Here’s a chilling summary of the past 30 years from the NY Times. While a few of us have been tracking this trend for a long time, many people seem oblivious to what’s going on.

America’s Sinking Middle Class

On Tuesday, however, the Census Bureau reminded me how for most Americans 1988 still looks a lot like yesterday: last year, the typical household made $51,017, roughly the same as the typical household made a quarter of a century ago.

The statistic is staggering — hardly what one would expect from one of the richest and most technologically advanced nations on the planet.


In key respects, in fact, the standard of living of most Americans has fallen decidedly behind. Just take the cost of medical services. Health care spending per person, adjusted for inflation, has roughly doubled since 1988, to about $8,500 — pushing up health insurance premiums and eating into workers’ wages.


Though the statistics may be startling, the story they tell is, unfortunately, not surprising. It is the story of America’s new normal. In the new normal the share of the nation’s income channeled to corporate profits is higher than at any time since the 1920s, while workers’ share languishes at its lowest since 1965.

In the new normal, the real wages of workers on the factory floor are lower than they were in the early ’70s. And the richest 10 percent of Americans get over half of the income America produces.

“Almost all of the benefits of growth since the trough of the Great Recession have been going to those in the upper classes,” said Timothy Smeeding, who heads the Institute for Research on Poverty at the University of Madison-Wisconsin. “Middle- and lower-income families are getting a smaller slice of a smaller economic pie as labor markets have changed drastically during our recovery.”

This story is about three decades old.

Go read the full article here. It’s short.

The Internet is Killing the Middle Class

Here’s a related article on how the globalization of the marketplace by the Internet forces you to compete with people on the far side of the planet who can afford to undercut your prices by a wide margin.

Read article.

You won’t survive this by becoming a Twitter consultant.

Read what Marcus Lemonis has to teach us.

18 Responses to America’s Shrinking Middle Class

  • The internet may be killing the middle class, but at least we have facebook.

  • As long as there is as much opportunity to become a part of the sectors which are gaining traction, it’s still America – land of opportunity, not land of the free ride. With so many folks by your own account living longer and living better, it doesn’t sound like the opportunity is less, it sounds more as if the drive to stretch and grab the brass ring has diminished.

    • @Rick: It would be nice if your remarks were realistic.

      • You need wish no longer – everything I’ve said is true and fully documented.

        Have a look at and note that in fully adjusted dollars its not that the middle class has any less but rather that the rich are becoming richer, and -not- at the expense of the middle class.

        The conclusion there is continued opportunity (and exceptional recognition) for those that have learned how to work within the system to create benefits for all.

        Such gains are fundamental to the continued prosperity of everyone in our country and the gains at the highest levels may well be what’s keeping the middle class afloat.

        What I see here does not represent a diminishment of opportunity for one performance class but rather the improvement of it for another – without detriment to others and quite possibly having a net effect to their benefit.

        Finally if you don’t believe the numbers you can also come to the same conclusion through simple observation.

        Legal immigration continues to grow exponentially (
        Emmigration from continues to drop like a rock (

        Are all of these people just stupid? Or to put it another way, are you that much smarter than everyone else in the world?

        Fact is that if you can’t make it in America, you can’t make it – period.
        I’m not a flag waving zealot, by the way – there’s far more we could do better and the likelihood of our government becoming productively involved in any of that seems woefully minute.

        But one of the alternatives to what IS happening is that we all stay static (which means that someone else in the world is likely gaining on us) or that we all decline together (which would be the worst of all worlds).

        I would admonish everyone here – and you in particular to look at the data and interpret it intelligently rather than blindly believe the knee-jerk emotional content that the media use to engage their audiences in order to enlarge their paychecks.

        • Your first graph appears to support the Times claim that wages for the middle class have been stagnant for decades. You are also missing the fact that two people now have to work hard to earn what dad earned by himself in the seventies. The huge influx of women into the workforce pushed wages down.

          • Work smart or you’ll be working hard – that’s true – anywhere.

            But here at least you’ll be working and the potential is there to maintain household equity if that’s important to you.

            That’s clearly not the case elsewhere, and given that these are incomes and not inheritances, there is clearly also the potential to do much better than that.

            You have the numbers so you can think through it – or you can let the pundits do it for you.
            It shouldn’t be overly surprising that the more that do the latter, the more we get what we’ve got.

  • The rich get richer while the poor get poorer.

    Billionaire Wealth Doubles Since Financial Crisis: Report

  • FYI Peter, here’s an article on the stratification of society.

  • Well, it’s always good to look at things from different angles. Teach the controversy, as they say. However, I wouldn’t be so quick to discount the economists who aren’t as optimistic about the future. Buried somewhere in my bookmarks folders is an article where some big wig at Goldman Sachs, if I recall correctly, predicted that 25% of the American middle-class would sink into poverty over the coming decade due to deteriorating conditions caused by globalization.

    Now some people don’t care about this and point to the fact that others still continue to get rich. What they forget is that most businesses depend on a healthy middle class to play the role of consumers. Recall how Henry Ford gave his workers a raise so that they could afford to buy his cars.

    I judge an economy by how well the average citizen is doing not just by how the top 5% are doing. Just look at countries with high Gini Coefficients and ask yourself if you’d want to live in any of them.

    • Let’s see now, Goldman – that would be the firm that has repeatedly marketed securities that it knew full well would be worthless. ( Yes indeed, I would certainly believe whatever they told me.

      And your statement about businesses (which is presumably how the rich are getting richer) depending on a strong middle class is either fully satisfied (if you agree that a for the middle class to have a stable time-adjusted income over decades is sufficient) or simply BS (of you think that’s not enough), because whatever businesses are creating the increase you’re seeing in the wealthy sectors appear to be doing just fine.

      As far as GINI coefficients, I, as well as apparently a lot of folks (see previously provided immigration and emigration data) seem to feel quite sanguine living in the 4th most extreme income inequality country in the world (that would be us here in the US). I guess the question then would be where -you- might like to live instead (and if so, why aren’t you there)?

      From what I can tell, you are in the business of selling a guidebook on how to get rich and at the same time you endorse and encourage people to wallow in self-induced, media amplified despondency. Hmmm, you know, this DOES remind me of Goldman after all.

      Good luck – and goodbye, Peter.

      Peter, Henry Ford also is quoted as saying “Whether you think you can or think you can’t, you’ll be right” and somehow I tend to believe him far more than I’d believe anyone at Goldman

      • Rick, all I can say is that you come across as being pretty selective about who you choose to believe. If someone says something that you happen to disagree with then we are all supposed to ignore them and side with you. Sorry, but that’s not how the world works.

        As for your point about the USA’s high Gini Index, well we are an exception to the rule. How so, you ask? Because we are still a safe haven for wealth. For example, the Chinese make their millions in China and then squirrel it away in California (and British Columbia) real estate. Note that they make their money outside the USA.

        It also helps to be a de facto “island Fortress” as North America is. We simply can’t be invaded. The land mass is too far from potential enemies and too big to occupy. Most other countries have at least one neighbor who could go to war with them. We also outspend the next nine big military spenders combined.

        As for the Playbook, it’s not really a guidebook “on getting rich.” Read the FAQ, Is This for You, and other pages which warn off the get rich crowd. The product is on how to grow your business through acquisitions–for those so inclined.

        “…you endorse and encourage people to wallow in self-induced, media amplified despondency.”

        Ok, now you have gone over the top. I am merely being a realist. Have you noticed the data on how millennials are so underemployed that they can’t even afford to move out of their parent’s homes at age 30? I moved out at 19 and felt that it was a year too late. Now people are living at home when they enter their thirties.

        Houston, we have a problem.

        I prefer to be a cold hard realist rather than a cheerleader.

        • Peter, I have no horse in this race.
          You and those who choose to follow you should feel free to wallow to whatever extent doing so makes you feel better. Of course, if you’re never asked to dine at the captain’s table, you might consider that it may be because no one is expecting that you’ll have anything of value or interest to share.

  • Reality is seldom as popular as fantasy, Peter, but it still makes for better decisions.

    • You sound as if you are coming round to my side on the reality issue.

      For me the cheerleading and cheap boosterism are best left for whipping up downlegs at MLM rallies and when trying to con some naive kid into doing months of coding for free.

      I have always been impervious to these tactics and don’t employ either.

      • > You sound as if you are coming round to my side on the reality issue.

        I wouldn’t know anything about MLM rallies or ripping off some kid for coding, but I can tell you that what a pseudo-social anthropologist from Mexico City writes in his column for the on-line edition of the New York Times doesn’t even remotely approach reality.

        Reality is looking at the numbers recognizing that the great majority of things that scientific and technical advances from which we all benefit are developed by people who aren’t even US citizens Thinking, rather than parroting the nonsensical rhetoric being used to sell media advertising, is good for you and once you see how things really work you might just decide you’d like to try and contribute rather than field yet another groundless forum of discontent.

        • Rick, you came here with both guns blazing. Recall your first two posts. They can be summed up as “everybody is stupid but me.”

          I have cited a variety of sources that indicate we are in for tougher times.

          All I see you doing is insulting everyone.

          How about taking a break?

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