A "lost generation" for the American middle class

The new census numbers are out, and include some surprising, sobering facts. Poverty remains unchanged; incomes are still still flat. A staggering 15% of Americans live under the Federal Poverty Line. The fact that this number stopped increasing like in previous years should not mask the fact that it is still appallingly high.

The number that really should worry us, however, is median household income. Or to be more precise, this graph:

Source: Census Bureau

Median household income in the United States of America is lower than at any point since 1989. That is, the median American family had a higher income 24 years ago ($51,681) that in 2012 ($51,017). Even taking into account the fact that adjusting for inflation for long time periods is tricky, these numbers are truly disappointing.  The country has created a staggering amount of wealth for the past two decades (the economy is 75% larger today as it was in the late eighties; GDP per capita is 40% higher), but the middle class has barely seen any of it.

Where did the money go? Mostly to those at the top of the income distribution, with those at the very top reaping most of the bounty. The top 1% households earned 20% of the total income generated by the US economy, an unprecedented sum. Middle class wages have stagnated for the past 24 years; those at the very top are making more money than ever before. We have a whole generation of American middle class families that had not seen any progress whatsoever in their standard of living for more than a decade, and the great recession has moved them back to where they were 24 years ago.

The US as a whole generates more wealth today than ever before. Most of us, however, are not seeing this wealth.

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