Middle Income Households Continue to Lose Ground Despite Improving Economy

Data released Wednesday by the Census Bureau show that the middle class lost ground in terms of income for the fourth consecutive year. This slump occurred even though the economy was growing, albeit modestly. In 2011, real household income in the middle of the income distribution was $50,054, a 1.5 percent ($780) decline since 2010. These households are bringing home less real income than they did in 1996. Since 2007, the year the Great Recession began, median household income dropped by 8.1 percent ($4,400).

Working age households in the middle of the income distribution were hit even harder in 2011. Median household income for this group was $55,600, falling by 2.4 percent ($1,400) since 2010 and 9 percent ($5,700) since 2007. Workers’ wages are falling behind even though productivity is up in the nation. Budget and Tax Center research shows that North Carolina’s workers’ pay growth is also lagging far behind productivity gains.

Well, if the middle class lost ground and the poverty rate was unchanged during the same time period, to whom did the economic gains accrue? Preliminary* Census data show that the benefits of the economic growth flowed to top earners. From 2010 to 2011, the share of income going to the top fifth of households rose by 1.6 percent to reach 51.1 percent of all national income—the highest share on record since 1967. In contrast, the share held by the lowest three fifths of households was the lowest share on record since 1967, reaching only 19.5 percent—2.8 percentage points lower than the share held by the top 5 percent. In other words, the top 5 percent of households have more income than the bottom 60 percent of households.

The widening income gap is not a new occurrence. As this chart shows, income inequality has been indisputably trending upward since the late 1960s. Research conducted by the Budget and Tax Center shows that there is also widespread inequality in North Carolina. Other research shows that income equality is a key condition in promoting and sustaining economic growth.

Economic growth is needed to help those struggling to make ends meet but it is not enough. Policymakers need to enact policies that grow our economy equitably and address the rising gap between compensation and productivity. We need to invest in tools that support equality of opportunity for all people and in the meantime provide adequate services to those in need. We can no longer afford to accept an economy that is only designed to work well for the top earners rather than also improving the living standards of everyone else.

*This preliminary data excludes capital gains and non-cash benefits. Nevertheless, the data provides a  beneficial look at income inequality.

15 Comments

  1. Alex

    September 16, 2012 at 8:30 am

    Something is funny here. If Obama is so much for the middle class, why have we lost ground for all four years ? Is it because his policies have only benefited Wall Street, the big bankers , and the wealthy ? His cheap money has run all commodity prices up, and basically killed the middle class and the seniors who depend on savings income.

  2. david esmay

    September 16, 2012 at 5:47 pm

    Doug/Frances/Alex, the middle class has been losing ground ever since Reagan and his moronic policies turned us into the largest debtor nation in the world. My 401k tanked under George the Dullard, but I’ve gotten most of it back under President Obama.

  3. Alex

    September 16, 2012 at 7:01 pm

    Are you saying we also lost ground during the Clinton years ?

  4. david esmay

    September 17, 2012 at 8:19 am

    I’m saying wages have been stagnant for the middle class for 30 years.

  5. david esmay

    September 17, 2012 at 8:24 am

    There was broad growth under the Clinton administration, but the Repubs fixed that and reversed the course.

  6. gregflynn

    September 17, 2012 at 9:04 am

    In the Bush administration neo-cons desperately tried to prove the existence of non-existent WMDs. Since Obama got elected they’ve been been desperately trying to prove the non-existence of GWB.

  7. Frank Burns

    September 17, 2012 at 9:58 am

    The solution to a healthy economy is elect Republicans in the House and Senate. Clinton gets no credit for that. If you remember, he was forced to play small ball as the GOP was lead on all initiatives. Do you recall the Contract for America?

  8. david esmay

    September 17, 2012 at 11:13 am

    That Republican party doesn’t exist anymore, most were indicted, left in disgrace, or became lobbyists, like Phil Gramm. Who by the way did more damage to this country financially than almost anyone. Gramm and his wife, the darling of ENRON should both be in jail. The best solution is to get rid of every Teapublican in congress.

  9. Alex

    September 17, 2012 at 12:32 pm

    “We know that he has stored secret supplies of biological and chemical weapons throughout his country.”
    – Al Gore, Sept. 23, 2002

    “Iraq’s search for weapons of mass destruction has proven impossible to deter and we should assume that it will continue for as long as Saddam is in power.”
    – Al Gore, Sept. 23, 2002

    “We have known for many years that Saddam Hussein is seeking and developing weapons of mass destruction.”
    – Sen. Ted Kennedy (D, MA), Sept. 27, 2002

    “The last UN weapons inspectors left Iraq in October of 1998. We are confident that Saddam Hussein retains some stockpiles of chemical and biological weapons, and that he has since embarked on a crash course to build up his chemical and biological warfare capabilities. Intelligence reports indicate that he is seeking nuclear weapons…”
    – Sen. Robert Byrd (D, WV), Oct. 3, 2002

  10. gregflynn

    September 17, 2012 at 1:28 pm

    Those statements about WMDs were based on information supplied by the Bush administration with “intelligence reports” based largely on the false statements of “Curveball” and the false interpretations and assertions of Dick Cheney.

    “Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction.”
    - Dick Cheney August 26, 2002

    The right would have us believe that Clinton caused this recession in 8 years, that Obama hasn’t fixed it in 4 years and that the 8 years of Bush in between never existed.

  11. Alex

    September 17, 2012 at 2:30 pm

    “One way or the other, we are determined to deny Iraq the capacity to develop weapons of mass destruction and the missiles to deliver them.
    That is our bottom line.”
    President Clinton, Feb. 4, 1998-Truth!
    This was a quote from President Clinton during a presentation at the Pentagon defending a decision to conduct military strikes against Iraq.

    “If Saddam rejects peace and we have to use force, our purpose is clear.
    We want to seriously diminish the threat posed by Iraq’s weapons of mass destruction program.”
    President Clinton, Feb. 17, 1998-Truth!
    Bill Clinton went to the Pentagon on this occasion to be briefed by top military officials about Iraq and weapons of mass destruction.
    His remarks followed that briefing.

    “Iraq is a long way from USA but, what happens there matters a great deal here. For the risks that the leaders of a rogue state will use nuclear, chemical or biological weapons against us or our allies is the greatest security threat we face.”
    Madeline Albright, Feb 18, 1998-Truth!
    This is a quote from Albright during an appearance at Ohio State University by Albright

    Sorry greg , but you are wrong as usual, always trying to exploit bad information !

  12. gregflynn

    September 17, 2012 at 3:31 pm

    That is why Clinton authorized Operation Desert Fox on December 16, 17, 18 and 19th, 1998, a bombing campaign of Iraqi targets, in conjunction with British forces, to diminish Iraq’s then known WMD program. There was no substantive evidence that he rebuilt it after that bombing blitz other than the false evidence of “Curveball” and Cheney’s machinations.

    Still waiting on evidence to support the missing GWB years.

  13. Adam Searing

    September 17, 2012 at 5:28 pm

    “Alex”, “Doug”, “Juan Gonza”, “frances”, “David Wordslay”, and “Andrew” are all made-up names from the same person. It isn’t worth responding to his comments. So, when you see “Alex” get agreement from “Doug” it shouldn’t be surprising. And when you see “Juan Gonza” parrot the line that “Doug” took it should be expected. I guess it’s flattering that the NC right-wing machine feels funding someone to spend enormous amounts of time on our blog is worthwhile, but ignoring the anonymous posts he wouldn’t dare confess to writing under his own name should be easy.

  14. Alex

    September 17, 2012 at 7:24 pm

    I get tickled at Adam who obviously has a lot of time on his hands. Besides his daily ritual worship for Obama,and a few op-ed pieces about the ACA legislation, Adam has nothing to do but chase after retired conservatives. I really admire a guy on the nonprofit/government dole who’s been able to somehow convince people that he’s an expert on something even though he’s never held a real job. What a nice gig he and Ezra Klein have come up with, and it sure beats working. Congratulations Adam !

  15. david esmay

    September 18, 2012 at 9:42 am

    Conservatism must be retired, it’s been irrelevant for decades.