Middle-Class Squeeze

June 20th, 2011 at 7:02 pm

I’ve been crunching all day on a paper on the middle-class squeeze.  Here are two figures from the work that tell a lot about the story.

First, there’s the well-known split between the growth in real middle-class family income (here, the median income) and productivity growth.  People used to say: “well, you’d expect family incomes to grow more slowly since productivity growth slowed.”  But the deceleration in median income has been so much greater than the slowdown in productivity.

Sources: Census Bureau and BLS

Clearly, growth has been doing an end run around the middle class for a while.

It’s not, btw, from lack of trying.  This next figure shows the annual hours worked of middle-income families with kids, 1975-2009, with husbands and wives shown separately.  While middle income husbands generally worked full-time, full-year over this period, hours worked in the paid labor market by middle-income wives grew steeply, by over 400 hours.

Since middle-income men’s wages were stagnant and wives’ were rising, this dynamic helped to keep middle-class incomes from falling, but it also gave deepened the challenge of balancing work and family.  (Note large hours losses for both husbands and wives over the great recession.)

I also look at single moms in the paper, and they too work a lot more over this period—clearly as the sole breadwinner, their work/life balance challenge is a lot harder.

More to come on this.

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11 comments in reply to "Middle-Class Squeeze"

  1. Sandwichman says:


    What’s your data source for the second chart? Does it go back earlier than 1975? How do you define middle income?

  2. Ed Zactly says:

    Jared, after forwarding “Middle-Class Squeeze” to a friend, she responded,”Using statistics and quoting information like this, are aspects of a very complex process in order to arrive at anything even remotely accurate. Did Mr. Bernstein factor the rate of inflation and the corresponding devaluation of the dollar into these conclusions/assumptions? Also, historically, women’s wages for performing equivalent work as the men have been typically lower. So, if women’s wages are rising, are they only rising to par, or to less than what men earn? If men’s wages are declining, are women’s wages rising, but still less than what employers might pay a man for the same job? Finally, due to affirmative action, employers are required to hire X percentage of women. When they lay men off replacing with women at at lower wage, is this also factored into the assessment?” Could you respond, please?

    • Michael says:

      The only reason any economist would not include inflation in a discussion (unless discussing nominal issues specifically) is if they are trying to deceive. That’s actually one of the easy flags for discerning if someone is lying to you about policy; if they are remotely economically educated and using nominal data, they are attempting to deceive.

      Anyways, what is being referred to is “real” wages, which are wages that have been adjusted for inflation. “Nominal” is the adjective for items unadjusted for inflation.

  3. general c. san desist says:

    …before women entered the market for jobs, America was a much different place. I remember those days. It was such a pleasure to have mom waiting for the me & my sisters at home, ready to nurture. There was no neighborhood crime to speak of, period. Nowadays, not so much…moms don’t have time for the family without heaping stress upon themselves & their surroundings, should they choose to offer their services for employment.

    I’m not against women in the market place since single women & divorcees are in need of financial assistance. The reason families were provided for traditionally in divorce proceedings was just for that simple reason. When married women or single moms ply their trade…the statistics in crime do not look back, wages become depressed & the sexes are put against each other. Very good for business, very bad for nation.

    Did you catch Bob Schieffer’s comment on school teachers as women analysis…wrong premise but arrived at the right conclusion (the need for higher pay)…go figure. He says women became teachers due to no other takers at that wage level. I beg to differ, children are taught by nurturers. Men have a whole other agenda in nature’s calling…it’s in our jeans/genes.

    In reality, it is the soap operas that should be blamed & condemned. Fellas, have you ever scene what our ladies are exposed to? There is no cure, just inoculations. I’m gonna catch heck for my comments, but someone has to speak truth to power…sorry gals, forgive me.

    • Michael says:

      Let’s take the kernel of truth out of this and leave behind the sexist relegation of women’s ambitions and needs.

      How closely does all of this track the labor force participation rate, which of course increased as women have been allowed into the labor force? For example, one of the main causes of salary inflation in the educational sector was opportunities for smart women elsewhere…

      • general c. san desist says:

        …seems one must allow a designation as to a problem when statistics reveal no other culprit. As mothers, not women per se, increased in the work force so too did crime in the juvenile arena. The path to adult imprisonment is a short walk from there. At what cost are we willing to continue such an arrangement? This is reality everyday.

        Should the gov offer a salary for one parent to stay home & tend to the kids, probably, but it will not happen in my lifetime. Would the payoff in lower crime be worth it…you decide. We just can’t continue having both parents in the workplace…what kind of example does that set?

        I am my father’s father. This relationship in men will never change. Men are from Mars, remember?

  4. general c. san desist says:

    …afterthought…single income households are the American dream foundation. Is that possible today…nah! Whether it is men or women earners, I could give a leap. But only one per family should be dwelling the cubicle. Bad manners, rudeness & criminal behavior follow the footsteps of an unsupervised child from which society is the victim.

    From the looks of our present environment, case closed. Even politics has lost it’s civility…care to venture a reason why? It is quite true that kids before the ’80’s spoke only when spoken to at the dinner table…now, good luck with that.

    My mother was university educated and proud to be a housewife. She felt when a person spoke, they should be prepared & knowledgeable. It had nothing to do with preparing for a job or career. She also reveled in the free time afforded the domestic engineer…good work, if you can get it.

  5. Virgil Bierschwale says:

    I think the IRS Databook numbers might surprise you.

    Here is a good starting point