Two stories in the news this week illustrate what is happening to the middle class. One story is about numbers showing how the middle is being squeezed. The other is about how people are literally being squished. “The new business model, apparently, is to shrink the seats, charge extra for everything and offer nothing for free that might be construed as an amenity.”
In the Wall Street Journal, Behind the Middle-Class Funk tells the numbers story,
Many economists define the middle class as those adults whose annual household income is between two-thirds and twice the national median—today, that means roughly $40,000 to $120,000. By this standard, according to the Pew Research Center, the middle class is significantly smaller than it once was. In 1971, it accounted for fully 61% of adults, compared with 14% for the upper class and 25% for the lower class.
Four decades later, the middle class share had declined by 10 percentage points to just 51%, while the upper class share increased by six points and the lower class by four. The U.S. income distribution is still a bell curve, but the left and right tails are fatter and the hump in the middle is lower.
[ . . . ] Between 1979 and 2007, on average, annual hours worked by middle-income households rose from 3,007 to 3,335—fully 10%, a larger increase than for any other income group. Some of the additional work reflects expanding opportunities for women. But much of it came in response to economic pressure and represents time that men as well as women reluctantly diverted from their children—hardly an unambiguous improvement in family well-being.
The middle class shrank by 10% and people in the middle have to work longer to get by…
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Harold Meyerson illustrates this squeeze by showing how the non-corporate-rich are being literally squished. In A hard landing for the middle class, Meyerson writes about what is happening to airline passengers,
…Airline seating may be the best concrete expression of what’s happened to the economy in recent decades.
Airlines are sparing no expense these days to enlarge, upgrade and increase the price of their first-class and business-class seating. As the space and dollars devoted to the front of the planes increase, something else has to be diminished, and, as multitudes of travelers can attest, it’s the experience of flying coach. The joys of air travel — once common to all who flew — have been redistributed upward and are now reserved for the well-heeled few.
Meyerson describes the elevated luxury — and prices — for business and first-class passengers, while coach sections and seats get smaller. “The new business model, apparently, is to shrink the seats, charge extra for everything and offer nothing for free that might be construed as an amenity.”
Welcome to the new economy: More for the well-to-do, less for everyone else, and those without enough money literally are not on board.
Meyerson explains how this reflects what is happening to the whole economy,
The upgrading of business and the downgrading of coach present a fairly faithful mirror of what’s happening in the larger economy: the disappearance of the middle class. As University of California-Berkeley economist Emmanuel Saez has documented, between 2009 and 2011, the incomes of the wealthiest 1 percent of American families grew by 11.2 percent while those of the remaining 99 percent shrunk by 0.4 percent. Median household income has declined every year since 2008. Profits, meanwhile, have risen to their highest share of the nation’s economy since World War II, while wages have sunk to their lowest share.
As more and more of the gains from our economy go to a few at the top the rest of us get squeezed — literally.