Some 51 percent of U.S. citizens lived in middle-class households in 2014 | Photo: Reuters
Soon, researchers predict, the middle class will no longer be the largest class in the United States.
Households in the United States made less money in 2014 than they did in 1999, according to a study released Wednesday by the Pew Research Center, a decline that transcends class.
According to the research, lower-income households saw their income drop from a median of US$26,373 in 1999 to US$23,811 in 2014; middle-income households declined from US$77,898 to US$72,919; and even upper-class households lost ground, dropping from a median of US$186,424 to US$173,207.
The drop in income was felt across the U.S., with Rakesh Kochhar, associate director for research at Pew, saying there’s no one reason why. Rather, there are various factors contributing to the decline, particularly among the middle and lower classes, from globalization and the outsourcing of jobs to an erosion of the power of organized labor.
The result is a shrinking middle class. Some 51 percent of U.S. citizens lived in middle-class households in 2014, down from 55 percent in 2000.
The Pew Center defines the middle class as households with incomes between two-thirds of U.S. median income and twice the median, adjusted for household size and the local cost of living.
In 2014, a three-person household was middle class if its annual income fell between US$42,000 and US$125,000.
According to that standard, middle-class adults now make up less than half the population in cities such as New York, Los Angeles, Boston and Houston. Indeed, the decline has been felt in 90 percent of U.S. metropolitan areas. Soon, researchers predict, the middle class may no longer be the largest class in the country.
Furthermore, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. One can postulate that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the American economy.
To put this in context, it is important to briefly note that throughout history, man has endeavored to overpower the time constraints of physical and biological processes. It is now an accepted fact that accelerated scientific and technological innovation has directly led to a speeding up of all physical and social processes in the name of progress. The competitive drive has led to a frantic national and international chase for more efficient methods of production and distribution. In the process, humanity has pushed to develop even more powerful technologies, on the assumption that such technologies would accomplish more and more useful functions in less time. The results have been a dramatic acceleration of change and concentration of wealth ownership.
The productive capital factor input to creating products and services is statistically 90 to 98 percent. In concentrated capital ownership terms, roughly 1 percent own 50 percent of the corporate wealth with 10 percent owning 90 percent. This leaves 90 percent of the people scrambling for the last 10 percent, with them dependent on their labor worker wages to purchase capital assets. Thus, we have the great bulk of the people providing a mere 10 percent or less of the productive input. Contrast that to the less than 5 percent who own all the productive capital providing 90 percent or more of the productive input, and who initiate and oversee most of the technological advances that replace labor work by workers with capital work by the owners of productive capital assets. As a result, the trend has been to diminish the importance of employment with productive capital ownership concentrating faster than ever, while technological change makes physical capital ever more productive. Corporate decision makers know this, whether in the United States or China, or anywhere organized assemblies of people engage in production. Technology is an easier and faster way to get a job done. Because technology increases the profitability of companies throughout the world, technology always has the advantage over human labor when the costs of them are the same. But because this is not well understood, what we as a society have been doing is to continually shift the work burden from people labor to real physical capital while distributing the earning capacity of physical capital’s work (via capital ownership of stock in corporations) to non-owners through make-work job creation, minimum wage requirements, and welfare programs. Such policies do not function effectively.
For a more in-depth analysis see my article “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://foreconomicjustice.org/11/economic-justice/
