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2017-09-13 12:37 PM

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Subject: Disappearing Middle Class?

I saw this posted on FB earlier and thought it would be a fun discussion.  We all hear about the disappearing middle class, but according to the Census Bureau data (updated to 2016) the middle class has been disappearing, but they are earning higher incomes and disappearing into higher income groups.
The rich are getting richer, the middle class are getting richer, and the poor are getting richer. 
(all figures are inflation adjusted to 2016 dollars)



2017-09-13 1:18 PM
in reply to: tuwood

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Subject: RE: Disappearing Middle Class?

I'd be interested in how that study adjusted to 2016 dollars...I would've thought that the inflationary pressures of everyone (collectively) having more $$$ would push someone backwards.

2017-09-13 1:32 PM
in reply to: jmhpsu93

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Subject: RE: Disappearing Middle Class?

Originally posted by jmhpsu93

I'd be interested in how that study adjusted to 2016 dollars...I would've thought that the inflationary pressures of everyone (collectively) having more $$$ would push someone backwards.

I couldn't find this most recent one from the source but did find one from 2015 (thru 2014 data) that has some context.
http://www.aei.org/publication/charts-of-the-day-another-look-at-how-americas-middle-class-is-disappearing-into-higher-income-households/

2017-09-13 2:11 PM
in reply to: tuwood

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Subject: RE: Disappearing Middle Class?
Ummm, am I missing something? this graph states that 53.2% fell into the mid income bucket in 1967 and that 42.2% were in that bucket in 2016. That is a net decrease in that category. True that many increased into the >$100K bucket but my bet is that nearly all of those gains are in the >$250K group. And really, is $100K considered a high income nowadays? Good to see that the low income bucket shrank, that is good news. But this is AEI data, not necessarily the most straight-down-the -middle source of economic news.
2017-09-13 2:17 PM
in reply to: Oysterboy

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Subject: RE: Disappearing Middle Class?
Tony, you should read this:

https://www.economist.com/news/united-states/21713849-far-ignoring-m...

This story is pretty complex, lots of moving parts. The one take-home is that income inequality is real and is growing wider in the US. I fear it will damage our democracy unless we attack it head on.
2017-09-13 2:19 PM
in reply to: Oysterboy

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Subject: RE: Disappearing Middle Class?

Originally posted by Oysterboy Ummm, am I missing something? this graph states that 53.2% fell into the mid income bucket in 1967 and that 42.2% were in that bucket in 2016. That is a net decrease in that category. True that many increased into the >$100K bucket but my bet is that nearly all of those gains are in the >$250K group. And really, is $100K considered a high income nowadays? Good to see that the low income bucket shrank, that is good news. But this is AEI data, not necessarily the most straight-down-the -middle source of economic news.

The point of the chart isn't that the middle class isn't shrinking it's that more people are moving upwards.  If it's >$250k then that's even better because it's a percentage of households that are in that category.

I know the left likes to puppet that the rich are getting richer, but really everybody is getting richer according to the US Census.  Also, it's not "AEI data", it's US Census Data that AEI put in the graph.  Do you believe the US Census data is incorrect, or that they incorrectly graphed the US Census data?



2017-09-13 2:26 PM
in reply to: Oysterboy

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Subject: RE: Disappearing Middle Class?

Originally posted by Oysterboy Tony, you should read this: https://www.economist.com/news/united-states/21713849-far-ignoring-m... This story is pretty complex, lots of moving parts. The one take-home is that income inequality is real and is growing wider in the US. I fear it will damage our democracy unless we attack it head on.

No question income inequality exists, but I like to think about what is the real root cause.  My theory is that we have a government that is all too willing to "help" everyone get ahead.  We set up regulations that enable corporations to export labor and manufacturing to "help" them and then we give welfare to those who are now unemployed to "help" them.  Then we guarantee hundreds of thousands of dollars in student loans to "help" kids get degree's that barely make minimum wage.  Then we "help" them by mandating that they pay for healthcare out of pocket if they make too much money, etc...

I think you're seeing a pattern in my theory.  Every time the government tries to help they end up hurting the very people they're trying to "help".

There of course needs to be some regulation, but we are so regulated as a country that our government makes it very difficult to succeed.
I own a business and I'm doing everything I can to stay under 50 employees because my life will be a living hell the day I hire the 50th employee and it's because of nobody but the government.  The government also has a ton of regulations in place to restrict banks from lending money to businesses such as my own.  This also hurts my growth ability.

I could go on and on, but the government is the number one reason for 95% of our economic woes as a nation.  The solution is most certainly not "more government". 

2017-09-13 2:53 PM
in reply to: tuwood

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Subject: RE: Disappearing Middle Class?
"Also, it's not "AEI data", it's US Census Data that AEI put in the graph. Do you believe the US Census data is incorrect, or that they incorrectly graphed the US Census data?"

It's all how the data is interpreted. Data is data but I do think that calling $100K "high income" is entirely misleading in 2017.

I too believe that the gov't has a strong hand in the income inequality that we have in the USA. Just take a look at the tax code and see how it helps out the top but does little for the middle. I'd like to think that they can do tax reform in DC but alas I do not think they can do anything right. Anything.
2017-09-13 2:58 PM
in reply to: Oysterboy

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Subject: RE: Disappearing Middle Class?
OK, I know its HuffPo, but I could find you the same thing in the Economist if I looked hard enough. This is far from left-wing politics here:

http://www.huffingtonpost.com/2013/05/28/income-inequality-study_n_...
2017-09-13 4:05 PM
in reply to: Oysterboy

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Subject: RE: Disappearing Middle Class?

Originally posted by Oysterboy "Also, it's not "AEI data", it's US Census Data that AEI put in the graph. Do you believe the US Census data is incorrect, or that they incorrectly graphed the US Census data?" It's all how the data is interpreted. Data is data but I do think that calling $100K "high income" is entirely misleading in 2017. I too believe that the gov't has a strong hand in the income inequality that we have in the USA. Just take a look at the tax code and see how it helps out the top but does little for the middle. I'd like to think that they can do tax reform in DC but alas I do not think they can do anything right. Anything.

lol, I think we can both agree on that.   

 

2017-09-13 6:06 PM
in reply to: tuwood

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Subject: RE: Disappearing Middle Class?

Originally posted by tuwood

Originally posted by Oysterboy Tony, you should read this: https://www.economist.com/news/united-states/21713849-far-ignoring-m... This story is pretty complex, lots of moving parts. The one take-home is that income inequality is real and is growing wider in the US. I fear it will damage our democracy unless we attack it head on.

No question income inequality exists, but I like to think about what is the real root cause.  My theory is that we have a government that is all too willing to "help" everyone get ahead.  We set up regulations that enable corporations to export labor and manufacturing to "help" them and then we give welfare to those who are now unemployed to "help" them.  Then we guarantee hundreds of thousands of dollars in student loans to "help" kids get degree's that barely make minimum wage.  Then we "help" them by mandating that they pay for healthcare out of pocket if they make too much money, etc...

I think you're seeing a pattern in my theory.  Every time the government tries to help they end up hurting the very people they're trying to "help".

There of course needs to be some regulation, but we are so regulated as a country that our government makes it very difficult to succeed.
I own a business and I'm doing everything I can to stay under 50 employees because my life will be a living hell the day I hire the 50th employee and it's because of nobody but the government.  The government also has a ton of regulations in place to restrict banks from lending money to businesses such as my own.  This also hurts my growth ability.

I could go on and on, but the government is the number one reason for 95% of our economic woes as a nation.  The solution is most certainly not "more government". 

Government should have a role in combating *other* governments... I think we can agree the U.S. trade relationship with China is anything but balanced right now.  Our government gets lobbied by big business to lower trade barriers even if it means selling the farm.  China on the other hand, with their one party system, tends to make longer term strategic moves.  We need to start playing the game that way, IMO.



2017-09-13 6:08 PM
in reply to: jmhpsu93

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Subject: RE: Disappearing Middle Class?

Originally posted by jmhpsu93

I'd be interested in how that study adjusted to 2016 dollars...I would've thought that the inflationary pressures of everyone (collectively) having more $$$ would push someone backwards.

No, it's just that everyone's dollars have less buying power.

2017-09-13 6:13 PM
in reply to: tuwood

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Subject: RE: Disappearing Middle Class?
Originally posted by tuwood

Originally posted by Oysterboy "Also, it's not "AEI data", it's US Census Data that AEI put in the graph. Do you believe the US Census data is incorrect, or that they incorrectly graphed the US Census data?" It's all how the data is interpreted. Data is data but I do think that calling $100K "high income" is entirely misleading in 2017. I too believe that the gov't has a strong hand in the income inequality that we have in the USA. Just take a look at the tax code and see how it helps out the top but does little for the middle. I'd like to think that they can do tax reform in DC but alas I do not think they can do anything right. Anything.

lol, I think we can both agree on that.   

 




My take on the disappearing middle class is mostly caused by our tax code. No matter what politicians say, every tax punishes the middle class. Take Obamacare, taxes increased on most people. Ultra rich people didnt even notice it. the wealthy and the well off will about paying more taxes, but they can manage it into their budgets. The low income folks are spared paying into the tax and get a benefit in free healthcare. That leaves the middle class.....these are the folks who have to try and figure out how the tax increase affects their take home pay and how they fit that in their budget. For many it means cutting something....a vacation, a new car, or paying certain bills. I can give hundreds of examples like this.

The point is to be leery of any politician promising "taxes on the rich". First rich in the Northeast and West Coast is completely different from rich in the midwest. Many taxes on the rich begin at $250k. That income is great, it really is. However, $250k household income in San Francisco/San Jose area gets you a nice 1500 sq ft house with and hour commute to your job. In the mid west, it might get you a McMansion. Second, rich does not mean only rich are going to get tax increases. When the largest pool of money lies with the middle class, why would politicians exclude them? Third, the government has been recording record revenues per year for the past 5 years. There is not a revenue problem, there is an expense problem.

Good topic and chart. We need tax reform and I have been a huge fan of a flat tax for years. I think a simple tax rate in the high teens for anyone earning an income with no deductions would produce high revenues and put more money in people's pocket. I realize its a pipedream, but when you have an entire industry based solely on interpreting the tax code, you have a serious problem.
2017-09-13 6:29 PM
in reply to: hessma

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Subject: RE: Disappearing Middle Class?

Good topic and chart. We need tax reform and I have been a huge fan of a flat tax for years. I think a simple tax rate in the high teens for anyone earning an income with no deductions would produce high revenues and put more money in people's pocket. I realize its a pipedream, but when you have an entire industry based solely on interpreting the tax code, you have a serious problem.

If and only if you include investments.  If it's only wages then a flat tax = middle class tax.

2017-09-13 7:33 PM
in reply to: spudone

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Subject: RE: Disappearing Middle Class?
Originally posted by spudone

Good topic and chart. We need tax reform and I have been a huge fan of a flat tax for years. I think a simple tax rate in the high teens for anyone earning an income with no deductions would produce high revenues and put more money in people's pocket. I realize its a pipedream, but when you have an entire industry based solely on interpreting the tax code, you have a serious problem.

If and only if you include investments.  If it's only wages then a flat tax = middle class tax.




I agree, Income is taxed, no delineation between salary or investment income. Now, the only thing I might say is over 65 you pay less on investment income. This would encourage retirement savings. However, I really would stay away from any exceptions.
2017-09-14 6:49 AM
in reply to: spudone

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Subject: RE: Disappearing Middle Class?

Originally posted by spudone

Originally posted by jmhpsu93

I'd be interested in how that study adjusted to 2016 dollars...I would've thought that the inflationary pressures of everyone (collectively) having more $$$ would push someone backwards.

No, it's just that everyone's dollars have less buying power.

The "adjustment" should, uh, adjust, for that.  Or so I would think.  That was the point of my question/comment.  If those dollars have less buying power now because of inflation, then they're not comparing apples to apples.



2017-09-14 11:01 AM
in reply to: tuwood

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Subject: RE: Disappearing Middle Class?

If it helps, we can draw a different graph showing absolutely no change over 50 years.  

High-Income = top 33.3% earners each year
Middle-Class = middle 33.3% earners each year
Low-Income = bottom 33.3% earners each year.  

Or we could use a Normal distribution with 16% "high income" 68% "middle class" and 16% low income.  

Or we could simply split it down the middle with 50% high income and 50% low income and eliminate the middle class entirely.  

Instead, we probably have some entirely arbitrary definitions about the 3 classes changing over the 50 years shown.  

2017-09-14 4:14 PM
in reply to: McFuzz

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Subject: RE: Disappearing Middle Class?

Originally posted by McFuzz

If it helps, we can draw a different graph showing absolutely no change over 50 years.  

High-Income = top 33.3% earners each year
Middle-Class = middle 33.3% earners each year
Low-Income = bottom 33.3% earners each year.  

Or we could use a Normal distribution with 16% "high income" 68% "middle class" and 16% low income.  

Or we could simply split it down the middle with 50% high income and 50% low income and eliminate the middle class entirely.  

Instead, we probably have some entirely arbitrary definitions about the 3 classes changing over the 50 years shown.  

Good point.  I read something years ago that was poking at how nobody can define what the "middle class" really is.  

2017-09-15 8:59 AM
in reply to: tuwood

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Subject: RE: Disappearing Middle Class?
First off let's quit using middle class as it implies an upper or high class and a low class.

The question is, should the government try to tax people to obtain a bell curve?

I was born middle income, moved to low class when Dad flew the coop but am now high class. I think this mobility is what makes America special.
2017-09-15 9:09 AM
in reply to: Rogillio

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Subject: RE: Disappearing Middle Class?
Must face facts here; I got no class.
2017-09-19 8:24 AM
in reply to: mdg2003

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Subject: RE: Disappearing Middle Class?
Unions created the middle class. In the 1900s there were ridiculously rich class and everyone else. During the gilded era you had families like Rockefeller, Vanderbilt, JP Morgan, Carnegie that were extremely wealthy and the then you had the middle class. In 1912 first class passage on the RMS Titanic cost the equivalent of 17 year's wages of the guy shoveling coal into the boilers in the engine room.

So the rich were getting richer and working class said our biggest strength is in our numbers. So they organized and demanded a bigger slice of the pie.

I was going to brilliantly tie this into the subject of this thread but the thought of how I was going to do that disappeared like a fart in the wind.

We live in a different world now with jobs tending towards the technical....with the jobs of sitting a sewing machine 10 hrs a day being farmed out to the Chinese. So if you are not blessed to be boring with the intellect to do one of the more technical jobs....and the low end jobs are being taken by the Chinese and Mexicans and robots.....what is a person to do?

During WWII my granddaddy was a welder in shipyards in New Orleans. I figure this was skilled labor and a 'middle class' job. But now robots can weld better than humans and do the work of a dozen men. So most of these 'middle class' jobs are gone forever.


2017-09-19 9:01 AM
in reply to: Rogillio

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Subject: RE: Disappearing Middle Class?

Originally posted by Rogillio Unions created the middle class. In the 1900s there were ridiculously rich class and everyone else. During the gilded era you had families like Rockefeller, Vanderbilt, JP Morgan, Carnegie that were extremely wealthy and the then you had the middle class. In 1912 first class passage on the RMS Titanic cost the equivalent of 17 year's wages of the guy shoveling coal into the boilers in the engine room. So the rich were getting richer and working class said our biggest strength is in our numbers. So they organized and demanded a bigger slice of the pie. I was going to brilliantly tie this into the subject of this thread but the thought of how I was going to do that disappeared like a fart in the wind. We live in a different world now with jobs tending towards the technical....with the jobs of sitting a sewing machine 10 hrs a day being farmed out to the Chinese. So if you are not blessed to be boring with the intellect to do one of the more technical jobs....and the low end jobs are being taken by the Chinese and Mexicans and robots.....what is a person to do? During WWII my granddaddy was a welder in shipyards in New Orleans. I figure this was skilled labor and a 'middle class' job. But now robots can weld better than humans and do the work of a dozen men. So most of these 'middle class' jobs are gone forever.

Things have definitely changed a lot over the past 100 years.  I sit and think about what it took to make the equivalent of millions of dollars 100 years ago and you'd have to build a pretty substantial business with many people and buildings, etc.  Today a High School kid can program a stupid phone app in his bedroom and sell it for $1 on the App store and make tens of millions of dollars without ever hiring a person. 

Heck, my entire business is providing IT products and support to businesses.  25 years ago my industry was pretty much non-existent.

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