However, we have increased the minimum wage numerous times, and it has never had the effect you describe.
Pat Paine -- You have ignored a few non-linear effects. Giving $3.9 trillion to people, who would spend it, would greatly increase our GDP. Currently, it has been computed that for each dollar given to welfare returns $1.67 of economic activity (GDP). Before all our trade "agreements", that dollar returned $3 to $4.
Chuckle8-The minimum wage was never raised to the massive extent proposed in the Democratic platform. It was raised incrementally. A better solution would be to significantly increase the Earned Income Tax Credit. This is politically "do-able", would be limited to adult, head of household full time employees who are US citizens, and would not cost jobs. I firmly believe thats what everyone should be pushing for. Also for a COLA on the minimum wage so it won't continue to fall behind.
TOM D -- It seems if the min wage is raised less than the productivity rate would demand there would be very little detrimental effect due to inflation. Also, remember soc security has a cpi adjustment. If one was trying to sell supply side economics, one of the benefits would be low inflation. Of course, supply side economics has been shown to destroy economies, but the inflation is low.
Do you know what percentage increases the previous min wage raises were? The current plan for minimum wage is to raise it over several years (at least that is the plan in CA).
chuckle 8 If the minimum wage were to be raised nationally to $ 15.00 per hour, the greatest effect would be the raising of prices of necessities to what the market will bear. If the minimum wage were to be raised the same percentage as the Social Security COLA, that would be fine, but it would take much longer to raise the minimum wage. If the minimum wage is raised immediately to 15 per hour, those in the middle class making $16-% 40 per hour (middle/upper middle class) would be hurt badly, if they don't get a proportional increase. I believe the best way to help low wage heads of households is dramatically increasing the Earned Income Tax Credit to something the equivalent to $ 15 per hour, and paying it quarterly. This would be much less inflationary, more narrowly target the increase to those who most need it, and quell opposition to increasing wages for the poor who believe it would cause job loss.
In the early 2000s, I worked a job I had done in 1984. The pay had gone down on that job by just shy of 50%. Does that tell you anything? By the way, it was a psychotherapy job working for a non-profit that had decided to pocket more of the alloted county pay per contract (which had risen) to pay their administrators. I then took out a contract directly from the county (rarely the government admits individual contractors) and got a 600% raise. Hmmmm.
My bungalow house, charming old 1800s farmhouse in Seattle, for which I paid $139.5 in 1990 is in a neighborhood where the houses are now selling at upwards of $800. It's valued around $600, but multiple bids drive it upwards. Hundreds of thousands of increased 'value', in a little less than 3 decades is uncontained economics. Period. (Also, the rent I get for it is about $1000 more than I should be getting, in my estimation. This is un-controlled, or Over-Controlled, i.e. manipulated growth, in my humble opinion.
So, Thom, your book on the crash? ... I think so; I am just waiting.
PS On the topic of "Class," per sae
It sounds by some of the comments here that to have a middle class requires there be poor.
I don't think so.
I was instructed to read about (I was facilitating a Middle Class Support group for 7 years; one bright person handed me the article in question), one working economy designed in such a way that noone was allowed to earn more than 8 times what the bottom did. The result: high, middle and low wage earners, with noone 'going under'.
Greed is absolutely relevant to the discussion of American economics.
Tom D -- Do you know of any real world examples that support what you say?
One dynamic you have not mentioned, is that a $15 wage would make companies, e.g.. Walmart, pay their employees rather than the welfare system supporting their employees.
Also, a significant indicator of the economy is the inflation rate. An inflation rate less than 4% (Robert Reich in Aftershock) means the economy is weak. Janet Yeltsin refuses to adjust the fed rate until the inflation rate is at least 2%. She is starting to weaken her stance and say she might adjust it if it could just get near 2%.
Chuckles 8 I don't have any real world examples of a doubling of the minimum wage effects, because I don'rt know if any nation did it. This would also be called "wage compression" and "socialization of wahes", terms I have dealt with aas a union contract negotiator. If every minimum wage employee got a raise to $ 15.per hour, the cost of the goods everyone buys, including those making 15 per hour, would increase, as producers will always raise prices to what the market will bear.If raising to 15 per hour wouldn't be particularly inflationary, at what point above 15 per hour does an increase become inflationary? If there is no identifiable inflation point, and I know this sounds ridiculous, but wouldn't it be better to raise the minimum wage to $ 60 per hour and make the annual minimum salary $ 120,000 per year for everyone, and $ 240,000 per family with two full time workers? Don't you think we'd soon be paying $ 200,000 for a Chevy Impala and 400 a month for Cable TV? The Earned Income Tax Credit I described above would be more effective because it would be properly targeted.
Tom D -- I still think the point at which the wage increase is too much is when the increase is greater than the increase in the productivity rate.
I've posting for a long time: "Where do you think the shrinking middle class is going?" They are going into the poor class. No one wants to talk about the poor except Bernie Sanders. It seems as though "poor" is a four-letter word to politicians.