Middle Class Under Assault?

While the wealthy in America have increased their wealth over the years, the middle class have experienced stagnant wages along with big increases in expenses. It is easy to find people who are on both sides of this argument, but many indicators appear to point to the fact that the middle class is barely managing instead of thriving.

According to Charles Hugh Smith, here is how Elizabeth Warren, chair of the Congressional Oversight Panel that is monitoring the TARP bailout funds given to banks, jumped into the debate on the topic. In an interview with The Washington Post, she said: "I believe that the middle class is under terrific assault."An astute political player, she added: "And I don't want to play this as a capitalism issue." Actually, capitalism has quite a bit to do with the squeezing of the middle class -- but so do other factors, including government policy and deep structural changes in the global economy.

Here is more of Warren's statement on the subject, which provides a good sense of where middle class families stand today.

When we compare middle class families today with their parents a generation ago, we have basically flat earnings -- a fully employed male today earns on average about $800 less, adjusted for inflation, than a fully employed male earned a generation ago. The only way that families could increase their household income was to put a second earner into the workforce, and, of course that's now flattened out because there aren't any more people to put into the workforce. So you've got, effectively, flat income in this time period, with rising core expenses: housing; health insurance; child care; transportation, now that it takes two cars to get everywhere, two jobs to support; and taxes . . . families are spending a lot more on what you describe as the basic expenses.