Plundering the middle class – 35 percent of American households live on $35,000 or less each year. Bailouts a success for the wealthiest 5 percent of Americans.
- 7 Comment
The middle class is being slowly dismantled piece by piece. New Census data released this week highlights a continuing trend that is pushing more average Americans into a perpetual struggle to stay financially afloat. New data shows that the median household income is $50,221 in 2009 which is down from $52,029 in 2008. This drop of 3.6 percent comes at a time when many U.S. households are struggling to make payments on mortgages and more importantly, find jobs. The only group that grew their household income was for those making $180,000 or more (top 5 percent). This growing inequality gap demonstrates that this recession is actually widening the chasm between the working and upper-classes of our society. I went ahead and took the data from the new Census report and created the following income distribution chart:
35% of U.S. households live on $35,000 or less. The hope of making it into the middle class for this group is getting tougher and more financially challenging. Those making more than $100,000 fall under the top 20 percent category. But the real income disparity shows up clearly once you go over the $200,000 range. The top 20 percent of Americans made close to 50 percent of all income while those below the poverty line made up 3.4 percent. This ratio of 14.5 to 1 is the highest on record keeping history. In 2008 the ratio was at 13.6 and back in 1968 it was 7.69:
Source:Â Census
“(AP) A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.
At the top, the wealthiest 5 percent of Americans, who earn more than $180,000, added slightly to their annual incomes last year, census data show. Families at the $50,000 median level slipped lower.
“Income inequality is rising, and if we took into account tax data, it would be even more,” said Timothy Smeeding, a University of Wisconsin-Madison professor who specializes in poverty. “More than other countries, we have a very unequal income distribution where compensation goes to the top in a winner-takes-all economy.”
How is it possible that during a time when the vast majority of Americans are moving backwards financially, only a small segment actually progressed forward? It would be one thing if the real economy were improving but it is not. What is happening is the bailout funds have worked but for a very tiny portion of the population. Most people depend on a job to pay for bills and manage their daily budgets, not stock market wealth. The bigger problem is you have insufficient risk management systems built into the current financial system. As we saw with the AIG bailout, it was merely a way to rectify the bad bets of Goldman Sachs. How did this improve the real economy? It didn’t. How did handing out money to the investment banks provide added jobs? They have no statistics to show for the trillions of dollars handed out to Wall Street in terms of helping out Main Street. What we do have is 43 million Americans in poverty and the middle class shrinking.
So what can be done? The answer is obvious but the politics will make this a battle for the middle class in America. It can be argued that the following decade will be a struggle for the survival of the middle class. We need to split commercial and investment banking. This must be done or another crisis is only a matter of months or a few short years away. There is no reason to commingle run of the mill banking like mortgages, checking, savings, and credit cards with derivatives, asset backed securities, hedge funds, and other high risk items. We need to treat banking like a utility. There is no doubt that we need capital in the system to function. Yet right now the banks operate like loan sharks on the working and middle class while they use the taxpayers as piggybanks for their own generous bailouts. This has been going on for years now and the growing inequality is showing that the bailouts have worked. They just haven’t worked for the middle class.
If you enjoyed this post click here to subscribe to a complete feed and stay up to date with today’s challenging market!
If you enjoyed this post click here to subscribe to a complete feed and stay up to date with today’s challenging market!7 Comments on this post
Trackbacks
-
otis Houston Jr said:
I don’t want to rob the bank but the bank want to rob me
Black CherokeeAugust 16th, 2012 at 10:24 pm -
Lee Bickley said:
On Oct 20 2011, the Social Security Admin reported that 50% of all workers made less that $26,364 in 2010. It looks kile your artical was based on 2009 data. So I am wondering is does this new information change “35% of U.S. households live on $35,000 or less.” Also, if you exclude the top 20% what is the median income of the bottom 80%.
THanks
Lee BickleyOctober 1st, 2012 at 11:30 pm -
Ramona Elizabeth Jaime said:
I struggle and continue struggling finishing college because I can never make enough money to purchase a new vehicle. I do pay a mortgage, living in my home now for 13 years. I am 57 years old. What am I doing wrong????????????????????????
My hoopties/ used cars are always breaking down therefore I have to quit school and ride a bus to go to work so I can have a home to go to.
Ramona E. Jaime.November 16th, 2012 at 12:04 am -
Kate said:
Here in 2013 I still don’t know everyone that is not struggling to stay “above water.” I know of a family that made faithful payments on their house for almost ten years, once one lost their job it was harder to 1) to find another and 2) to make the payments as easily. They missed three payment before he could find a job again, even though it was for less pay, the bank was ready to take their house. They made about 480 payments without trouble but missed three and it almost undone they. Everyone claims” It’s business not personal” I truly believe that’s one thing wrong with this world today! The only way to change this world is to start making more effort plus better bills and laws for the middle and lower classes. If you have more money why not pay more? Why beat the middle and lower classes like a dead dog for money they don’t have? Obama is trying but the Republic party will have none of it no matter the cost to us. Anyone else see the problem in all of this?
January 10th, 2013 at 9:16 am -
Deb said:
Why does the upper management in most companies get all the raises, they can actually vote themselves raises; however, the ‘lower’ middle class people that do all the work get raises. Sales people can make commission plus any bonuses, but they don’t share any of that with their team who, again, actually does the work for them. I am on a constant really tight budget. Now I need to consider getting a part time job again. I cannot even afford to go out to eat! I am 59 y/o.
July 11th, 2013 at 7:23 am -
Chris said:
I started working at 7, I have worked ever since, most of the time double and triple jobs just to make it enough to pay rent and utilities. I have made all the right choices and stayed on the right side of the law. I even fought to get educated and pay for it, I still owe and can’t afford to make payments, I live in a broken down mobile home, with my family, from pay check to pay check we sacrifice on food supplies, with debt collectors on my back threatening us daily. I am 35 now and my body is broken and old and I have no support, or medical assistance that I can afford. My family line is of people who fought in all the wars and tried to help make this great country. I am a fairly intelligent guy, with honor, respect, morals, ethics, and responsible. My best year was $45k my average is below $20k a year. What are any of us doing wrong? I do not think its us. However it is us who do nothing about it. It’s those who abuse everything while we try to do whats right. My parents couldn’t make it, and didn’t have the support they needed to make it. That legacy was passed down to me and now my children and theirs. Our only hope is?
February 16th, 2014 at 1:22 pm -
Matti said:
Free public education, with enough quality and resources to cut the inherited poverty and to offer opportunities regardless your economic background. More equal income distribution to support the consumer middle class = more taxes to the higher income levels. Equal freedom doesn’t make equal opportunities.
The problem is that public welfare is defined socialism and/or unfair in the US. You’re left on your own against that rich 1%, and you lose. Always.
October 18th, 2015 at 1:29 pm