Tuesday, June 14, 2011

Middle Class Fading Away

During a normal boom/bust economic cycle during the 20th century (America's century) American worker's share of national income fell during economic contractions (firings, wage reductions) and grew during economic expansions (hirings, wage increases).

This process makes sense.  Something changed, however, beginning in 2000.  As the chart below shows, after the 2000 economic peak and recession American worker's share of the national income began to fall, but it never recovered.

This simple chart shows that the recovery was based on artificial asset price inflation in both housing and stocks, not an increase in the true economic growth of the nation.

This process continues today while stock prices rise padding the portfolio of the nation's haves, the working class and poor continue to be left further and further behind.

If you are wondering how this story has ended historically, the answer is not well, and many times it is with both anger and violence.