The Destruction of the Middle Class

My apologies for not posting sooner, I have been really busy with work.

 I have commented many times about the "Middle Class" and that we are a check on the "Cloud People" and their ambition, if they have their way, there will be 2 class of people, the rich and the poor, and the poor would be beholden to them for leadership and guidance and that would give them all the power.  And they want to destroy the middle class, take our wealth, 401K's and bankrupt us and put us in our place because we are "too Uppity and don't know our place.

Since money-printing went into permanent high gear after the dotcom crash in 2000, the top 1 percent of households have gained $20 million each in inflation-adjusted net worth. Likewise, the top 0.1 percent or 131,000 households at the tippy top of the economic ladder have gained $88 million each in inflation-adjusted net worth.

Needless to say, the net worth gains available to the wage-earning classes are almost exclusively from what they manage to save after absorbing the relentlessly rising cost of living. And we do mean relentless. Even though the CPI tends to undermeasure the cost of living on Main Street owing to its flaky hedonics’ adjustments for “quality” and other statistical razzmatazz, this imperfect proxy for the cost-of-living is still up by 82 percent since the turn of the century.

 

Accordingly, during the last 22 years the median real annual wage, as tracked by Social Security payroll tax records, has risen by only 14.5 percent or just $235 per annum. And, no, we didn’t omit any zeros from that figure. These piddling gains amount to just $4.50 per week on average.

These annual inflation-adjusted gains in the median wage compare to real net worth gains of nearly $1 million and $4 million per annum for the top 1 percent and top 0.1 percent, respectively. In relative terms, these annual wealth gains for the top 1 percent were 4,250X larger than the median real wage gain and 17,000X larger for the top 0.1 percent.

Needless to say, outsized gains at the top of the economic ladder are not owing to a superior growth of national income, which, in turn, might have been reflected in higher capitalized values for financial assets. Instead, the bulk of these gains are attributable to valuation multiple expansion. Thus, the net worth of the top 1 percent computed to 135 percent of GDP in 2000, but now stands at 207 percent. Likewise, the net worth of the top 0.1 percent rose from 50 percent to 85 percent of GDP during this 22-year period.

 

 

Stated differently, the values of stocks, bonds, real estate, and other financial assets have soared because the Fed’s massive emissions of cheap credit and excess liquidity have caused their prices to be bid skyward by leveraged speculators. And that part of the problem can only be effectively addressed by banning the Fed from conducting open market operations on Wall Street and owning or collateralizing government debt, as we amplify below.

But that’s just half the problem. On the other end of the economic ladder, the real median wage as cited above has lagged badly because the Fed’s inflationary policies have drastically reduced the purchasing power of domestic wages. At the same time, it has also fostered a massive offshoring of high-productivity, high-pay goods and services output and employment, thereby causing the mix of wages in the U.S. economy to skew steadily lower.

 

 

In this context, the Social Security Administration’s recent release of annual wage statistics for 2022 is an eye-opener, and also puts the lie to “Joe Biden’s” preposterous bragging about the Administration’s economic accomplishments.

It turns out that the above cited median annual wage for 2022 was just slightly above $40,000, and that by definition half of the nation’s 172 million workers with wage records earned less than that amount. To be exact, 84.5 million workers posted annual earnings of $40,000 per year or less in 2022, with an average annual earnings level of just $17,900.

That’s right. The average worker in the bottom half of the wage distribution generated earnings that do not even remotely support a middle-class living standard. In fact, this figure amounts to only 65 percent of the Federal poverty line for a household of 4 persons ($27,750) and is barely above the $14,580 poverty level for a single person household.

In other words, the overwhelming bulk of the 84.5 million workers in the bottom half of the wage distribution pulled in paychecks over the course of 2022 which were below or just above the Federal poverty line!

 

 

That is to say, the U.S. economy is badly broken, yet you do not hear a peep from either wing of the Uniparty. The above cited figures have been the same in relative terms for many years, yet President Donald Trump claimed to have produced the Greatest Economy Ever and President Joe Biden has the nerve to endlessly tout the virtues of Bidenomics.

As it happens, a good part of the problem is that the overwhelming bulk of these 84.5 million workers not only receive low hourly rates, but also experience gainful employment only on a part-time or intermittent basis.

For instance, there were nearly 29 million payroll records in 2022 where total earnings were less than $10,000 with an average of $4,250. Even at the minimum wage, the latter would amount to only 566 hours of paid employment or about 28 percent of a standard 2,000-hour work year.

Likewise, there were nearly another 10 million workers who posted earnings of between $10,000 and $15,000, with an average of $12,477. Again, that amounts to just 1,650 hours of paid work, even at the Federal minimum wage.

 

 

In all, these 39 million bottom-of-the-ladder jobs generated about $244 billion of aggregate wage income in 2022. That was roughly equal to the $236 billion earned by the 28,500 workers with wages of $3.5 million or higher.

Again, the problem is not that 28,500 workers made a lot of money last year, averaging more than $8 million each. Presumably their talents and value-added in the marketplace warranted such wage and salary compensation.

The real problem is that the U.S. economy has done such a poor job of generating middle-class employment opportunities that it took 1,400X more workers at the bottom of the labor market to generate the same amount of wage income as the top-tier earners.

In all, the 84.5 million workers below the median annual wage ($40,000) generated $1.51 trillion of aggregate wage income in 2022. That is to say, 50 percent of the employed labor force generated just 15 percent of the $10.53 trillion of aggregate wage income reported by the Social Security Administration.

 

 

Moreover, given the skew to the low wage end, the average income of the bottom 50 percent of workers computed to only the aforementioned $17,900. And to repeat, that’s not a typo, either. It’s the actual average wage income of 84.5 million U.S. employees, who represent a larger work force than the total population of either England, France, Italy, or even Germany.

In short, a huge share of the workforce is no longer even remotely middle-income. That’s underscored by the fact that the other half of the U.S. workforce—the 84.5 million workers with 2022 wages above the median level—generated an average income that was nearly six times higher at $102,000.

So the question recurs. Why isn’t the U.S. economy generating middle-income jobs at the scale needed to provide better opportunities to the 84.5 million workers below the median wage level?

The short answer, of course, is that the U.S. economy desperately needs far less speculation on Wall Street and far more productive investment on Main Street—when, in fact, the opposite has been happening during the past two decades

 

To wit, net real private investment (i.e., after inflation and D&A) declined from 6.7 percent of real GDP in the year 2000 to just 4.8 percent as of 2022. Yet given the fearsome competitive pressures of the global labor and product markets, the U.S. economy actually needs net investment at rates well above historical levels.

As we will show in Part 3, however, unless the Fed’s open market operations are completely shut down in favor of a return to a purely discount window-based modus operandi, there is not a snowball’s chance in the hot place that this will happen. As long as the Fed is in business cheek-by-jowl with the hedge funds and speculators of Wall Street, it will be their captive. So ensnared, it will continue to flood the financial markets with the cheap debt and artificial liquidity which is the mother’s milk of speculative excess.

Real Next Domestic Investment as % of Real GDP, 1999 to 2022.

The modern class struggle and the Trump effect.

I got this from my Online friend Brad Torgersen, he had picked it up off USA Today.  I was surprised as was everyone else that the liberal USA Today would print something that wasn't a character assassination on President Trump.  I have blogged repeatedly about the Trump effect and why he got elected, he was the first president that spoke of the forgotten man.  the one that seemed to get forgotten in the inter-sectional identity politics of the modern age.  he surprisingly has become the spokesman for the middle class, you know the one that the GOP traditionally ignores and the Democrats discarded.  You know the ones that President Obama called "Bitter Clingers" and 2016 democratic candidate Hillary Clinton called "Basket of deplorables".  We are the ones forgotten about when the politicians play their games in D.C on the Potomac.  It seems like we play by the rules and "do right" by society by working, paying bills and the myriad of taxes.  Our kids are the ones joining the service and sacrificing but "Our Betters" children go to the Ivy League schools to learn how to network and then use the system to their advantage.

 The article from USA Today:

To understand events around the world today, one must think in terms of the class struggle.

This sentence sounds like something that could be written by a doctrinaire Marxist. But it is nonetheless true. Much of the current tension in America and in many other democracies is in fact a product of a class struggle. It’s not the kind of class struggle that Karl Marx wrote about, with workers and peasants facing off against rapacious capitalists, but it is a case of today’s ruling class facing disaffection from its working class.

In the old Soviet Union, the Marxists assured us that once true communism was established under a “dictatorship of the proletariat,” the state would wither away and everyone would be free. In fact, however, the dictatorship of the proletariat turned into a dictatorship of the party hacks, who had no interest whatsoever in seeing their positions or power wither.

"Yellow Vest" protesters near the Champs Elysees in Paris on Nov. 24, 2018. (Photo: Bertrand Guay/AFP/Getty Images)

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Yugoslav dissident Milovan Djilas called these party hacks the “New Class,” noting that instead of workers and peasants against capitalists, it was now a case of workers and peasants being ruled by a managerial new class of technocrats who, while purporting to act for the benefit of the workers and peasants, somehow wound up with the lion’s share of the goodies. Workers and peasants stood in long lines for bread and shoddy household goods, while party leaders and government managers bought imported delicacies in special, secret stores. (In a famous Soviet joke, then-leader Leonid Brezhnev shows his mother his luxury apartment, his limousine, his fancy country house and his helicopter only to have her object: “But what if the communists come back?”) 

Djilas’ work was explosive — he was jailed — because it made clear that the workers and peasants had simply replaced one class of exploiters with another. It set the stage for the Soviet Union’s implosion, and for the discrediting of communism among everyone with any sense.

Elites of postwar institutions don't want change

But the New Class isn’t limited to communist countries, really. Around the world in the postwar era, power was taken up by unelected professional and managerial elites. To understand what’s going on with President Donald Trump and his opposition, and in other countries as diverse as France, Hungary, Italy and Brazil, it’s important to realize that the post-World War II institutional arrangements of the Western democracies are being renegotiated, and that those democracies’ professional and managerial elites don’t like that very much, because they have done very well under those arrangements.  And, like all elites who are doing very well, they don’t want that to change.

The postwar era saw the creation of international institutions ranging from NATO to the United Nations to the World Bank, along with a proliferation of think tanks and nongovernmental organizations (NGOs) to accompany them. It saw the vast expansion of higher education in the United States, and the transformation of academic degrees into something close to must-haves for the upper-middle class. It saw a great expansion of power on the part of media organizations, and on the part of government bureaucrats and lobbyists, both of whose numbers increased enormously.

But after the turn of the millennium, other Americans, much like the workers and peasants in the old Soviet Union, started to notice that while the New Class was doing quite well (America’s richest counties now surround Washington, D.C.), things weren’t going so well for them. And what made it more upsetting was that — while the Soviet Union’s apparatchiks at least pretended to like the workers and peasants — members of America’s ruling class seemed to view ordinary Americans with something like contempt, using terms such as “bitter clingers,” “deplorables” and flyover people.

Class wars in America disguised as culture wars

Suddenly, to a lot of voters, those postwar institutional arrangements stopped looking so good. But, of course, the beneficiaries showed no sign of giving them up. This has led to a lot of political discord, and a lot of culture war, since in America class warfare is usually disguised as cultural warfare. But underneath the surface, talk is a battle between the New Class and what used to be the middle class.

If you look at the “yellow jacket” protests in France, the election of Brazilian President Jair Bolsonaro and events in places like Italy and Hungary — or, for that matter, the Brexit movement in Britain — you find a similar unhappiness with institutional arrangements and the sleek and self-satisfied elites who benefit from them.  People who, in President Bill Clinton’s famous phrase, worked hard and played by the rules now suspect that the rules were rigged, and that they were treated as chumps.

Talking about the yellow-vest movement, French geographer Christophe Guilluy observes: “Immediately, the protesters were denounced as xenophobes, anti-Semites and homophobes. The elites present themselves as anti-fascist and anti-racist, but this is merely a way of defending their class interests. It is the only argument they can muster to defend their status, but it is not working anymore.”

That’s right. It’s class war masquerading as something else, but people have seen through the mask.

Understanding this won’t make the conflict less intense, but it might make it clearer what’s really at stake. What’s happening in America is an echo of what’s happening in democracies around the world, and it’s not happening because of Trump. Trump is the symptom of a ruling class that many of the ruled no longer see as serving their interest, and the anti-Trump response is mostly the angry backlash of that class as it sees its position, its perquisites and — perhaps especially — its self-importance threatened.

Glenn Harlan Reynolds, a University of Tennessee law professor and the author of "The New School: How the Information Age Will Save American Education from Itself," is a member of USA TODAY's Board of Contributors.

Obama and the middle class..

I saw this from the WSJ


The Presidential race is boiling down to one dominant issue: which party's policies will do more to help the financially stressed American middle class. President Obama's campaign theme is that Mitt Romney and the Republicans cater to the rich, while Mr. Obama cares about struggling families.
He may care, but he sure hasn't done much for them. New income data from the Census Bureau, tabulated by former Census income specialists at the nonpartisan economic consulting firm Sentier Research, reveal that the three-and-a-half years of the Obama Presidency have done enormous harm to middle-class households.

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In January 2009, the month President Obama entered the Oval Office and shortly before he signed his stimulus spending bill, median household income was $54,983. By June 2012, it had tumbled to $50,964, adjusted for inflation. (See the chart nearby.) That's $4,019 in lost real income, a little less than a month's income every year.Unfair, you say, because Mr. Obama inherited a recession? Well, even if you start the analysis when the recession ended in June 2009, the numbers are dismal. Three years after the economy hit its trough, median household income is down $2,544, or nearly 5%.

In January 2009, the month President Obama entered the Oval Office and shortly before he signed his stimulus spending bill, median household income was $54,983. By June 2012, it had tumbled to $50,964, adjusted for inflation. (See the chart nearby.) That's $4,019 in lost real income, a little less than a month's income every year.Add the authors: "The overall decline since June 2009 was larger than the 2.6 percent decline that occurred" during the recession from December 2007 to June 2009. For household income, in other words, the Obama recovery has been worse than the Bush recession.
     It's true that the Bush years overall were also not great for household incomes. According to Sentier's analysis, real median household income is down about 8% from $55,470 in 2000 before the dot-com bubble burst. Some of this decline is due to the continuation of a trend of smaller family size, lower fertility rates and more Americans living alone. But some was also due to the subpar economic growth across the 2000s.
That slow growth trend has become worse since the latest recession, and this is where Mr. Obama is implicated. The President portrays the financial decline of American families on his watch as part of a decades-long trend. He's wrong. Real income for middle-income households rose by roughly 30% from 1983 to 2005, according to the Congressional Budget Office. The political left likes to blame the ebbing of union power. But nongovernment unionization fell dramatically in the 1980s and '90s, and incomes rose.
     So what does explain falling real incomes? Slow growth, yes, but another culprit has been rising prices—especially for food, gasoline, medical procedures and college tuition—that have eroded worker purchasing power. The Federal Reserve claims this is no problem because "core inflation" has been relatively contained. But core inflation excludes food and energy prices, which are two of the biggest components of consumer budgets.

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Getty Images

The big pay freeze is also the bitter fruit of public schools that have failed to teach the basic skills and knowledge needed to succeed in a competitive global economy. Rising health-care costs have also forced employers to take money that used to go into higher wages to pay higher premiums.
A key driver of higher wages in the 1980s and 1990s was a surge of capital investment in computers, plant and equipment, which made Americans workers more productive. When Mr. Obama pledges to raise taxes on investment income (capital gains, dividends and small-business profits), he is making it costlier to innovate and modernize. That plays out over time into slower gains in productivity and wages.
Consider the toll from America's corporate tax rate, which is the highest in the industrial world. A 2011 study by economists at the American Enterprise Institute found that because of the capital flight from the U.S. as a result of this high rate, "every additional dollar of tax revenue [from the corporate tax] leads to a $4 decrease in aggregate real wages." American workers would be the biggest beneficiaries of tax reform.
The new income data reveal other eye-opening trends. The group that has suffered the most during the Obama Presidency has been black Americans, whose real incomes have fallen by more than 11%.
Mr. Obama also likes to say that government workers like teachers are hurting and the private economy is doing "just fine." But the data indicate that over the past three years households with government workers saw their incomes decline less than households with private workers. The public-private pay gap is now wider than ever ($77,998 government versus $63,800).
Every age group has seen a decline in income—except the elderly. Those between the ages of 65 and 75 saw an average 6.5% gain in income, though most are not working and collect Medicare and Social Security.
The last time incomes fell this fast was during the late 1970s under Jimmy Carter, and it's no coincidence that economic policies then and now are so similar. If Mr. Obama succeeds in convincing voters that he really is the tribune of the middle class, it will be the political conjurer's trick of the century.

5 ways Obama is killing the middle class....

I saw this here and thought the information was relevant...and when the old print media starts to turn on you...you are in trouble.

Five Ways Obama Is Hurting the Middle Class

Economic challenges persist despite presidential claims to the contrary

 

President Obama and Vice President Biden (AP Images)

BY: Bill McMorris
August 22, 2012 5:00 am
Vice President Joe Biden claims that the middle class is mounting a comeback—and will continue to do so unless the GOP bumps Democrats from office.
“Folks, the middle class is coming back,” he told a crowd of supporters in Minnesota. “They have been ravaged, but they’re starting to come back.”
President Obama attempted to paint a similarly rosy picture in June after disappointing jobs reports showed unemployment ticking up.
“The private sector is doing fine,” he said.
Unemployment has risen from 8.1 percent at the time of Obama’s statement to 8.3 percent when Biden spoke. The Republican National Committee (RNC) has jumped on the statement and pointed to four additional signs that the middle class is far from a comeback during the Obama recovery.

1. Prices are up

AP Images

The average American family is spending an extra $40 per month on food under Obama, according to data from the Department of Agriculture. Gas prices have also skyrocketed since 2008, rising from $1.78 per gallon under President George W. Bush to $3.72 per gallon and climbing as Labor Day approaches. College tuition, meanwhile, has jumped 25 percent. Health care costs continue to rise.

2. Decreased savings

Bank of America / Wikimedia Commons

Americans are struggling to manage their day-to-day expenses, leading many to abandon the savings that have been an entryway to the middle class. Nearly 1 in 4 Americans have reported no savings, a five percent jump since Obama took office.

3. Record-high Handouts

AP Images

Nearly half of all Americans—49.1 percent—received some form of government assistance in 2011, including unemployment, Medicaid, and welfare. Food stamp recipients jumped 45 percent over the past three years. Means-tested government transfer payments can act as marginal tax increase, studies show.

4. Wealth Has Vanished

AP Images

Median income has plummeted since the start of the recession. Wages remain stagnant. The average household has lost $4,300 from its annual income since Obama took office. Average wealth fell 40 percent during the weakened recovery. Nearly one in three mortgages are now underwater.

5. Joblessness

AP Images

The root cause behind all of these issues is unemployment, which has remained above 8 percent for the past 42 months, despite Obama’s assurances. People are also staying unemployed for longer periods of time: The average jobless person can expect a nearly 40-week wait in between jobs, double the 20-week rate when Obama took office.