MIDDLE CLASS CONTINUES TO SHRINK
ajc.com
by Cynthia Tucker
Published on: 11/26/04
Sears and Kmart may be struggling for survival in the Darwinian world of retail, but makers of high-end items are managing quite well, it seems. Jimmy Choo is expanding, opening new stores around the globe.
For the sartorially challenged, Jimmy Choo is a designer of very expensive, very trendy and obviously uncomfortable shoes for women — shoes of the sort popularized by the characters on "Sex and the City." (They wore Manolo Blahniks, too. Same deal — a lot of bucks for a little bit of sole and severe pain to boot.) The company — whose shoes start at around $400 a pair and soar upward — plans several new stores, with Boston and Chicago on the list of cities that could get them. "There has been a strong bounce back" in demand for luxury goods, an analyst told The New York Times.
In the brave new "ownership society" championed by President Bush, a minority of Americans gets to own a lot of very expensive stuff — designer clothes, wretchedly overpriced handbags, yachts, private planes, high-end SUVs (standard equipment includes a tax deduction) — while many other Americans cannot afford health insurance or decent day care. It's a class cleavage reminiscent of the days of the robber barons.
Before you scream "class warfare!" let's consider the statistics. I'm not one of those who claims that most Americans are suffering. That's simply not the case.
Indeed, there are more prosperous Americans than there used to be. In inflation-adjusted dollars, the percentage of households earning more than $75,000 annually soared from 8.2 percent in 1967 to 26 percent in 2003, according to the U.S. Census Bureau. That's a substantial increase in affluence.
Much of that change has been generated by two-income families in which both parents have college degrees. Women have not only gone to college in much larger numbers, but they also have also gone to law school, medical school, dental school. As women have made inroads in professions dominated by men, they have brought their families the ability to buy spacious homes, vacation abroad and own several cars. Many of those families own weekend homes, as well.
But look at the squeeze on the middle — the households earning between $35,000 and $50,000. The percentage of households near the median, which was $43,318 in 2003, dropped from 22 percent in 1967 to 15 percent in 2003. Many jobs in that income range are threatened by outsourcing or offshoring. Those households are also hit harder than those at the higher end by big hikes in gasoline prices or health insurance costs.
In addition, families in those income brackets are less likely to own stock or to have inherited wealth from parents or grandparents. The Bush tax cuts have already shifted taxation away from wealth (dividends, for example) to work (wages), partly because the president has cut taxes on dividends and capital gains without reforming the payroll tax. (If you earn less than $87,900 a year, you pay Social Security taxes on every dollar you make. It would be fairer to do it the other way around.)
In his second term, the president wants to continue the shift by eliminating taxes on dividends and capital gains altogether. The top 1 percent of households in this country already owns nearly 40 percent of the household wealth.
Meanwhile, in the third quarter of this year, the share of gross domestic product going to salaries and wages dropped for the 14th straight quarter, according to the Commerce Department. At the same time, the share of GDP going to corporate profits has increased substantially.
At the moment, there is rough parity in the numbers of households at the top and the bottom ends of the nation's economic ladder. About 44 percent of households earn more than $50,000 a year; about 41 percent earn less than $35,000. But it's the faltering middle that tells us a lot about the direction in which the nation is headed.
As Bush carries out his economic agenda, the middle will continue to shrink. The center cannot hold. |
