Since 2000, America's Middle Class Has Shrunk in Every Single State in the Union
The American middle class is officially dying.
According to a new interactive map released by the Pew Foundation Thursday, the middle class shrank in every single state between 2000 and 2013. And it's not that more people are leaving the middle class for the upper class. The study found that median income has declined in most states and that the number of Americans paying 30% or more of that income on housing, a federal measure of housing affordability, had increased.
Though some have previously argued the American middle class has been shrinking, few, if any, previous studies have laid out the data so completely or demonstrated the grim extent of the fall.
Wait — isn't the economy getting better? The data stand in stark contrast to what Americans have been told about the recovery of the economy. After all, U.S. job growth was stronger in 2014 than at any time since 1999. Since the height of the crisis, the unemployment rate has fallen from a 2009 peak of 10% to its current rate of 5.5%. The stock market has also soared in recent years, now far surpassing its pre-recession peak.
But while many have trumpeted the return of the American middle class, these figures don't tell the whole story. While overall the economy has bounced back, the gains that have been made have not trickled down.
Part of the problem is that the Bureau of Labor Statistics routinely undercounts the actual number of unemployed people. Federal Reserve chairwoman Janet Yellen all but admitted it in a February Senate hearing. According to the Bureau, a person is only counted as unemployed if they "do not have a job, have actively looked for work in the prior four weeks, and are currently available for work."
This methodology ignores the phenomenon of long-term unemployed or "discouraged workers," who may no longer be "actively" looking because, as their name suggests, they are discouraged from even trying. The official number also does not account for part-time workers, who cannot find full-time work, or those described as "marginally attached to the labor force." Add all that to the mix, and the real unemployment rate last month was 11%.
When it comes to stock market gains, the primary beneficiaries have been individuals with large portfolios. If you're one of the roughly 86% of Americans who don't own stocks, you won't see that money. Once, market gains might have translated into higher wages for workers at those companies, but today median incomes are virtually flat. According to one analyst, corporations are moving away from internal investments, research and development and raises, and instead are funneling the money to powerful shareholders.
"For a long time, a lot of people in this country felt that if the rich are doing well, their prosperity would trickle down to the rest of us," Brendan Duke, a policy analyst at the Center for American Progress, told Mic. "People have to readjust their assumptions."
Far from trickling, wealth has accumulated at the top. Between 1981 and 2012 the pre-tax income of the top 1% more than doubled.
Fixing inequality is about more than addressing jobs. Much of the broad economic growth enjoyed during previous generations came from jobs that have now gone overseas and are not coming back. However, there are some measures the U.S. could take to ease the burden.
It could start by raising the minimum wage, which hasn't budged since 2009. This would immediately put more money into the pockets of workers. Better still, as former Republican presidential candidate Mitt Romney suggested during his campaign, the minimum should be tied to inflation so it can be predictable and so Americans can stop arguing about it every few years.
Given the increasing necessity of higher education in the modern workforce, the federal government could also take steps to make college more affordable. President Barack Obama's recent proposal for universal community college is an admirable start, but it's still not enough. In Germany, for example, all college is free.
Massachusetts Senator Elizabeth Warren once famously declared that the economy was "rigged" against American workers. The complete collapse of the American middle class as shown in the Pew study shows just how right she was. If prosperity is not broad-based and all Americans cannot share in the nation's recovery, we only sow the seeds of the next crisis.