People who think the "...middle class is shrinking?

Question

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You do realize the middle class by definition can't shrink? It merely shifts. Am I the only one who laughs at this seemingly ridiculous sentiment. If the average income for people increases, the middle class doesn't "shrink" it just shifts. There will always be a class of people making less than the upper class and more than poverty level, it's just the amount that changes. I got a lot of thumbs down for that same answer, does this demonstrate the complete lack of logic employed on Y/A in the Politics section?

Answer 1

You're right, Scott. The middle-class shrinking is grossly misstated by the current measure of income inequality.



Income inequality has been rising since the 1970's, but there are problems with the way it's reported. Income inequality will always be overstated.



Here are some income distribution facts taken from the U.S. Census Bureau:



Household Income Group % of Total Income Income Range:



Lowest 20%-----3.4%------$0-18,500

Second 20%----8.7%------$18,500-34,738

Third 20%-------14.7%-----$34,738-55,331

Fourth 20%------23.2%----$55,331-88,030

Highest 20%----50.1%----$88,030 and up



The top 20% has roughly 14 times the total share of money than the bottom 20%. For a comparison, in 1971, the top 20% had only 11 times the share of total money than the bottom 20%.



But why is this? Here's why.



The steady increase in income inequality in recent decades is due largely to increased immigration. Between 1970 and 2000, foreign-born population in our great country increased from 9.6 million to 31.1 million. The percentage of the U.S. population that is foreign-born increased from 4.7% in 1970 to 11.1% in 2000.



Immigrants' median annual income is about 15% lower than native-born Americans. This is why the gap between the top and bottom groups has increased.



However, income is even more equally distributed after taking out taxes and in-kind (food stamps, medical assistance, etc.) transfer payments. The current measure of inequality is skewed by this lack of inclusion.



Higher incomes pay a higher percentage of their income in federal taxes, but in-kind transfers are received disproportionately by lower income households.



Another way that inequality is overstated is that the distribution of money income expressed above overstates the actual degree of income inequality by focusing on income distribution at one point in time.



A large chunk of the people in the lowest 20% of households are young people at the start of their careers. Most of these young people will move into higher income groups as their careers progress and they develop more human capital (developed ability that increases a person's productivity).



If career incomes were compared or if incomes were compared for households at the same career stage the gap between the highest and lowest would be much smaller.



Wealth distribution is also overstated. This is caused by the measure of wealth distribution comparing different people at different career stages. Comparing the wealth of a 60-year-old to the wealth of a 25-year-old overstates the inequality.



Wealth distribution is also overstated because human capital is NOT included in measuring wealth. For most people, their human capital is the most valuable asset owned. An example would be a 25-year-old recent Harvard Law School grad may have very little accumulated wealth in terms of physical assets, but the Harvard Law degree is very valuable human capital.



These are the causes of the continuing income inequality, which people might find interesting.



1. Natural ability: Some people are born with skills in math, music, or athletics. A person with a high level of marketable natural ability may earn a higher income than a person with a lower level of natural ability.



2. Human capital: Mean earning increase as education levels rise, but, again, a degree in chemical engineering and a degree in elementary education will have different earning potential in the marketplace.



3. Work and leisure choices: Contrary to popular belief rich people don't just sit back and make money off the backs of hardworking proletarians. Most people who've accumulated much wealth and have high earning potential have worked incredibly hard for it.



4. Risk taking: People differ in their willingness to take risks. An example would be that self-employed entrepreneurs make up a disproportionately large share of society's millionaires, but they also make up a disproportionately large share of those filling for bankruptcy.



5. Employment discrimination: This occurs when employees make hiring, promotion, and pay decisions based on factors unrelated to employee productivity.



6. Luck: A person can have good luck (winning the lottery) or bad luck (suffering a debilitating illness). Most people experience a mix of good and bad luck.



Hope this helps!

Answer 2

In a way, what you say is correct and logical, but not entirely true. If someone was to get a raise and become richer then what he was before, while others are still making money at the same rate. He can no longer be classified as middle class b/c of the fact he now makes more money than the average middle class person does. If everyone was to make more money (all the classes,) then you would still be middle class, maybe just a bit richer, but still middle class because everyone increased by the same amount.

Answer 3

No, not the only one.

You are probably one of the few though.that laugh at the increasing disparity of earnings by US citizens.



The middle class is not shrinking, it is going away. Soon there will be only the rich, and the poor, as there was before the rise and strengthening of labor unions in this country.



It is no coincidence that manufacturing and production jobs began to leave The US at the same time the so called "ownership" method of business began to surface in the 80's.

Tricking the workers into putting the company first is why all of the company first jobs are gone.



The difference between now and the pre-1930's is that people have had a taste of the better life, this is the reason why so many are in debt. They became accustomed to the lifestyle.

Make no mistake, Voodoo economics is a catastrophe for The USA, and there will eventually be more than the economic backlash we are seeing now.

Answer 4

Stephen Rose , an economist working for a "revolutionary" (liberal) think of tank defines midsection type as families earning between $30,000 and $a hundred,000 a twelve months. He says there are fewer people contained in the midsection type right this moment than there have been 30 years in the past because of the fact the proportion of people who earn extra suitable than $a hundred,000 a twelve months has doubled .. from 12 p.c. in 1979 to 24 p.c. now.the proportion of people earning below $30,000 a twelve months has remained unchanged. So , in accordance to a Democratic economist, you're suitable. the midsection type is shrinking.... To top and severe earnings categories.. undergo in techniques that an economist defining the "midsection type" purely provides to the "taxable prosperous" that the Democratic base are promising to tax......

Answer 5

NO, I think 'YOUR LACK of logic' is showing. You are missing the POINT!

What the People are trying to say is as the Classes "SHIFT" (as you say) the 'shift' becomes so GREAT that (SOME) of the Middle- class EARNERS NOW, fall into the "Poverty Level".

"THE RICH GET RICHER AND THE POOR BECOME POORER"...(Poorer by falling near 'homelessness')...and the Middle Class "SHRINKS".

P. S. You sound like a "Future" or you are Presently a Republican....lol..lol..

Answer 6

If someone who has a middle class income, gets a couple promotions and becomes rich, while somebody else loses their job and becomes poor- the middle class shrinks by 2 people. Your theory makes no sense.

Answer 7

"There will always be a class of people making less than the upper class and more than poverty level, it's just the amount that changes."



If that amount shrinks, the middle class shrinks.......



Its not rocket science and its fairly easy to judge.

Answer 8

You are dreaming. The middle class has already shrunk.

Answer 9

You listen to Rush Limbaugh a LOT don't you.