Declining Middle Class
There's another article on the declining income of the middle class, via Big Picture.
the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years.
I am going to bet that if you broke that down further you'd find the bottom 20-30% have declined significantly. Probably somewhere in the 70-90% have actually maintained lifestyle.
This business of percent wage increases benefits high wage earners far above low wage earners. 5% on a 20k income is only going to give you about $83/month, whereas on $120k it gives $500/month. Increases in rent, utilities, transportation, etc. can easily outstrip that kind of increase on a low income earner. The high income earner covers it and has some left over to spend or save as they please.
It is interesting to me that they go back to 1973, as I find it hard to believe the decline has been happening that long. There is no question in my mind that in Vancouver it has been happening since the early 80s. In the 80s Vancouver completely saw union power and wages decline, but wages remained better across the rest of Canada and I was constantly shocked at the wages American friends were discussing relative to what I saw in Vancouver.
My perception is that the rest of Canada started to see a decline of wages in the 90s, and perhaps the US was also seeing a decline, but I think the decline was steeper in Canada.
I wrote about the declining wages back in 2007. Something in the above linked article is that the American couple that has income a full 1/3rd above the median income is that they say they can't seem to save, and what I was pointing out was that people aren't saving anymore because they simply have far less disposable income. Also, in Canada the tax burden on the young and poor is grossly excessive. In my post I link to an article which show the basic tax burden before paying employment and pension benefits is a full 1/3rd more for a young person compared to a senior. Additionally, that young person has all kinds of work related expenses, like transportation to get there. A 25-year-old making 30k compared to a senior with 30k of income is trying to live on about 20% less after the extra taxes and work related costs. They haven't had a chance to accumulate wealth of any kind to buffer them to live on a lower income and they likely still have student loans, or are trying to save for basics like cars and furniture. They simply do not have the capacity to support the aging population and unless there are massive structural changes, they are going to be an exceptionally destitute senior population.
I am far more for structural changes that enable people to look after themselves and for giving people more responsibility for their retirement rather then being expected to pay for others retirement through taxes. I do believe in some kind of pension, but something that is a buffer rather then any kind of expectation that it should be a living income. My thoughts are in the range of covering food and utilities.
I don't believe at all that lifestyle has been declining since 1973. I suspect there are quite a few years in there where it was gaining anymore before it started to decline. Certainly my memory of how you could live as a minimum wage earner in my youth was that you could live on it and have money left over and that simply hasn't been possible for quite a few years now.