The Myth of the Shrinking Middle Class

Populist politics is all the rage this election year. Jonathon Edwards seems to be channeling the spirit of Huey Long as he vows to "Fight! Fight! Fight!" corporate greed. On the Republican side, Huckabee is making headway with populist rhetoric, winning the Iowa caucus with little financing. Central to the populist argument is the claim that the middle class is disappearing in the United States as a result of being exploited by corporate greed, tax policies that favor the rick, and international trade. Unfortunately for the populists, it is not true. George Will has an excellent article at Real Clear Politics where he gives some interesting facts.

Economist Stephen Rose, defining the middle class as households with annual incomes between $30,000 and $100,000, says a smaller percentage of Americans are in that category than in 1979 -- because the percentage of Americans earning more than $100,000 has doubled from 12 to 24, while the percentage earning less than $30,000 is unchanged. "So," Rose says, "the entire 'decline' of the middle class came from people moving up the income ladder." Even as housing values declined in 2007, the net worth of households increased.

Huckabee told heavily subsidized Iowa -- Washington's ethanol enthusiasm has farm values and incomes soaring -- that Americans striving to rise are "pushed down every time they try by their own government." Edwards, synthetic candidate of theatrical bitterness on behalf of America's crushed, groaning majority, says the rich have an "iron-fisted grip" on democracy and a "stranglehold" on the economy. Strangely, these fists have imposed a tax code that makes the top 1 percent of earners pay 39 percent of all income tax revenues, the top 5 percent pay 60 percent, and the bottom 50 percent pay only 3 percent.

See the whole article here.