Monday, November 5, 2012
The Middle Class Is Worse Off Than You Think
The decline of the middle class has emerged as a key issue in the presidential campaign with both candidates promising policies to restore the economic stability of the middle class.
The conventional view has wages for the middle class, particularly men, stagnating over the past 40 years. But Michael Greenstone, economics professor at MIT and director of The Brookings Institution's Hamilton Project, says the situation is much worse than that.
Greenstone tells The Daily Ticker that after studying the data more carefully he found "that a lot of men are no longer in the workforce or are working part time."
"If you put them back in, the earnings of the guy in the middle have declined 20% over the last four decades," he says. "As a result, the median earnings of men are back to the levels that prevailed in the 1960s."
In the latest jobs report released Friday, the average hourly earnings for men and women rose a penny to $23.58 an hour. That caps a 1.6% gain over the past 12 months, which is not enough to keep up with 2% inflation as measured by the Consumer Price Index. Read more >>