Boosting the Middle Class May Be an Elusive Goal

Friday, 15 Feb 2013 09:29 AM

By John Morgan

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Economic growth alone may no longer be enough to help the middle class, according to The Washington Post.

The evidence is that in the past three recession recoveries, the resurgence of growth has not produced nearly the job and income gains that previous generations of American workers enjoyed.

“The consequences of this breakdown are only now dawning on many economists and have not gained widespread attention among policymakers in Washington,” The Post stated. “Many lawmakers have yet to even acknowledge the problem.”

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

Moreover, there is no apparent agreement on why the link between economic growth and job creation is frayed, The Post said.

Middle-class income growth in particular has been affected by the trend. In recent recoveries from 1992 to 1994, and again from 2002 to 2004, real median household incomes dropped, even though the economy grew more than 6 percent in both cases. Likewise from 2009 to 2011, the economy grew more than 4 percent, but real median incomes only grew by 0.5 percent.

In contrast, from 1982 to 1984, the economy grew approximately 11 percent and real median incomes jumped by 5 percent.

Robert Shapiro, an economic advisor during the Clinton administration, blamed the change on increased global competition.

“It makes it hard for firms to pass along their cost increases — for healthcare, energy and so on — in higher prices,” he told The Post. “So instead they cut other costs, starting with jobs and wages.”

Shapiro said the best way to renew job growth is to help businesses cut the costs of hiring, such as reducing payroll taxes and being aggressive in curbing healthcare cost increases.

David Frum, a White House advisor during the administration of President George W. Bush and a journalist, said the prescription for the ailing middle class is also a social and cultural one. He said strengthening the institution of marriage would help.

“Marriage means two incomes at a time when most Americans find two incomes essential to earning a middle-class livelihood,” he wrote in an article for CNN.

“Marriage means more asset accumulation: Married families save more at every income level.”

In his State of the Union speech, President Obama called for raising the federal minimum wage from $7.25 an hour to $9 as a means to help lower-income Americans climb a ladder to the middle class.

But House Speaker John Boehner, R-Ohio, said he was against that idea, the Los Angeles Times reported.

“When you raise the price of employment, guess what happens? You get less of it,” Boehner said. “At a time when the American people are still asking the question, ‘Where are the jobs?,’ why would we want to make it harder for small employers to hire people?”

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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