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Goodbye Middle Class: Half Of All American Workers Made Less Than $34,248.45 Last Year
- Thread starter Banjo
- Start date
11,000 of 63,000?
Citation?
zerohedge
zerohedge
link?
The standard of living for most people in the world is the highest it has ever been. Billions have moved out of abject poverty due to trade. Bad news for Americans whose jobs were lost to somewhere cheaper. Trump has brought back 11,000 of the 63,000 factories lost but is favourite to lose re-election.
Worldwide poverty went down, but the middle class lost buying power since the 80's. Before that time 1 job was enough to live, today you need 2 jobs, so man and wife should both work. The average income in the US is around $36,000. With that money you cannot live a normal life like we did in the 80's.
The statement "The standard of living for most people in the world is the highest it has ever been" comes from the fact that the really poor got a "better" life. The average middle class family did not get a better life. A lot of costs went much faster up than the salaries, so the buying power went down. Especially RE, to have an own house, became much more expensive, taxes as well.
https://www.investopedia.com/ask/an...-current-cost-living-compare-20-years-ago.asp
Inflation Examples
For example, the Bureau of Census reports that the average price of a new home in January 2000 was $194,800.4
According to the inflation calculator, that price in January 2020 should be $297,705.3 The same report places the average sale price for January 2020 at $402,400, more than 35% higher when accounting for inflation alone.5
The same method can be applied to see if household incomes have similarly increased. The median household income in 1999 was $42,000, according to the Census Bureau.6 According to the inflation calculator, that price today should be $65,191 in January 2020.3 The most recent year with full data available is 2018, which places household income at $63,179, meaning that it has failed to keep up with inflation and is 5% below where it should be.7
The average cost of buying a new car in 1999 was $20,686; adjusted for inflation, that price today should be $31,874. However, according to Kelly Blue Book, the average cost of buying a new car in May 2019 was $37,185, 14% higher than the price when accounting for inflation.
The Bottom Line
Taken together, these figures indicate that, while the average person is still making the same amount of money when accounting for inflation, prices for many of the daily necessities have gone up considerably, which means that each dollar earned does, in fact, buy less than it did 20 years ago.
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This article shows very well the middle class got killed.
https://www.cbpp.org/research/pover...ics-on-historical-trends-in-income-inequality
https://www.cbpp.org/research/pover...ics-on-historical-trends-in-income-inequality
Worldwide poverty went down, but the middle class lost buying power since the 80's. Before that time 1 job was enough to live, today you need 2 jobs, so man and wife should both work. The average income in the US is around $36,000. With that money you cannot live a normal life like we did in the 80's.
The statement "The standard of living for most people in the world is the highest it has ever been" comes from the fact that the really poor got a "better" life. The average middle class family did not get a better life. A lot of costs went much faster up than the salaries, so the buying power went down. Especially RE, to have an own house, became much more expensive, taxes as well.
https://www.investopedia.com/ask/an...-current-cost-living-compare-20-years-ago.asp
Inflation Examples
For example, the Bureau of Census reports that the average price of a new home in January 2000 was $194,800.4
According to the inflation calculator, that price in January 2020 should be $297,705.3 The same report places the average sale price for January 2020 at $402,400, more than 35% higher when accounting for inflation alone.5
The same method can be applied to see if household incomes have similarly increased. The median household income in 1999 was $42,000, according to the Census Bureau.6 According to the inflation calculator, that price today should be $65,191 in January 2020.3 The most recent year with full data available is 2018, which places household income at $63,179, meaning that it has failed to keep up with inflation and is 5% below where it should be.7
The average cost of buying a new car in 1999 was $20,686; adjusted for inflation, that price today should be $31,874. However, according to Kelly Blue Book, the average cost of buying a new car in May 2019 was $37,185, 14% higher than the price when accounting for inflation.
The Bottom Line
Taken together, these figures indicate that, while the average person is still making the same amount of money when accounting for inflation, prices for many of the daily necessities have gone up considerably, which means that each dollar earned does, in fact, buy less than it did 20 years ago.
Excellent post. Two comments:
1. As you correctly pointed out in your first example the problem isn't necessarily prices - they have mostly stayed the same (point 2 will address this further). The problem is wage stagnation due to globalization and automation. Traditional middle class jobs just don't pay what they used to. Take car factory work for example. A traditional "middle class" job. Most of that is done in Mexico with final production in America.
2. The car example is a little contrived. There are other circumstances that account for that 14% increase. Cars were far simpler 20 years ago. Regulations were fewer, and construction was more robust. Through safety regulations, taxes, and other small thing they add up to most of that 14% increase. The rest is in luxuries, which even a base model Honda Civic has these days. Perhaps it's a sweetener because they can make back some of the profit eaten up by regulation.
The middle class are tech workers. Higher skilled, harder to export. Once globalization eats techs lunch (that is, when infosys and cognizant actually produce employees a few tiers higher than hot garbage) the tech industry will succumb to the same fate. Our economy is setting us up to fail. The reason "Make America Great Again" was such a powerful slogan for electioneering is because the idea of "Making America Great Again" involves bringing jobs back and paying Americans enough to live the American Dream. To quote Carlin - "It's called a dream because you have to be asleep to believe it". MAGA was, perhaps, the death rattle of the middle class after suffering from terminal wage stagnation and globalization since at least 2004.
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zerohedge
Zero Hedge or ZeroHedge is a far-right libertarian financial blog, so Trumps side. They have an interest in blowing up the number of jobs "brought back" by Trump. Not an objective source.
Zero Hedge or ZeroHedge is a far-right libertarian financial blog, so Trumps side. They have an interest in blowing up the number of jobs "brought back" by Trump. Not an objective source.
There's virtually no objective source my friend. News outlets are propaganda machines. If you failed to realize this then you are living in a fantasy land.
The car example is a little contrived. There are other circumstances that account for that 14% increase. Cars were far simpler 20 years ago. Regulations were fewer, and construction was more robust. Through safety regulations, taxes, and other small thing they add up to most of that 14% increase. The rest is in luxuries, which even a base model Honda Civic has these days. Perhaps it's a sweetener because they can make back some of the profit eaten up by regulation.
- I agree that the car example is a bit difficult to use.
- I bought a BMW in 1980. If I want to buy the model that today replaces the model I bought in 1980, the price is 4.5 times higher. The car is indeed better but I have to spent 4.5 times more money while the consumer price index (which is linked with salaries) went up only 2.32 times. So I lose a lot of money for a car that has a lot of stuff that I don't need but am forced to take.
- Bottom line is that if salaries don't follow consumer prices you have to safe money somewhere. In reality everything you buy is much better but also much more expensive than years ago.
- The dilemma is you have to save money, because salaries don't follow consumer prices, but all products force you to do just the opposite, causing financial problems.
What's the use that you can buy for 50K a year a "very good" life if you only make 40K a year? You need a "not so good" life but at an affordable price. In this case a 40K life.
There's virtually no objective source my friend. News outlets are propaganda machines. If you failed to realize this then you are living in a fantasy land.
True, that's why I made the remark.
We need verifiable numbers. But I don't see them. Even not a link where the numbers came from.