Is the “Middle Class” disappearing in America? (1 Viewer)

[JoeyR]

Well, I must be in the bottom middle, because my wages are in between the top and bottom quoted, everything else stated has been true for me.....

Post 59-My wages arent up, in fact I havent seen many people here post that they have had raises seeing how the "economy is so great" and personally I dont know too many that have received raises either.....

post 102-http://ask.yahoo.com/20040802.html,http://en.wikipedia.org/wiki/United_...Postal_Service, oh yeah and one word ENRON

America's rags-to-riches dream an illusion: study

By Alister Bull

04/27/06 -- WASHINGTON (Reuters) - America may still think of itself as the land of opportunity, but the chances of living a rags-to-riches life are a lot lower than elsewhere in the world, according to a new study published on Wednesday.

The likelihood that a child born into a poor family will make it into the top five percent is just one percent, according to "Understanding Mobility in America", a study by economist Tom Hertz from American University.

By contrast, a child born rich had a 22 percent chance of being rich as an adult, he said.

"In other words, the chances of getting rich are about 20 times higher if you are born rich than if you are born in a low-income family," he told an audience at the Center for American Progress, a liberal think-tank sponsoring the work.

He also found the United States had one of the lowest levels of inter-generational mobility in the wealthy world, on a par with Britain but way behind most of Europe.

"Consider a rich and poor family in the United States and a similar pair of families in Denmark, and ask how much of the difference in the parents' incomes would be transmitted, on average, to their grandchildren," Hertz said.

"In the United States this would be 22 percent; in Denmark it would be two percent," he said.

The research was based on a panel of over 4,000 children, whose parents' income were observed in 1968, and whose income as adults was reviewed again in 1995, 1996, 1997 and 1999.

The survey did not include immigrants, who were not captured in the original data pool. Millions of immigrants work in the U.S, many illegally, earnings much higher salaries than they could get back home.

Several other experts invited to review his work endorsed the general findings, although they were reticent about accompanying policy recommendations.

"This debunks the myth of America as the land of opportunity, but it doesn't tell us what to do to fix it," said Bhashkar Mazumder, a senior economist at the Federal Reserve Bank of Cleveland who has researched this field.

Recent studies have highlighted growing income inequality in the United States, but Americans remain highly optimistic about the odds for economic improvement in their own lifetime.

A survey for the New York Times last year found that 80 percent of those polled believed that it was possible to start out poor, work hard and become rich, compared with less than 60 percent back in 1983.

This contradiction, implying that while people think they are going to make it, the reality is very different, has been seized by critics of President Bush to pound the White House over tax cuts they say favor the rich.

Hertz examined channels transmitting income across generations and identified education as the single largest factor, explaining 30 percent of the income-correlation, in an argument to boost public access to universities.

Breaking the survey down by race spotlighted this as the next most powerful force to explain why the poor stay poor.

On average, 47 percent of poor families remain poor. But within this, 32 percent of whites stay poor while the figure for blacks is 63 percent.

It works the other way as well, with only 3 percent of blacks making it from the bottom quarter of the income ladder to the top quarter, versus 14 percent of whites.

"Part of the reason mobility is so low in America is that race still makes a difference in economic life," he said.

© Reuters 2006.

1.Where did you find this?
2.The article states that a poor child has a 1% chance to make it in the top 5%, you state one in 10? 95% of 300 million=285000000, 1% of 285000000=2850000, 285000000 divided by 2850000 =100, 1 in 100 not 1 in 10
3.90% of the people could believe pigs fly, but that is irrelevant whether they fly or not
4.I can agree with that statement

 

[Eric_L]

If your wages are where you say they are then yes, you are in the bottom of the middle. You should do something about that if you are unhappy there. Your response to post 59 would indicate that your peer group is less successful than the documented average. Your response to post 102 is one of those 'huh?' moments in my life. Something must have gone wrong in your hyperlink because I haven't yet figured out what the USPS, Enron and WalMart have to do with anything. Maybe you are confusing public and private employers? Still not sure what Enron has to do with it. I'm also not sure why you chose to quote in the entirety the same essential article I linked in my prior post. I will quote my favorite part - buried near the bottom and ignored by most;


therefore, on average, 53% do not remain poor. Noplace else on earth will you find those odds, especially anywhere as diverse as the USA. The American Dream is alive and well.

edit - I just noticed your last question at the bottom of your post. I reversed 5% to 1% instead of 1% to 5% - thats all. I edit/corrected my post and the odds are still fantastically high. Of the 53 out of 100 people who escape poverty at least one of them achieve the top 5%! I find it interesting that today Yahoo featured THIS article;
http://biz.yahoo.com/weekend/great_1.html

 

[RobertR]

I think the difference is that the author of the study you cited assumes that you're wealthy only if you're in the top 5%. I'd like to see the percentages for those making it into, say, the top 25%. Also, I'd say the fact that 78% of those born into wealth won't be wealthy is rather dramatic evidence that outcomes are dependent on the individual (contrary to claims that the rich always have it made).

 

[AjayM]

I wonder what the percentage is in a truly impovershed nation such as those in sub-saharan Africa? How about rapidly developing economies such as China or India? How about established "1st world" nations like most of Western Europe or Japan, etc.

As for the original subject, the last numbers I saw had the poor growing at something very small like 1.8% and the rich growing at around 1.4%, not exactly heart stopping numbers.

 

[JoeyR]

Im just replying about your "this article has nothing to do with this conversation comment"(general paraphrase), I dont have a problem with it but when your proven wrong there is no need to smart off or make a snide comment.............

"peer group" read my location Im in Louisiana were last in everything
also http://ask.yahoo.com/20040802.html theres the hyperlink, just like one of the other links Wal-Mart is listed 2nd behind the Department of Defense and in front of the USPS as the United States largest employer. Last time I checked Wal-Mart wasnt a government agency and also as per previous posts has been cited here several times. Enron-Why buy a small island when you can bankrupt all your employees?

I posted the article to show the relevance of the information you had in your post and to show proof that half of it was made up........

 

[Eric_L]

What half are you prooving was made up? I made the comment that the government was the largest US employer and I am standing my it. I was not specific to any department nor even federal state or local. As far as I recall all combined the government employs aroud 40% of Americans. And really - Enron? That's quickly turning into the Godwin's law in Economic discussions.

 

[JoeyR]

First off you made the commetn about the CEO's buying the island, I'm just stating the devestation that can be caused, also today it came out that Ford lost 5 billion dollars this quarter. Who do you think will pay for that mistake? The CEO? I think not......

Ok in one of your post somewhere in the 100s you posted that corporations employ 1 in 4 people, but by above figure that would be about 60%, we may have to restate what we are discussing, 9 pages in and I'm starting to lose track

 

[Chu Gai]

My youngest (I've two) is taking US History. I managed to have the book for a couple of days and decided to just keep reading. I was reminded of the struggle, good and bad, in the formation of the United States. I was also reminded of the courage many had in venturing to lands and hewing a life for themselves. (Yes, I know about the discrimination and plight of Indians, Asians, Irish, Germans, etc.) I was reminded of the struggles that had to do with the formation of a central government, the apportionment of relative powers and how to safeguard the individual liberties.

Throughout though, I was impressed by the accomplishments of the individual person. I still am.

Being poor back then and for my father's generation (he's 90 now) was something different than what it seems to be today. Being poor was something you were until you could move out of being poor. It was kind of a transitory thing. He expected to struggle, forgo things (I remember going to the Thrift Store for day old bread that we bought and placed in the freezer), and work until he could move out. He tells me, and so did my aunts and uncles, that neighborhoods were different then. The poor cared about their neighborhoods and kept them clean. People swept the areas in front of their apartment buildings. The school was right, the kids were wrong. There was a respect for authority. There was a family. There was accountability. If you screwed up, you screwed up and it wasn't the goverment's fault.

Things are different today. We blame things. We blame people. We blame the Chinese. We blame the companies. We relax the standards and accept mediocrity. Is an A in school today the equivalent of an A 40 years ago? We bitch at the continuing poor high school test scores compared to other other countries despite every imaginable program and hundreds of billions if not trillions spent on education. What business, in their right mind, would be able to justify the mismanagement of funds for such shoddy returns? Throughout all this blaming, all of us regardless of color, become like the characters in "Waiting for Godot". So long as we keep on blaming, we'll never have to take responsibility for the foolishness we wreak upon ourselves.

I want and expect my government to provide the means for people in need to get help. I also expect leaders of communities, people like Jana and others, to provide leadership and not a finger pointing solution for people's problems. Rather than look through the glass and see a Walmart or the lack of enough government programs, turn the glass around because it's a one-way mirror and recognize that a goodly amount of the problems are staring you right in the face. We were pioneers back then with a spirit and a hope that burned. I'm sad to see that the light burned brighter then.

 

[Chris Lockwood]

Alister Bull has a very appropriate last name.

 

[MarkHastings]

You can't live without video games!!!

 

[Eric_L]

How do you come up with 60%? Are you considering government and corporations the only source of employment in the US? That is an overly simplistic outlook on employment and income options in the US.

As far as Ford goes - so what? The shareholders know the risks - Ford is hiding nothing. If you want a real unalduterated opinion of why Ford (and GM) is in such dire straights, read this:
http://www.thetruthaboutcars.com/?p=693
As you can see Ford is nothing at all comparable to Enron - or any other company for that matter. Each corporation is unique - just like people. It cannot be so easily oversimplified. Ford is a victim of many things, but not one of corporate malfeasance.

I will agree that executive compensation has gotten out of hand, however that is really not so much an issue for the employees as it is for the shareholders. Labor is a commodity - the ultimate costs (and profits) belong to the business owners.

 

[JoeyR]

Mark when did you come to my house??????

 

[JoeyR]

Eric, I dont feel like going tit for tat on everything any longer, but you did say this so at least we agree on one thing

I will agree that executive compensation has gotten out of hand

 

[Chu Gai]

Interesting GM article. The one thing I don't like is people's pensions, which I see as an agreement, being placed at risk as a result of bankruptcy. Do you know if the pensions are fully funded or not?

 

[AjayM]

I doubt they are fully funded, however they are almost certainly insured. Which still means a lower benefit payout in a lot of cases (but also means they aren't out to dry with nothing if the company goes bust).


You mean the very few companies that you have heard about have comp packages that are out of hand, go peaking through some SEC documents from various companies and you'll find most comp packages aren't nearly as lavish as the news stories would have you believe.

 

[Brian Perry]

While these pensions may have been viewed as an unbreakable contract, the fact is that they are dependent on the company being around to pay them. What I find unacceptable is that taxpayers may end up being on the hook for a portion...after all, those of us with 401k retirement plans have no recourse if our investments get crushed.

 

[Eric_L]

get in line - taxpayors are also on the hook for all bank deposits, social security, medicare and the occasional corporate bail-out.

 

[AjayM]

The tax payer rarely has to pay anything on a corporate bail-out, all a "bail out" does is guarantee a loan which is then made by a private bank to a company. If that company fails and the bank isn't able to recover enough assets to cover the loan then the government comes in and pays the note.

 

[Mort Corey]

Insanity is doing the same thing, the same way, in expectation of different results no? In governmentspeak it's called reform.

Mort

 

[Eric_L]

The last 'free' FDIC bailout cost $150,000,000,000 in 1988.
Presently social security and Medicare do not fully pay out for a large number of involuntary participants and it is going to get much worse in about three decades.
Loan guarantees are not 'free'. If they were then we could all get them. Companies like AMBAC, MBIA, CIFG etc. make good money guaranteeing debt - it is not free. Corporate bailouts aren't always apparent - for example airlines after 9/11 were bailed out in many different ways.