Is the middle class going extinct? Part I

Business Insider seems to think the Brady clan and the rest of the middle class is being wiped out of existence in America and provides 22 bullet points to back up the claim.

I disagree.  I think it is getting harder to join the elite rich.  I also think it is getting harder to advance from the bottom of the economic ladder. But I’m not entirely convinced the middle class is being forced into extinction.

BI’s Point #1: 83% of all U.S. stocks are in the hands of 1 percent of the people.


83 percent of all U.S. stocks are in the hands of 1 percent of the people.

It looks like the percentages are roughly about the same, no?

My quick and dirty back of the napkin math looks like 1962 compares to 2001 quite favorably, as far as the growth of the middle class.  In 1962 about 93% of stocks belonged to the top 1%, compared with 83% in 2001, that’s a decrease!  All the other percentiles of earners shows an increase in percent, as well.

Additionally, the poor were more insulated during the 80’s crash.  This would seem to bode well for the lower earners post 2001 given the stock markets 2007-2008 plummet.

The rest of my point by point response to Business Insider–Part I– below the jump.  Click below to:

BI’s Point #2: 61% of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007

Some questions:

  • What does paycheck to paycheck really mean?
  • If you stopped getting a paycheck would you be able to keep living?
  • Wouldn’t a better measure be the average person’s percent of paycheck that they put into savings?
  • Do the responders have the same definition of paycheck to paycheck as the questioners? What is the rate from say the 40s, 50s, and 60s?
  • What part of the larger increase in paycheck to paycheck living is just part of the prolonged “adult adolescence” with young adults marrying, etc later in life?
  • Obviously, this number is going to go down post 2007 as the recession is effecting the respondents!

BI’s Point #3: 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.

What happened to that post 2007? What is the historical growth rate by income class?

Seems odd to me that they didn’t include that or a graph and just cribbed this from a Harvard Mag piece. I’m not refuting this point, the lost decade of ‘aughts’ has been noted in several places — it just seems they could have done a better job of making use of it!

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5 Responses

  1. Point #1 they directly contradict their statement. You’re right. The 1962 v. 2001 makes no sense.

  2. Hmm, It looks like as a percentage of all stocks, the middle class owns more now than they did then, according to that graph. It’s a terrible graph. I don’t understand what they were going for there…

    I mean, I do think the middle class is shrinking but this evidence is terrible. Your questions about paycheck to paycheck are good points.

    I think its always important to note, when it pertains to household income, that back in the 60’s many families relied on one income and were comfortable living off of it. now, a much higher percentage rely on two incomes and can’t get by on 1. that graph on college costs is a great one. that hammers middle class families.

    You aren’t the only one who noticed this:

    Nice Analysis on Jul 15, 4:45 PM said:

    @ften:

    The first chart “83 percent of all U.S. stocks are in the hands of 1% of the people.” proves the opposite of what is being claimed. In 1962, 1983, 1989, 1998, and 2001 the top 1% held 94.4%, 92.9%, 87.52%, 86.0%, and 83.6% respectively. Meanwhile all of the other categories at improved their share by a minimum of 380% (Top 9.0% category). The Middle 20% category grew by 1000%. The greedy Top 1% saw only 136% increase in that time.

    Some of the other graphs and charts are poorly analyzed too. Facts are stubborn things. They tell a different tale than the raw emotion one has based on ideological points of view.

    We have problems, but let’s be honest. Things are not that bad here. We are pointing ourselves in the wrong direction in the future with our current leadership. If we don’t steer away from the socialist policies being made today it will be bad 10 – 15 years from now.

  3. OK, it is nice to know I am not going completely insane…

  4. Your opinion is only as good as the evidence behind it, and this is some crappy evidence. I guess that makes Business Insiders opinion crap too.

  5. […] Viewed Posts Please, cover this Stephen Colbert!Is the middle class going extinct? Part IHow the heck did I get here?Another Unqualified Economist?How much does a teacher […]

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