No recovery for the middle class Now 5 years in

The recovery still doesn't feel like one for many American families -- in part because a long middle class decline is still under way.

491B13A1888314381198213283B347.png

The recovery is now officially in its fifth year. Sure, the stock market is back. And housing is getting off the floor. But for middle class Americans, the pressure is still on.

This has been an uneven recovery, with the benefits accumulating to the rich and the corporate sector while regular folks have largely been left behind amid stagnant wages, rising living costs, mediocre job gains and persistent long-term unemployment.

And none of this is new. The recession merely exacerbated trends that started in the late 1970s: lost manufacturing prowess, an important source of good-paying jobs; a shift to generally lower-paid service jobs; freer global trade, which deepens these employment problems; and increased reliance on finance, credit and debt as families try to hold on to the American dream.

The graphics that follow illustrate the depth of the problem -- and explain why so many in the middle class feel still feel so frustrated.

 D9433C61FC964C2EC326D84BDC23.png

Working harder for less

While Americans are working harder and are far more productive then they used to be, for a variety of reasons they are not sharing in the prosperity their work creates. This is a reversal of the situation enjoyed from the 1950s through the 1970s, when the middle class prospered amid strong demand for labor, widespread unionization and the ability to demand pay raises.

You can see this in the way median household income has badly lagged behind the per-capita share of economic output, as shown in the graphic above. Both measures are adjusted for inflation. While the available income statistics run only through 2009, it's doubtful that they've improved much since.

In the late 1970s, these measures were roughly equal. Now, actual household income is merely 73% of what it would be if the relationship had held. The difference has accumulated to corporate profits, as you'll see later.

One reason is that simple full-time jobs, the basic building blocks of a middle class life, are harder to find.

To continue reading:http://money.msn.com/investing/no-recovery-for-the-middle-class?page=0

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Comment by Wolf on August 6, 2013 at 10:10am
For graphs see link.

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