Half the U.S. makes under $27 K, and other signs the middle class is dying

Half The Country Makes Less Than $27,520 A Year And 15 Other Signs The Middle Class Is Dying

Submitted by Tyler Durden

June 5, 2014 | Zero Hedge

Submitted by Michael Snyder of The Economic Collapse blog,

If you make more than $27,520 a year at your job, you are doing better than half the country is.  But you don't have to take my word for it, you can check out the latest wage statistics from the Social Security administration right here.  But of course $27,520 a year will not allow you to live "the American Dream" in this day and age. After taxes, that breaks down to a good bit less than $2,000 a month.  You can't realistically pay a mortgage, make a car payment, afford health insurance and provide food, clothing and everything else your family needs for that much money.  That is one of the reasons why both parents are working in most families today.  In fact, sometimes both parents are working multiple jobs in a desperate attempt to make ends meet.  Over the years, the cost of living has risen steadily but our paychecks have not.  This has resulted in a steady erosion of the middle class.  Once upon a time, most American families could afford a nice home, a couple of cars and a nice vacation every year.  When I was growing up, it seemed like almost everyone was middle class.  But now "the American Dream" is out of reach for more Americans than ever, and the middle class is dying right in front of our eyes.

One of the things that was great about America in the post-World War II era was that we developed a large, thriving middle class.  Until recent times, it always seemed like there were plenty of good jobs for people that were willing to be responsible and work hard.  That was one of the big reasons why people wanted to come here from all over the world.  They wanted to have a chance to live "the American Dream" too.

But now the American Dream is becoming a mirage for most people.  No matter how hard they try, they just can't seem to achieve it.

And here are some hard numbers to back that assertion up.  The following are 15 more signs that the middle class is dying...

#1 According to a brand new CNN poll, 59 percent of Americans believe that it has become impossible for most people to achieve the American Dream...

The American Dream is impossible to achieve in this country.

 

So say nearly 6 in 10 people who responded to CNNMoney's American Dream Poll, conducted by ORC International. They feel the dream -- however they define it -- is out of reach.

 

Young adults, age 18 to 34, are most likely to feel the dream is unattainable, with 63% saying it's impossible. This age group has suffered in the wake of the Great Recession, finding it hard to get good jobs.

#2 More Americans than ever believe that homeownership is not a key to long-term wealth and prosperity...

The great American Dream is dying. Even though many Americans still desire to own a home, they are losing faith in homeownership as a key to prosperity.

 

Nearly two-thirds of Americans, or 64%, believe they are less likely to build wealth by buying a home today than they were 20 or 30 years ago, according to a survey sponsored by non-profit MacArthur Foundation. And nearly 43% said buying a home is no longer a good long-term investment.

#3 Overall, the rate of homeownership in the United States has fallen for eight years in a row, and it has now dropped to the lowest level in 19 years.

#4 52 percent of Americans cannot even afford the house that they are living in right now...

"Over half of Americans (52%) have had to make at least one major sacrifice in order to cover their rent or mortgage over the last three years, according to the “How Housing Matters Survey,” which was commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation and carried out by Hart Research Associates. These sacrifices include getting a second job, deferring saving for retirement, cutting back on health care, running up credit card debt, or even moving to a less safe neighborhood or one with worse schools."

#5 According to the U.S. Census Bureau, only 36 percent of Americans under the age of 35 own a home.  That is the lowest level that has ever been measured.

#6 Right now, approximately one out of every six men in the United States that are in their prime working years (25 to 54) do not have a job.

#7 The labor force participation rate for Americans from the age of 25 to the age of 29 has fallen to an all-time record low.

#8 The number of working age Americans that are not employed has increased by 27 million since the year 2000.

#9 According to the government's own numbers, about 20 percent of the families in the entire country do not have a single member that is employed at this point.

#10 This may sound crazy, but 25 percent of all American adults do not even have a single penny saved up for retirement.

#11 As I noted in one recent article, total consumer credit in the United States has increased by 22 percent over the past three years, and 56 percent of all Americans have "subprime credit" at this point.

#12 Major retailers are shutting down stores at the fastest pace that we have seen since the collapse of Lehman Brothers.

#13 It is hard to believe, but more than one out of every five children in the United States is living in poverty in 2014.

#14 According to one recent report, there are 49 million Americans that are dealing with food insecurity right now.

#15 Overall, the U.S. poverty rate is up more than 30 percent since 1966.  It looks like LBJ's war on poverty didn't work out too well after all.

Sadly, it does not appear that there is much hope on the horizon for the middle class.  More good jobs are being shipped out of the country and are being lost to technology every single day, and our politicians seem convinced that "business as usual" is the right course of action for our nation.

Unless something dramatic happens, it is going to become increasingly difficult to eke out a middle class existence as a "worker bee" in American society.  The truth is that most big companies these days do not have any loyalty to their workers and really do not care what ends up happening to them.

To thrive in this kind of environment, new and different thinking is required.  The paradigm of "go to college, get a job, stay loyal and retire after 30 years" has been shattered.  The business world is more unstable now than it has been during any point in the post-World War II era, and we are all going to have to adjust.

American Dream is a myth for aspiring middle class

RIP, American Dream [emphasis mine]:

[A]s a sobering New York Times  article last week made clear, America could have a lot to learn by looking to Europe. According to the New York Times, the American middle class – the linchpin of the country's phenomenal postwar economic growth – can no longer call itself the richest in the world. "While the wealthiest Americans are outpacing many of their global peers," says the NYT, "across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades." America's poorest citizens lag behind their European counterparts; 35 years ago, the opposite was true.

Here's how Cohen sums it up:

In the immortal words of Ralph Waldo Emerson, "conservatism makes no poetry, breathes no prayer, has no invention". Its success comes in standing in the path of reform and saying no. With the Republican party currently in charge of the House of Representatives (and unlikely to lose that control in this autumn's mid-term election) there is little reason, unfortunately, to believe that the nearly four-decade decline in the financial standing of the American people will right itself soon. In short, the "choice" that America made to pursue the path of decline will be with us for some time to come.

Kind of makes looking to Europe seem like not such a bad idea.

The American Dream is now just that for its middle classes – a dream

By Michael Cohen

April 26, 2014 | Guardian

URL:  http://gu.com/p/3zyzq

More evidence the middle class is gone

Sedulous readers (all three of you) will remember how back in 2011 I remarked on Citbank's "consumer hourglass theory": companies should either sell high-end products or bottom basement. Because the middle-class consumer is gone.

Well, it took the New York Times only three years to catch on.

Check this out: "[A]bout 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income." 

Bye-bye, American Dream!

The Middle Class Is Steadily Eroding. Just Ask the Business World.

By Nelson D. Schwartzfeb

February 2, 2014 | New York Times

URL: http://www.nytimes.com/2014/02/03/business/the-middle-class-is-steadily-eroding-just-ask-the-business-world.html?ref=business&_r=0

Conservatives ruining 'American exceptionalism'

Beinartfeb argues convincingly that conservatives, who say they defend "American exceptionalism," are actually doing the most to destroy Americans' feeling of having a special place in the world that diverges historically and culturally from Europe.  

How?  First, because of conservatives' politicizing religion. Feelings of exceptionalism are strongest with those who attend church regularly and identify with a particular religious denomination. By politicizing religion, starting in the 1980s, conservatives have steadily turned off generations of Americans from churchy Christianity. They believe church has gotten too political.  (They're right).  We have an increasing contingent of "spiritual not religious" Americans who never hear the pastor's or televangelist's politicized sermons.

Secondly, because of Dubya. A belief in American exceptionalism goes along with an aggressive, "unapologetic" U.S. foreign policy. Thanks to Bush's avoidable debacles in Afghanistan and Iraq, two generations have been turned off from an active, interfering U.S. role in the world; and they are less likely to believe in "going it alone" and more likely to trust the UN and international institutions.

Third, because of economic inequality. Republican policies have limited class mobility, have encouraged accumulation of wealth at the top, and have made more Americans class-conscious: they are more likely to look at their country just like any other, where the Haves rule the Have-Nots -- not the land of the "American Dream" where anybody who works hard can live comfortably and even strike it rich. 

The End of American Exceptionalism

By Peter Beinartfeb

February 3, 2014 | The Atlantic

URL: http://www.theatlantic.com/politics/archive/2014/02/the-end-of-american-exceptionalism/283540/

Was American Revolution worth it? Revisiting the 'American Dream'

This July 4th we can stop and ponder: was the American Revolution worth it? Here's what NPR had to say about the "American Dream," i.e. social and economic upward mobility:

So, in the 19th century in the U.S., there's unbelievable economic mobility. If your father, for example, was an unskilled laborer, sort of the lowest end of the working hierarchy, then you had an 80 percent chance of doing some more skilled, more highly paid job than your father. At the same time, in the U.K., you had about a 50 percent chance. Half the children of unskilled laborers were unskilled laborers themselves. But by just after World War II, the U.S. and U.K. are converging and the differences start to disappear. And by 1970, the U.K. has pulled ahead. So, by the 1970s, the children of unskilled laborers are more likely to do be doing something higher paying in the U.K. than in the U.S.

Why is that so?  Why is the "American Dream" more alive in Britain today than in America?  There are two basic theories, according to NPR:

• By the 20th century, the U.S. was a mature economy like Britain, without all the exceptional opportunities for growth that exist in a young, expanding nation.

• In early-mid 20th century, the welfare state and education in Britain grew at a faster pace.

These two theories are not mutually exclusive.  I would also point out the respective rates of unionization in the U.S. and UK: 11.1 percent vs. 25.8 percent.  The average in OECD countries for trade union density is 17 percent.  Nordic socialist paradises Denmark, Finland, Norway and Sweden, which top almost every global indicator of economic and social well-being, have well over 50 percent of their workers in trade unions.  In the U.S. we blame falling wages all on globalization, but then we should ask why wages aren't falling elsewhere in G-8 countries?  Unions have a lot to do with it.

And then there is the U.S. tax system, which for the past 30 years has discriminated against wages in favor of income earned through interest and financial securities, thereby inflating inequality and crushing the "American Dream."  Remember this chart?:

Paul Pirie for WaPo  gives us more socio-economic data to ponder:

Most Americans work longer hours and have fewer paid vacations and benefits — including health care — than their counterparts in most advanced countries. Consider also that in the CIA World Factbook, the United States ranks 51st in life expectancy at birth. Working oneself into an early grave does not do much for one’s happiness quotient. This year the United States tied for 14th in “life satisfaction” on an annual quality-of-life study by the Organization for Economic Cooperation and Development. That puts the United States behind Canada (eighth) and Australia (12th). A report co-authored last year by the economist Jeffrey Sachs ranked the United States 10th in the world for happiness — again behind Canada and Australia. The Sachs study found that the United States has made “striking economic and technological progress over the past half century without gains in the self-reported happiness of the citizenry. Instead, uncertainties and anxieties are high, social and economic inequalities have widened considerably, social trust is in decline, and confidence in government is at an all-time low.”

But the difference is not just in economics or happiness, but also liberty.  Pirie points out that the British Empire (including Canada) abolished slavery in 1833, a full 32 years befoe the U.S. ratification of the 13th Amendment to the Constitution. Today's slavery is the U.S. prison-industrial complex that incarcerates more adults, in both absolute and relative terms, than any other country by a wide margin, including Red China and Russia.  

And speaking of Americans' liberty, I have three words for you: N-S-A.  Do I really need to say more?  It doesn't matter, the spooks are archiving this post anyway.

Today, having mentioned some of these factoids to a Brit, I joked about our reneging the Declaration of Independence.  He said Britons are glad America is no longer their problem; they can't imagine trying to govern the U.S.  I joked back, "Yeah, we have enough trouble dealing with places like Texas!"  Can you imagine British PM David Cameron trying to talk sense to the folks in U.S. flyover country? You start to wonder who got the better end of the deal when the U.S. declared its independence....   

Happy 4th of July, everybody!  Have a hotdog and light off a roman candle for me.

UPDATE: If you think I'm unpatriotic, here's a guy who really can't stand the 4th of July: "Hatetriot's Day: July 4th Is America's Crappiest Holiday."

Stiglitz: American Dream is statistically a myth

Equal Opportunity, Our National Myth

By Joseph E. Stiglitz

February 16, 2013 | New York Times

President Obama’s second Inaugural Address used soaring language to reaffirm America’s commitment to the dream of equality of opportunity: “We are true to our creed when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else, because she is an American; she is free, and she is equal, not just in the eyes of God but also in our own.”

The gap between aspiration and reality could hardly be wider. Today, the United States has less equality of opportunity than almost any other advanced industrial country. Study after study has exposed the myth that America is a land of opportunity. This is especially tragic: While Americans may differ on the desirability of equality of outcomes, there is near-universal consensus that inequality of opportunity is indefensible. The Pew Research Center has found that some 90 percent of Americans believe that the government should do everything it can to ensure equality of opportunity.

Perhaps a hundred years ago, America might have rightly claimed to have been the land of opportunity, or at least a land where there was more opportunity than elsewhere. But not for at least a quarter of a century. Horatio Alger-style rags-to-riches stories were not a deliberate hoax, but given how they’ve lulled us into a sense of complacency, they might as well have been.

It’s not that social mobility is impossible, but that the upwardly mobile American is becoming a statistical oddity. According to research from the Brookings Institution, only 58 percent of Americans born into the bottom fifth of income earners move out of that category, and just 6 percent born into the bottom fifth move into the top. Economic mobility in the United States is lower than in most of Europe and lower than in all of Scandinavia. [...]

American Dream v. American Lotto

I was waiting for the part when Robert Samuelson blamed the death of the American Dream on Obama.  Whew! -- he didn't.  Instead, he explains it was Bill Clinton's fault for perverting the Dream to:  Americans “who work hard and play by the rules shouldn’t be poor.”  

We knew it had to be one of them to blame.  (Beating up on Jimmy Carter is so '70s.)  Damn you, Slick Willy!

Seriously though, outside of pundits and politicians, most Americans have gotten the memo that the Dream is dead.  Maybe they have read how income mobility is greater in Canada and Europe, although I doubt it.  All they have to do is compare how they live now to how their parents or grandparents did. The Dream is now the Lottery: keep working, paying your taxes and buying those tickets, year in-year out, and maybe, just maybe, you'll get lucky, too.  

Is it any wonder that casinos, online poker and other forms of legalized gambling are making a huge comeback?  Everybody knows the game is rigged, the house always wins, and yet, and yet.... They prefer to hope against the odds.  

Today Ben Franklin would be scratching lotto cards.

The American Dream’s empty promise

By Robert J. Samuelson

September 24, 2012 | Washington Post

URL: http://www.washingtonpost.com/opinions/robert-samuelson-the-american-dreams-empty-promise/2012/09/23/e630946c-0428-11e2-8102-ebee9c66e190_story.html

Obama fits GOP's version of American Dream to a tee

The American dream, according to anti-government Republicans at this year's convention, is to work crappy jobs so your kids can become Congressmen.  Really? Well, that's not so bad come to think of it.

Indeed, if that's so, how in the world is Obama, whose parents worked crappy jobs, who became a state senator, then a senator in Congress, any less a living, breathing realization of their version of the American Dream?  

"Don't buy this business that you can be good at something. The deck's stacked against you," said Rush Limbaugh sarcastically.  A lower middle-class black man with an immigrant father, no pedigree and a funny Muslim-sounding name?  I'd call that a stacked deck! "The left wants to make sure people don't even try. So they mock trying," explained Rush. Excuse me!?  If it weren't for the Left, Obama would still be in Chicago.

As it turns out, Obama is the Republicans' version of the American Dream to the 10th power.  Barack Obama should have been speaking at their convention, not Marco Rubio.

UPDATE: Somebody argued that Obama never worked in the private sector so he can't possibly represent the American Dream.  Well neither did Marco Rubio.  My argument holds.

The American Dream as Described by Marco Rubio is Real -- But It's Under Assault

August 31, 2012 | The Rush Limbaugh Show

URL: http://www.rushlimbaugh.com/daily/2012/08/31/the_american_dream_as_described_by_marco_rubio_is_real_but_it_s_under_assault

Renting beats owning '100 percent of the time'

This Arzaga guy makes a pretty bold claim. Yet I bet if a lot of people crunched the numbers like he did, even "financially secure" people, they'd find out he was right: buying a home wasn't worth it financially. It really is an emotional / lifestyle choice for most people.

UPDATE (02.25.2012): Owning a home makes even less sense in today's economy, when you might have to pick up and move to find a good job. A new study found that there are millions more "super-commuters," those traveling 100 or more miles a day to/from work, because they can't or won't leave their old house.

New American Dream is renting to get rich

By Lou Carlozo

February 15, 2012 | Reuters

Rich Arzaga owns a luxury home in San Ramon, California, but he's not betting on it as an investment.

The founder and CEO of Cornerstone Wealth Management, who bought the 5,000 sq. ft. property in 2005 for $1.8 million and has spent $500,000 improving it, considers the abode a wonderful place for his family. But ask him to rate his home -- or any home, for that matter -- as a financial investment, and Arzaga balks.

"It's the American Dream to own a home, but whoever said that didn't do the analysis on it," says Arzaga, knowing he's taking a contrarian stance to conventional wisdom.

Examining 250 properties around the U.S., and going through close to 40 client files to project the financial impact of owning real estate versus liquidating it, Arzaga, an adjunct professor in personal finance at the University of California at Berkeley, found that, "100 percent of the time it was better to rent, rather than own."

That's right: 100 percent.

The reason is simple. While a home is the main repository of wealth for many Americans, it comes with numerous hefty expenses. The carrying costs - what's needed to hold and maintain the asset - range from property taxes and home insurance to emergency repairs and renovations. In a rental situation, the landlord covers those costs, leaving the occupant free to invest revenue in other areas.

"I don't have the emotions a lot of people do surrounding real estate," Arzaga says. "I have steely eyes for how investing in real estate works, and I'd better be a prudent investor for my clients."

Owning a dream home, he says, creates a drain on other financial priorities, causing homeowners "not to meet their financial goals. They were going to fail."

Some real estate experts thought there was some truth to Arzaga's argument, albeit with several conditions.

"To state that owning a home is or isn't a good investment is too simplistic," says Jeffrey Rogers, president and COO of Integra Realty Resources. "It depends. In times of relatively higher rents, low home values, and low interest rates, it makes sense to own a home. But in a reverse market, it wouldn't be economically feasible. Over time, those who purchase in down or flat markets with low interest rates come out ahead."

"Our lifetimes are a long time, and when we look over the long term, real estate and other investments tend to have a positive return," says Jed Kolko, chief economist at Trulia.com, a real estate search and research website. "But when it comes to real estate, changing your mind is expensive. There are a lot of costs involved in buying, selling and moving. If you move every two years, it's probably a bad investment for you. It also depends on your job market. If you're in a one-company town and the company goes down, there goes your job and there goes your home value."

Greg McBride, a senior analyst at Bankrate.com, agrees with one point of Arzaga's. "Home ownership is not so much a creator of wealth as a store of wealth," he says. "The promise of home ownership is that over the long haul, it can rebate many or perhaps all of your costs, unlike rent, which doesn't rebate a dime."

The trouble, he says, is that many Americans want a home so badly, they neglect other ways to grow wealth and financial security.

"You have the other financial bases covered: emergency savings, retirement savings, paying off debt, saving for the education of your children," McBride says. "There's no sense in buying a home if it's going to deplete your emergency or retirement savings."

McBride crunched the numbers in a pre-bubble era (2004) for a home purchased at $200,000 by a buyer in the 27 percent marginal tax bracket. Factoring in a 30-year mortgage, $1,200 in annual home insurance, closing costs of $5,500 and maintenance costs of $100 a month, along with property taxes, he calculated that it would take a selling price, 10 years later, of $395,404 just to break even. His conclusion gave Arzaga's view credence: "Homeownership may not be the moneymaker you think it is." (See the full chart at link.reuters.com/hej66s)

Then there's the emergency fund, a must for when a home requires unexpected repair work.

"As far as emergency savings is concerned, six months of a cushion is adequate," McBride says. "But only 24 percent of people have that kind of cushion, and about 65 percent own homes."

So while home ownership may sound glamorous, you need a lot of money to make it work, without much guarantee of positive returns in a post-bubble era. Indeed, Arzaga cites himself as an example of how home ownership doesn't pay off. His residence is today worth $1.5 million, about 17 percent less than what he paid.

So why not sell? For Arzaga, it's a lifestyle choice, and one that he doesn't regret, since his big money-making investments are elsewhere.

Geezers to bequeath 3 million jobs; youngsters won't qualify

Said Anthony Carnevale, director of Georgetown University's Center on Education and the Workforce:

The industries [which need workers] that we're talking about are fairly broad-based, but the ones that are most striking are industries that have lots of what I would call 'orphan jobs.' Manufacturing, utilities, transportation, mining — a whole set of agricultural jobs.

All those industries, he said, 'are dying.' But because so many baby boomers will be retiring in the next decade, those industries will still produce 'huge numbers of job openings that we can't fill.'

In manufacturing alone, 'while the overall number of jobs will decline by a million jobs over the next decade, there will be 3 million job openings due to retirement.'

Lots of baby boomers retiring is not just bad news because they'll be milking Social Security and Medicare and bankrupting the federal treasury -- it's good news because they'll open up jobs for younger workers. But not enough younger workers are qualified. And this leads to another problem I've talked about for years: the lack of real, quality vocational training in the U.S.

Continued Carnevale [bold and italics mine]:

'If we decide that we're going to, especially in high school, begin to train people for vocations — especially vocations that ... don't require four year[s of] college — we'll quickly find that the kids who are available for that are black, Hispanic or low income. ... We'll end up 'tracking.' That makes it very difficult for political leadership and policy leadership to focus on this issue. It creates a moral dilemma where we can, if we want to, make people better off. But if we stick to the purity of our ideals, which is that everybody goes to college and gets a four-year degree, we're not going to be able to get there.'

Well, then our ideals are all screwed up! Only 51.5 percent of able-bodied black Americans is employed right now, the lowest number since 1984. And black unemployment (meaning those who are looking for work but can't find any) is about 16.1 percent, compared to 11.8 percent for Latinos and about 9 percent for whites. That's an economic depression for minorities, folks.

We've convinced ourselves that college is for everybody and it's not. Meanwhile, colleges are getting worse and worse, catering to the lowest common denominator, while raising everybody's tuition, making the whole higher ed. system a cynical, ineffective diploma factory.

So elementary and high schools, track away! Let vocational students earn decent middle-class manufacturing wages and then send their kids to college, if that's their ideal. After all, the American Dream is to better yourself and leave your kids better off than you by working hard and playing by the rules.

2 Million 'Open Jobs'? Yes, But U.S. Has A Skills Mismatch

By Mark Memmott

June 15, 2011 | NPR

URL: http://www.npr.org/137203549

Double dip means time to buy?

The "double dip" in housing is now official. And the premier housing economist Mark Zandi of Moody's Analytics says it's a good time to buy, if you can afford it. Going back to 1986, the buy vs. rent ratio has never been so low.

"I think the arithmetic is such that if you plan to live in your home five or more years, then you should really consider buying a single-family home in most parts of the country at this point in time," Zandi said. "Prices have fallen so far, that single-family housing now is very, very attractive; very affordable [...] and it's now even attractive relative to renting."

"[H]omeownership has been such an important part of the American Dream, because people have used it as a way to save. And it's been a relatively safe way to save. Now of course, as we know as we have seen, there are ups and downs. But in general it's been a pretty good investment."

Just don't try to time the market; base your buying decision on your personal needs and financial wherewithal.

For Many, It's Still A Good Time To Buy A Home

By Chris Arnold

June 8, 2011 | NPR

URL: http://www.npr.org/137029194

More U.S. millionaires is good news, right?

Superficially, a projected rise in the number of U.S. (and global) millionaire households seems like good news. It's upward mobility and the American Dream, right?

Wrong.

Deloitte estimates that the wealth of U.S. millionaire households will rise 223 percent by 2020 to $87 trillion. Meanwhile, more than half of U.S. workers currently earn $25,000 per year or less; unemployment is at 9 percent; and annual GDP growth is between 2 and 3 percent. And let's not forget how we lost $19.4 trillion (in 2010 dollars) in U.S. household wealth from June 2007 to March 2009; since then and partially thanks to the stimulus, we have regained $6.6 trillion of that.

The real upshot? More of our shrinking pie of wealth will be owned by fewer people.

The next decade in global wealth among millionaire households

Deloitte Center for Financial Services

May 2011

URL: http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/FSI/US_FSI_Next%20Decade%20in%20Global%20Wealth%20Executive%20Summary_050411.pdf

The Economist gets the scoop on rising U.S. inequality

If any of this is news to you, it's probably because you only read The Economist. I've distilled the relevant parts:

In a new poll for The Economist by YouGov, 36% of respondents said they had less opportunity than their parents did, compared with 39% who thought they had more. Half thought the next generation would have a lower standard of living, double the share that thought living standards would rise.

• Between 1947 and 1973, the typical American family's income roughly doubled in real terms. Between 1973 and 2007, however, it grew by only 22%—and this thanks to the rise of two-worker households. In 2004 men in their 30s earned 12% less in real terms than their fathers did at a similar age.

• Compared with people in other rich countries, Americans tend to accept relatively high levels of income inequality because they believe they may move up over time. The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.

• Parental income is a better predictor of a child's future in America than in much of Europe, implying that social mobility is less powerful.

• More than 40% of those Americans born in the bottom quintile remain stuck there as adults.

• Ms Sawhill and Mr Haskins argue for a drastic shift in federal priorities: rather than pay for the consumption of the old, America should invest in the productivity of the young.

Upper bound

The American dream is simple: work hard and move up. As the country emerges from recession, the reality looks ever more complicated

April 15, 2010 | The Economist

URL: http://www.economist.com/world/united-states/displaystory.cfm?story_id=15908469