Moving up
"To say that the middle class is vanishing, one must have a definition of the middle class. A sensible person would probably define it as the group of people in the middle. ... But that's not how the commentators who have made the claim have defined the middle class. Instead, they take the group of people making income within a fixed range in inflation-adjusted dollars, say, between $35,000 and $50,000, and show that the percent of the overall number of families within this range is falling. In commenting on this way of defining the middle, [economist Alan] Reynolds points out an obvious but, nevertheless, often completely overlooked fact:
" 'Such a fixed definition ensures that the proportion of households in the middle group must decline with a rise in general prosperity, because rising prosperity causes a rising percentage of families to earn more than $50,000.'
"Reynolds continues by telling of a 2004 story in The Washington Post titled, 'The Vanishing Middle-Class Job.' The Post article pointed out that in 1967, nearly a quarter (22.3 percent) of households made between $35,000 and $49,999 in inflation-adjusted terms, but that that share was down to 15 percent by 2003. "Reynolds notes that the same article showed that the percentage of U.S. households with a real income higher than $50,000 rose from 24.9 percent in 1967 to 44.1 percent in 2003. Moreover, the percentage with income lower than $35,000 fell from 52.8 percent to 40.9 percent. In other words, the 'middle class' was shrinking because people were moving out of the Post's statically defined middle class into a higher income class."
-- David R. Henderson, writing on "What's Really Happening in the Economy?" Wednesday in Tech Central Station at www.tcsdaily.com |
