NYT: What’s Really Squeezing the Middle Class?

http://www.nytimes.com/2007/04/25/business/25leonhardt.html?_r=1&oref=slogin

Economix
What’s Really Squeezing the Middle Class?

By DAVID LEONHARDT
Published: April 25, 2007

There are two different stories people tend to tell when they’re trying to explain why the middle class is feeling squeezed.

The first one is about inequality. The top 0.1 percent of earners — that’s one taxpayer out of every 1,000 — now brings in 11 percent of the nation’s total income, triple the share that they did just a generation ago. This has happened because the rich have grown ever richer, while the pay of rank-and-file workers hasn’t risen much faster than inflation.



The second, related story is about instability. Layoffs seem to happen more frequently than they once did, and these job losses — combined with the spread of bonus pay — have caused workers’ incomes to bounce around a lot more than in the past. So not only have middle-class families been getting meager raises, their finances have also become more volatile.

The story about inequality is indisputably true. But we’re starting to learn that the second story, the one about instability, is more complicated. It may even end up being wrong.

There is now a big push in both Washington and state capitals to come up with policies that can alleviate middle-class anxiety. That’s all for the good. In fact, it is overdue. If it’s going to succeed, however, it will have to focus on the actual causes of the squeeze.

Last week, the Congressional Budget Office released a study that was arguably the fullest picture of economic volatility anyone has yet put together. Although some academics have taken a crack at the topic in recent years, they have had to rely on surveys in which people are asked how much money they make. The study by the C.B.O., as the budget office is known, used Social Security Administration records, which cover many more people than the surveys and are more reliable.

FULL story at link.

haven't seen a bonus in years.

is when I was going to be laid off...we were given retention bonuses throughout the year so that we'd stay...this was in 1996.

is when I was going to be laid off...we were given retention bonuses throughout the year so that we'd stay...this was in 1996.

Even in cases where families actually made more, the increasing income fluctuations and the risk they assume in finances made them feel less well off.

In addition to stagnant earnings, working families are being required to shoulder more economic risks than before.

How about one answer: mine. I used to worry about being laid off a lot before I finally was let go from the good-paying corporate job I had. Now I have no worries about being laid off, but of course, I'm in a low-level job in healthcare making $12 a hour.

I wonder how many other formerly middle-class types have similar stories that have skewed these bizarre results.