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Tuesday, July 31, 2012

The Agenda: Your Responses on the State of the Middle Class


The next major step in our story on the plight of the American economy - part of The Times's Agenda series - is to examine the causes. As I noted in the initial post, median family income in this country is lower today than 12 years ago, a stretch unlike any other since the 1930s.

On the most basic level, the causes are a slowdown in economic growth and an increase in income inequality: the pie is growing more slowly, and a large share of the gains is going to a small portion of the population. But that statement is as much an accounting statement as anything else. It doesn't explain the forces driving the changes.

More than 700 comments have been posted on that post, and many of these addressed underlying causes. Below, we are excerpting a selection of those comments, because we assume that most readers did not have time to read hundreds of them.

I am also using the responses to help me write a survey I'm send ing to a range of economists asking them to discuss what they see as the most important causes. Some may rank causes or put them in different buckets of importance. Others may use the survey as inspiration to write a few paragraphs laying out their views.

In coming days and weeks, we'll be posting the survey itself and then the economists' responses. Other Times writers will also be posting items on these issues. And we welcome continued reader feedback at every step.

Here is a sampling of those reader comments:

“Most of the income gains seen in my lifetime have been created by families going on afterburners - sending the other adult out to work. Now, we are seeing families going backwards, but that may be a good thing. But we will need to learn to get by on less, especially if competition by foreign workers accelerates.” â€" jstewart58

“Interesting that this appears on the same page as the article about Caterpillar. Is it really necessary for them to freeze wages when they are making record profits? You can bet that the upper echelon of company officers will not have frozen wages. There are many hard issues that contribute to the problem, global wage competition, automation, poor education, but these are exacerbated by actions taken by companies like Caterpillar.” â€" Oh Please

“Population growth in the USA as well as in Europe has slowed considerably. One of the options is to liberalize immigration, which will attract talented people as well as wealthy people from other countries. This will result in economic growth by the new immigrants spending money by opening new businesses and improving employment prospects for locals.” â€" VGM

“I have a theory the middle class aren't making more because the Government is taking more. Publish that chart and prove me wrong.” â€" Richard

“People working in manufacturing industries that lacked strong unions were always poorly compensated. It's just that now there are very few industries that are unionized and the pressure to compensate employees has declined across the board.” â€" Ross Williams

“Shouldn't you use an income number that captures the value of benefits received by Households? With health care costs increasing at a much faster rate than inflation, health care (and health insurance), is eating up wage/income gains … Employees need to understand that money spent on them - whether wages or benefits - is fungible from the standpoint of the employer. Ignoring these in-kind benefits overstates the share of income that goes to the top and understates the amount that goes to everyone else.” â€" Joel Pond

“Since WWII, the idea that one is solely responsible for their own success has widely taken root and the generations since have increasingly failed to acknowledge that success is the product of both individual initiative/hard work AND opportunity. The first generation that had the privilege of combining hard work with unprecedented levels of opportunity was the baby boomers and, speaking very generally, they seemed to forget the opportunity component as they rose through the professional ranks of business and government. This explains policies that reward the haves while eroding the opportunity (education, health care, higher minimum wages, pensions) that allows have-nots to use their individual initiative to pull themselves out of the lower classes.” â€" Dan

“I would like to know what happened in the Clinton years (and before) that led to the rise in income as well as the surplus at the federal level in those years, and why that is, or isn't, possible now.”â€" mennenster

“The uncomfortable truth is that America's economy has progressed beyond blue collar jobs and is now a service economy. Our biggest export is knowledge (in the form of technology, patents, business, etc), and is no longer ‘stuff.' So it is slightly misguided to blame manufacturing companies that don't pay workers higher wages, because these companies are no longer in industries where their workers can demand a premium.”â€" Austin

“Tax cuts for the rich have turbocharged inequality, beginning with Reagan and culminating with Bush II. To afford these tax cuts, we've cut everything else that helps the middle class, especially really great public schools.”â€" Carol