A lot of political discussion over the last few months/years has been centered on the middle class–specifically how growing inequality has been rough, and the middle class has been “Hollowed Out“.
The Financial Times has a nice graph that shows just how true this is.
Back in 1971, the income distribution looked almost like a bell-curve, centered around 40k (in today’s dollars). Now it definitely doesn’t–there’s a lot more spread. BUT…. If you look closely, you’ll notice that nobody got poorer, it’s just that a lot of people got richer.
We can have a debate over whether or not this is a good thing, but it’s important to remember that when we talk about the “hollowing out” of the middle class, we’re talking more or less entirely about people getting richer.
H/T to Scott Summers, http://www.themoneyillusion.com/?p=31611
One thought on “Something Happened To the Middle Class–They got Rich”
Thanks for this post. The debate is indeed about income stagnation for the bottom and middle, and an explosion at the top. The left tend to see this as bad, the right that it is not much of a problem, since its all down to market forces which shouldn’t be interfered with. Those wanting greater social justice would emphasise that the rise of high paid jobs in financial services and the huge increase in CEO pay explain much of the rise at the top. If these two factors have come about and are sustained by the huge rise in private sector debt, the framework of company law, and rent-seeking rather than simply the free market on its own, then the case and the solution are as much political as economic. It is certainly an interesting issue to look at.