NCPA - National Center for Policy Analysis

THE POOR MIDDLE CLASS MYTH

December 26, 2007

Leading liberal thinkers tell a compelling tale of middle-class decline.  Pity it isn't true, says Stephen Rose, an economist and author.

One myth is that the middle class's standard of living stagnated while the dot-com boom made the super rich even richer.  Not really, says Rose:

  • In fact, the U.S. economy hands out wealth far more evenly. Per capita gross domestic product has increased by more than 65 percent since 1979 -- growth that translates to $26,000 per household.
  • If all that money had gone to the richest 10th of the population, it would now hold more than 60 percent of the national income.
  • That's nearly twice as much as the super rich actually have, according to the best census surveys available.

In addition, the middle class is not shrinking:

  • True, fewer people today live in households with incomes between $30,000 and $100,000 (a reasonable definition of "middle class") than in 1979.
  • But the number of people in households that bring in more than $100,000 also rose from 12 percent to 24 percent.
  • There was no increase in the percentage of people in households making less than $30,000.
  • So the entire "decline" of the middle class came from people moving up the income ladder; for married couples, median incomes have grown in inflation-adjusted dollars by 25 percent since 1979.

Further, companies are not walking away from their commitments to workers by cutting pension and health insurance benefits, says Rose:

  • Employer contributions for health insurance jumped from 3.5 percent of wages in 1979 to 7.2 percent in 2005, according to the Commerce Department.
  • Virtually every large company provides coverage and pays more than 75 percent of employees' premiums.
  • The rise in the number of uninsured workers over the past decade comes from cutbacks by small businesses and the self-employed.

Source: Stephen Rose, "5 Myths About the Poor Middle Class," Washington Post, December 23, 2007.

For text:

http://www.washingtonpost.com/wp-dyn/content/article/2007/12/21/AR2007122101556.html

 

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