The class warfare that some conservatives have accused liberals of waging is already in full bloom – and the middle class is on the losing side. Despite a recent surge in economic growth, stagnant wages since the recession have middle-class families making more purchases on credit. In reality, many are just an emergency away from being unable to pay their bills.
Meanwhile, the wealthiest Americans continue to rake in cash. Recent studies show CEOs on average are making $354 for every $1 earned by workers, compared with $20 to $1 in 1965.
Standard & Poor’s found that the average annual income of the nation’s wealthiest grew from about $466,000 in 1979 to $1.26 million in 2012. More than 22 percent of all the dollars earned in this country went to the top 1 percent that year, or double their share in 1979. Meanwhile, Americans’ median household income rose, but only to about $51,000, still below pre-recession levels.
If the middle class could have retained the same share of earned income it enjoyed in 1973, the Council of Economic Advisers reported, household incomes would be 18 percent higher, which would add an average of about $9,000 a year to wallets and purses.
In a nation whose economic engine is oiled by consumer spending, that isn’t good. Stagnant wages have hurt states’ income- and sales-tax collections. Some are compensating by raising taxes; California now gets half its income-tax revenue from the top 1 percent, compared with a third in 1993.
There is a racial cast to income disparity. The median income in minority households fell 9 percent between 2010 and 2013, while white households experienced a drop of only 1 percent. White households have 13 times the wealth of African-American households and 10 times that of Hispanic households.
Families are trying to make do with little or no improvement in their wages even as the cost of maintaining their households keeps going up. Signs of generally lackluster spending during the Christmas shopping season that just ended are another reason for Washington to fulfill its post-recession promises to make the middle class whole again.