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Are We Better Off? The Numbers Say No

Sep 06, 2012

This is an excerpt from Executive Insight Briefing, produced every Thursday by the National Journal’s Daily Briefings Team.

The middle class in America today is not better off than it was four years ago, not better off than it was at the end of the Great Recession in 2009, not even better off than when President Clinton left office in 2001.

This is the truth that Democrats confronted as they anchored their national convention theme in Charlotte on vows of support for American workers: The middle class has been declining for more than a decade, including through the Obama recovery.

Inflation-adjusted median income fell by 2.3 percent in 2010 (the last year for which official statistics are available) and dipped below $50,000 per year for the first time since 1996, the Census Bureau reports. Real median weekly wages last quarter were lower than at the same time in 2002—and down 1.5 percent from the second quarter of 2010.

In the past decade, the middle class has endured a real-estate bust that wiped out two-fifths of median household wealth; seen millions of traditional middle-class jobs vanish as the nation hemorrhaged “middle-skill” manufacturing and service work that does not require advanced training; and watched as the income gains from expanded foreign trade and increased labor productivity accrued largely to a small group of Americans at the top of the income distribution.

Nearly all those trends continued after the Great Recession, even though President Obama cut taxes and offered new deductions and credits for middle-class families, among other legislative and rhetorical initiatives aimed at reversing the middle-class decline.

Since 2000, the Pew Research Center reported recently, “the middle class has shrunk in size, fallen backward in income and wealth, and shed some—but by no means all—of its characteristic faith in the future.”

Perhaps the only good news for Obama is that voters don’t seem to fault him for their woes: When Pew asked middle-class voters who believe they’re worse off than a decade ago whom they blame, the president finished sixth—behind Congress, banks, large corporations, the George W. Bush administration, and foreign competition. About a third of respondents said they blamed Obama “a lot” for their situation.

Obama’s campaign says that the president has helped the middle class, citing 4.5 million jobs created since the recession ended and the benefits of the Affordable Care Act. Campaign officials also cite an estimate by Sentier Research that real median household income has grown 3 percent since last August, and Federal Reserve Board data showing that household wealth is up 23 percent since 2008.

Still, the overall results pale when compared with what Obama promised when he made a flourishing middle class a cornerstone of his initial economic agenda.

Shortly after he took office, Obama created a Middle Class Task Force, chaired by Vice President Joe Biden, and declared, “The strength of our economy can be measured by the strength of our middle class.”

The task force issued what would be its only annual report in February 2010; in the introduction, Biden reminded Obama, “You have consistently stressed that we will be, and should be, judged by the extent to which our agenda lifts the living standards of hardworking, middle-class Americans.” —Jim Tankersley

Obama’s reelection campaign is built around that promise—of an agenda lifting the middle class from a prolonged slump—and the hope that voters won’t judge too harshly the results so far.

Read the complete September 6, 2012 edition of Executive Insight Briefing.

 
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