STRUGGLING
The middle class must be struggling. Consider:
* Growth in media household income ($46,326 in 2005) is flat.
* Median hourly, weekly and annual wages ($41,386 for men in 2005) are actually declining, despite steady economic and job growth.
* Median household wealth is higher than ever, but wealth is still highly concentrated (see item above).
THRIVING
The middle class must be thriving. Consider some other data:
* In constant 2005 dollars, the percentage of households with incomes below $25,000 a year has fallen to 27% (down from 33% 30 years ago), while the percentage of households with incomes above $75,000 has risen (to 28%, twice the share of 30 years ago). If the middle class is shrinking, in other words, it's because millions of households have moved up and out of it.
* Long-term job growth has moved to an all-time of 145 million (in the BLS household survey). At 4-6%, the unemployment rate is well below its 5.1% long-run average.
* Personal income is growing at an annual rate of 7.5%. Household net worth continues to increase, and it's not all due to home equity: individuals now hold $6.3 trillion in savings accounts, money market funds and CDs. Mortgage delinquency rates remain low, as do late payments for consumer loans and credit cards.
* Workers' incomes from wages and salaries are up 6.8% in the last year, the fastest annual advance in 5 years and more rapid than the 4% increase in overall consumer prices.
* Total compensation - wages and benefits, in other words - is up 8.7% since 2003, an average annual gain of 3.5%.
* According to the Commerce Department Bureau of Economic Analysis, business compensation per employee-hour has soared almost 8% this year through June; labor income for all Americans in the first half was an annualized $95 billion.
WHICH IS IT?
We'll go with "thriving." Consider the two main indicators of middle-class status: home ownership and a college degree. Between 1970 and 2004, the homeownership rate climbed from 63% to 69%, even as the physical size of the median new home grew by nearly 60%. Over the same time period, the percentage of Americans with a college degree rose from 11% to 28%. True, there is concentration of wealth and inequality of income, but not of consumption. Ownership of cars, washers and dryers, dishwashers, refrigerators, TVs, PCs, VCRs or DVD players, air conditioning, etc. is now nearly universal in the middle class (and in fact reaches well below).
Is there more uncertainty, uneasiness and in fact more individual, if not collective, risk? Yes, paradoxically, that seems to be the case. The new economy is hyper-competitive; an astonishing number of business, jobs - whole industries - are created and destroyed at an ever-quickening pace. That's great for us as consumers, but unforgiving of us as employees and employers. It's a trade-off we have collectively and willingly accepted.
© 2006 FutureScan Provided by ProQuest LLC. All Rights Reserved.
Source: Growth Strategies
