"The Myth of a Stagnant Middle Class" by Donald Boudreaux and Mark Perry argues that the stagnant middle class is a "myth." They are wrong. The truth is the middle class is not only stagnant but it is my fear that, without sustained and focused action, it is at risk of disappearing.
First, it is important to revisit what Boudreaux and Perry call the most "informative and important" measure of well-being: life expectancy. The authors claim that "an American born today can expect to live approximately 79 years -- a full five years longer than in 1980 and more than a decade longer than in 1950." That might be correct as an average, but if you dig deeper, the story is very different.
The reality is that life expectancy has not improved for everyone. In fact, in some cases life expectancy is actually decreasing. A recent study found that adult men and women with less than 12 years of education had life expectancies not much better than the nationwide average in the 1950s and 1960s. Between 1990 and 2008, white women without a high school degree actually lost five years off their life expectancy, falling to roughly 73 years, on average.
Black men in general have the lowest life expectancy of all; in 2008, their life expectancy at birth was 70 years -- nearly a decade less than the American average and just a single year higher than the age of 69, which some have proposed as the new retirement age for Social Security.
The widening life expectancy gap is clearly linked to income, race, and education. Of course, the authors fail to point that out.
So the truth is we aren't all kicking off of the same starting block. And for the wealthy, the system is rigged to boost them along the way.
Income inequality is the highest it has been since the Great Depression, and it has gotten much worse in the last few decades. Today, the top 1 percent of Americans have more wealth than the bottom 90 percent of Americans, who earn an average of less than $33,000 per year. If you look at income, the richest 400 Americans make nearly as much as the bottom 150 million Americans combined.
Vast gains in productivity have not been shared with workers. Even the authors admit that "the average hourly wage in real dollars has remained largely unchanged from at least 1964 -- when the Bureau of Labor Statistics (BLS) started reporting it."
And efforts to eliminate workers' ability to collectively bargain have been successful. It's a simple fact: unionized workers earn 28 percent more than those without unions.
The average CEO salary is just under $1.1 million for S&P 500 CEOs, and the average compensation is almost $13 million through benefits like stock (average $5.3 million) and pensions and deferred compensation ($1.3 million). According to the Economic Policy Institute, from 1978 to 2011, CEO compensation increased more than 725 percent, an increase substantially more than worker compensation which was 5.7 percent.
Low tax rates on wealth, investments, and income have benefitted those at the very top. Between 1979 and 2005, the top 0.1 percent of Americans saw their income grow by nearly $6 million. The bottom 20 percent of Americans? Their income increased a grand total of $200.
While the authors argue that the quality of goods and services has improved over the last 50 years, they ignore the fact that millions of Americans cannot afford to buy them. Higher health care, education, housing and even food prices have left people on the outside looking in.
All of those factors -- unshared prosperity, flat wages, and inequality in income, wealth, health, and life expectancy -- mean that there is a lot to be done in order to rebuild a robust middle class and give a boost to those who aspire to it. To believe otherwise may comfort the very comfortable, the problem is -- it's a myth.