http://money.cnn.com/2008/04/09/news/economy/incomegap/index.htm?postversion=200 8040904

Poor and middle-class families are entering the recession in a precarious situation due in part to declining or stagnant income growth, a study released Wednesday has found.

Incomes, on average, have declined by 2.5% among the bottom fifth of families since the late 1990s, while inching up by just 1.3% for those in the middle fifth of households, according to an analysis by the Center on Budget and Policy Priorities and the Economic Policy Institute, two liberal think tanks.

The wealthiest slice of Americans, however, saw their incomes rise by 9%.

More proof that tax cuts for the wealthy lead to wider income gaps.

http://money.cnn.com/2008/04/09/news/economy/middle_class.ap/index.htm?postversi on=2008040912

Growing numbers of middle-class Americans say they aren't better off than they were five years ago, reflecting economic pressures amid growing debt, a study released Wednesday shows. Their short-term assessment of personal progress, according to the study, is the worst it's been in nearly half a century.
It found that a majority of Americans said they haven't progressed in the last five years. One in four, or 25%, said their economic situation had not improved, while 31% said they had fallen backward. Those numbers together are the highest since the survey question was first asked in 1964. Among the middle class, 54% said they had made no progress (26%) or fallen back (28%).

Middle-class prosperity also lagged compared with richer Americans. From 1983 to 2004, the median net worth of upper-income families - defined as households with annual incomes above 150% of the median - grew by 123%, while the median net worth of middle-income families rose by just 29%.

GOP FISCAL POLICY DOES NOT WORK. I HOPE MIDDLE CLASS VOTERS REMEMBER THIS COME NOVEMBER.

Quick, get me my barf bucket!

I agree, Deane.

Being in the middle class, this administration's policies are enough to make me sick.

I can't afford to eat so no need for a bucket!

Big deal, the people that produce make more.

Anyone spending hours on this forum probably has a lot of room left on their schedule to earn enough money to survive on.

The people that are making more aren't producing more! Their wealth is growing while wages stay about the same, but those without wealth are losing to inflation because their wages are dropping. Long term, this will mean a super wealthy class of people, and then a third world country. I don't want my country to turn into that.

Actually, I agree with you, painful as that is. A strong middle class that is financially sound is the best position for us to be in.

It's fun to blame Bush, and that's about as much depth as some on this forum have, but it's far more complicated than that.

It starts with everyone wanting to buy the cheapest possible which sends our manufacturing off shore. That wipes out the backbone of the American economy, the American worker.

The other issue is over paid executives, and individuals who have gotten rich through mergers and other stock manipulations that have actually not produced anything new.

I'm certainly far from being an economist, but I think I can figure out that if you aren't making things of value, you aren't producing any real wealth.

the median income level is simply the average of everyones incomes, including many who have no income. and of course those over 150% had their net wealth go up, their the ones that usually own their own house, and housing prices have gone up.

as Disreili said there are lies, damed lies and statistics.

the bottom 1/5 are the chronically unemployed or underemployed.

Overpaid execs for sure... I'm all for compensation growing with productivity and responsibility, however I have a real hard time believing that the CEO of a company can be 100-1000 times more productive than an ordinary employee! It's just not possible.

The median is NOT the average of everyone's incomes. The median income is the income in exactly the mid-point of all incomes, where half are below that point, and half are above that point. The median income will rise if there are more on the higher-income half.

"It starts with everyone wanting to buy the cheapest possible..."

One could argue it starts with the company wanting to produce the product as cheaply as possible and sell it at a price which will maximize profits, for the CEO and the stockholders, and that is what leads corporations offshore.

OK, everyone gather up everything made by Coby or Durabrand, procede to the nearest window, preferably as high as you can, and chuck it in protest of foreign made Crapola!

The real cause of this is government changing of the market rules.

This is why we have a struggling middle class. This is why we cannot choose American products.

Of course everybody wants the cheapest. That's how it always is. If we don't check that, we end up with everything made everywhere for the lowest price, meaning we don't make anything here!

When that happens, we lose the middle class as, forums or not, the opportunity to build wealth has been outsourced.

Another thing. The price of something is not a function of it's cost to manufacture. That particular dynamic has to do with profit, namely how much can be realized from the sale of manufactured goods. If those costs are high, profit isn't all that good, or negative.

Innovation is how we normally fix that, but...

When we changed the rules to permit off shore labor, really we allowed more profit for items in exchange for our own ability to build wealth. Instead of innovation, we just sold our middle class! Nice huh?

Well, now that the deep pockets have been filled with our future, payback time is coming.

Really, true growth comes from innovation applied to labor over time. The big business lobby circumvented this, got the rules changed and saw "big growth" and "record profits". They sold us out for their short term bottom line.

This is your "easy lay" right there!

Had all that effort gone into engineering and process improvement, we would see better products, more profit, more niches being filled and more people employed.

We would not have a trade deficit.

Now, folks, you know what happens when we vote for Republicans. Clinton helped this mess along, so it's not all theirs, but most of it is. The whacko economic ideas that got us here are pure anti-New Deal republican.

Here here.

The ball really got rolling during the 80's under the Reagan administration. His corporate tax cuts and tax cuts on the wealthy, under the belief the lower tax burden would spur re-investment, never materialized, and the age of skyrocketing CEO salaries and corporate profits was underway.

I do draw a distinction between "cheapest" and "least expensive."

Almost all electronics are made off shore but its a combination of the labor, power costs, and anti-pollution costs. The fact that the Shrub has encouraged the outsourcing overseas of service jobs by not putting in penalties that has dealt the final blow to the already gone manufacturing business. Electronics, textiles, damn near everything is made somewhere else. Bush's policies
just up to 2004 included:

54. Signing a report endorsing outsourcing with thousands of American workers having their jobs shipped overseas.

55. Instituting steel tariffs deemed illegal by the World Trade Organization – Bush repealed them 20-months later when the European Union pledged to impose retaliatory sanctions on up to $2.2 billion in exports from the United States.

56. Promoting economic policies that failed to create new jobs.

57. Promoting economic policies that failed to help small businesses

58. Pledging a "jobs and growth" package would create 1,836,000 new jobs by the end of 2003 and 5.5 million new jobs by 2004—so far the president has fallen 1,615,000 jobs short of the mark.

59. Running up a foreign deficit of "such record-breaking proportions that it threatens the financial stability of the global economy."

60. Issuing inaccurate budget forecasts accompanying proposals to reduce the deficit, omitting the continued costs of Iraq, Afghanistan and elements of Homeland Security.

61. Claiming his 2003 tax cut would give 23 million small business owners an average tax cut of $2,042 when "nearly four out of every five tax filers (79%) with small business income would receive less" than that amount.

62. Passing tax cuts for the wealthy while falsely claiming "people in the 10 percent bracket" were benefiting most."

63. Passing successive tax cuts largely responsible for turning a projected surplus of $5 trillion into a projected deficit of $4.3 trillion.

64. Moving to strip millions of overtime pay.

65. Not enforcing corporate tax laws.

66. Backing down from a plan to make CEOs more accountable when "the corporate crowd" protested.

67. Not lobbying oil cartels to change their mind about cutting oil production.

68. Passing tax cuts weighted heavily to help the wealthy.

69. Moving to allow greater media consolidation.

70. Nominating a notorious proponent of outsourcing, Anthony F. Raimondo, to be the new manufacturing Czar—Raimondo withdrew his name days later amidst a flurry of harsh criticism.

71. Ignoring calls to extend unemployment benefits with long-term unemployment reaching a twenty-year high

72. Threatening to veto pension legislation that would give companies much needed temporary relief.

Any questions?

There is an upside to this. It's just not a zero sum game.

There are always new niches needing to be filled.

Say we shift the ideological thinking a bit. It could go like this:

We are now in a position where we have most component level manufacturing not being done here. Ok then, so we accept that, and move to process and systems level tech, which can be made here --and is still made here.

The bio-fuel movement is one worthy of this attention, right? So we apply our spirit and desire to innovate to that, lead in alternatives to oil, and see another boom, just as big as the last oil based one was.

This is just a matter of our government serving the people or not. If it's serving us, these kinds of things are going to happen, and a whole lot of money is going to be made.

If it doesn't, well there will still be a lot of money being made, but we will not see anywhere near the benefit of it.

Vote your best interests, and it's all over. Things will change, we will innovate, we will absolutely look back at this and laugh.

I do draw a distinction between "cheapest" and "least expensive."

Yes I do too. There is a balance between making a forum post and a small book. I know I often fail at that, but hey... it's an out right? Anyway, least expensive is likely the better phrase as it embodies the idea of cost of ownership, and that's really key.

Dono: Totally! Looking back at my father, I never knew him to be all that political. The one statement he made, when Reagan was elected was to put his picture on the inside of the toilet.

We were taught about the New Deal and the slant then was against it as being an older time and that now we need to exploit that and "grow". What a fucking lie that was (and is)!

Heh...

I've been growing increasingly worried about these basic things. Mostly because of the kids and their prospects for building nice, middle class lives. It's not going to be easy.

For me personally, I'm scaling down to better manage expectations. Real wealth is freedom to use our time as we see fit. The greater percentage of that time we have, the richer we are.

I want to buy quality stuff. Ideally, I buy it once and use it a long time. Perhaps this is why I continue to look for goods made at specific times when the engineering really was about "less expensive" instead of just cheap ass.

Having gotten started working in manufacturing, it's really hard for me to see it all just go away. Most of what is left here is tied to export restrictions of one kind or another, which limits the outsourcing.

(not that they don't try)

The greater impact of all of this lies in the "spend to solve" culture that is so pervasive today. IMHO, this is totally wrong and harmful to all of us. We all have time --how much we have is a function of our choices clearly, but also our general economic burden. That, of course, is balanced by our ability to build wealth.

If we have a "spend to solve" culture, and no ability to build wealth, we are headed for a dark age, where the nation is going to sink pretty low, then have to rebuild.

That's going to be a PITA. Nobody needs this, nobody wants it, and there is time yet to address it.

When my parents were young, general labor skill rates, per capita, were nice and high. Lots of people could manipulate materials and build basic things. In my gen-x / gen-y generation (1968, so I'm in the middle I think), it was less, but still very solid.

We had shop class, wood class, auto class, etc... Lots of kids took that education and ran with it in their lives.

Today it's horrible! Those general skills are low --very low, with almost none of that kind of basic education happening. What is worse is the stronger civics education, including basic economics, is lacking as well.

Instead, we've a focus on core education (not bad, mind you, but not inclusive enough to counter the spend to solve bit), and job specific "academy" type education that really is forcing kids to differentiate at an early age, and have a more corporate friendly mindset at the same time.

The corporate stuff isn't a bad thing --it's the corporations that are bad. They encourage all of this stuff because literally, "Innovation" is expensive.

(of course it is! why else do we call it work!)

All of that combines to yield a generation or two that is going to have a very hard time of things, leaving the up and coming one, assuming we see some change to empower it, and mine, to pull the slack while they adjust.

Today I was teaching some OSU engineering students about CAD tools, design intent, modeling for manufacturing, etc... These guys are our future. Amazingly, despite all the negatives, they are out there wanting to still just innovate like they always have.

From their perspective, this stuff is interesting. They are there to fix things, improve things and realize new things that we don't have yet.

The idea that we really don't do that here is in their minds, but the implications of it aren't just yet. All of them think it's just a phase, or that they are in a bad location or some other thing. (yeah, they are in the states where we outsource anything we know how to actually do, then we patent and lock up the rest with attorneys)

I was encouraged by that actually. What I see is a fairly constant pool of young people, leaving schools with these kinds of skills. If our political environment is ready to leverage them, they will be leveraged and we grow some.

They are not yet jaded, and that's good as they will just flow toward whatever starts happening.

If not, they re-purpose, become managers of people doing it somewhere else, and we really don't grow then.

Then they become somewhat jaded. We lose then.

We discussed some manufacturing related things today. Design intent, reverse engineering techniques, robust part design, and other bits and pieces. I included some of my manufacturing background in the discussion to put the CAD modeling tasks in perspective and one of them asked, "Why are you not still doing that?"

Answer: It was outsourced, so now I'm doing this, because this can pay a mortgage and manufacturing really can't. There literally is no place for me to work with those skills that could actually pay an amount worth using them.

This used to not be true. Building a good skill set meant moving up and the ability to keep building on it, while dragging up others at the same time.

Now, it's build some up, trash them, build up different ones, trash those, etc....

Many of my peers have done the same kinds of things a similar number of times. It's almost as if we look hard to ship anything we know how to do overseas!

Looking around today, we do what exactly?

We make toilets, government top secret war shit, tell really great stories, do each others laundry, nails, hair and oil changes. That's what we do, and it's just not sustainable in the longer term.

For a very large segment our our needs, it is no longer possible to purchase an American product of any kind. That should be a source of significant worry.

We either must bring those things back. (not bloody likely) Or really pound on some new niches, and create demand for something else. (that's the alternative energy bit I mentioned above. It's a perfect new deal, infrastructure plus strong engineering movement we could use right now)

The key then will be to NOT outsource it, once it's up and running. That cheap and easy exploitation will only bring us back here, and most everybody hates it here right now.

***I'm convinced the only reason "American Standard" privies are still made here is that they are too damn heavy to ship!

Everything else in the bathroom is made in china...

His corporate tax cuts.

Back in the 40's and 50's the corporate tax percentage was 30%+ now it's 7%...... We've given MORE back and they still leave....