The Tribune Democrat, Johnstown, PA

Consumer

August 6, 2012

5 myths about the middle class

Both President Obama and Mitt Romney say they'll support it. Many Americans say they're in it. And virtually everyone says something must be done to help it. It's the American middle class, and it's the biggest talking point of the 2012 election — and one of the most misunderstood.

1. Today's middle-class Americans are worse off than their parents.

The standard of living for Americans in the broad middle of the income ladder — households with incomes higher than the bottom 20 percent and lower than the top 20 percent — hasn't stagnated or worsened in the past generation. It has improved.

Analyzing data from the Panel Study of Income Dynamics, a long-running survey of U.S. households, the Pew Charitable Trusts' Economic Mobility Project found that as of 2000-08, 86 percent of Americans who grew up in a middle-class household had a higher income (adjusted for inflation) than their parents. This share has surely decreased in the years since, but probably not by much: Median household income fell by just $1,500 between 2008 and 2010.

Moreover, income changes alone don't capture the enhanced quality of life that stems from greater access to information and entertainment through personal computers, smartphones, the Internet and cable TV; advances in medical care such as MRIs and new surgical techniques; and more choices for all kinds of goods and services.

2. All the middle class needs is a return to solid economic growth.

During the three decades after World War II, the U.S. economy grew rapidly, and so did the incomes of middle-class households. So, if we just get our economy growing at a decent clip, will all be well for the middle class?

Sadly, that's wishful thinking. Since the 1970s, the American economy has continued to grow fairly quickly, yet the middle class has seen a relatively small gain in income. Between 1979 and 2007, two peak years in the business cycle, the country's per capita GDP increased by 50 percent. During that same period, the average income of the middle three-fifths of households rose by less than 30 percent, from $44,000 to $57,000, according to calculations by the Congressional Budget Office. The richest Americans have gotten a bigger share of the income gains from economic growth, leaving less for those in the middle.

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