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THE Middle Class Thread (merged)

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Re: Middle Class Families in Worse Shape Than Ever, Study Fi

Unread postby AgentR » Sun 22 Oct 2006, 19:55:37

$this->bbcode_second_pass_quote('mmasters', 'C')an you imagine though given a serious depression in the coming years the top 1% could come to own 90% along with the top 10% owning 99% !


That ought to tell you which side of the scale you need to be on. America is still lively enough to get you there if you want it enough. The question is, can you stand to make $70k a year and live in a $300 / month apartment with fuzzy TV..
Yes, we are. As we are.
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Re: Middle Class Families in Worse Shape Than Ever, Study Fi

Unread postby mmasters » Sun 22 Oct 2006, 22:17:44

$this->bbcode_second_pass_quote('AgentR', '')$this->bbcode_second_pass_quote('mmasters', 'C')an you imagine though given a serious depression in the coming years the top 1% could come to own 90% along with the top 10% owning 99% !


That ought to tell you which side of the scale you need to be on. America is still lively enough to get you there if you want it enough. The question is, can you stand to make $70k a year and live in a $300 / month apartment with fuzzy TV..

Definitely. It's a few years within my grasp done right. I'm currently in the top 1% salary range for my age group and debt free. I need to take it up a notch or two.
Last edited by mmasters on Sun 22 Oct 2006, 22:25:06, edited 1 time in total.
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Re: Middle Class Families in Worse Shape Than Ever, Study Fi

Unread postby Vexed » Sun 22 Oct 2006, 22:23:18

$this->bbcode_second_pass_quote('AgentR', '')$this->bbcode_second_pass_quote('mmasters', 'C')an you imagine though given a serious depression in the coming years the top 1% could come to own 90% along with the top 10% owning 99% !


That ought to tell you which side of the scale you need to be on. America is still lively enough to get you there if you want it enough. The question is, can you stand to make $70k a year and live in a $300 / month apartment with fuzzy TV..


Bingo!

And sad.
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Re: Middle Class Families in Worse Shape Than Ever, Study Fi

Unread postby AgentR » Sun 22 Oct 2006, 22:35:23

$this->bbcode_second_pass_quote('Vexed', '')$this->bbcode_second_pass_quote('', 'T')hat ought to tell you which side of the scale you need to be on. America is still lively enough to get you there if you want it enough. The question is, can you stand to make $70k a year and live in a $300 / month apartment with fuzzy TV..

Bingo!
And sad.


Why said? America lets people choose their paths as they see fit. Some want to live for the here and now, some want to leave life with neither debt nor asset, some want to leave substantial assets in the control of their children. Some are positioned to where the object is to take the reins of an existing set of assets, then improve and expand them to hand on to the next generation.

Pick the path that suits you best, and run with it. No apologies necessary for anyone.
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Re: Middle Class Families in Worse Shape Than Ever, Study Fi

Unread postby Vexed » Sun 22 Oct 2006, 22:57:09

$this->bbcode_second_pass_quote('Denny', 'V')exed, I think you are on the right track there. I think for a couple, without children, you keep a lot of flexiblility by not owning a residence. Your only downside risk is being outside the loop as real estate rises in value.


Depends on where you think real estate is going. In our area, down is the only direction for the next couple of years.

$this->bbcode_second_pass_quote('', 'M')aking interest, instead of paying it, is smart. Not to brag, but that is the same philosophy my wife and I used in our first couple of years.


I agree. Making interest is like free money. It is free money. Its a wierd feeling.

$this->bbcode_second_pass_quote('', 'M')y wife drove a 13 year old car that I learned to repair, often, but not always that well. We used a wringer washing machine, and had no VCR or even a dishwasher for those years while we had the mortgage. Mind you back then, a VCR cost about $500, like about $1,000 today. And, I would not change it for the world. It was an adventure, and gave me a sense of accomplishment to follow this path.


Absolutely with you. I remember watching the gun battles that took place in the apartment complex outside our back window - my wife and I of course ducking behind the couch (which we had "rescued" off a street corner previously).

These days we still utter some of the curse words we heard those gangsters shout. They were very inventive folks who gave us much incentive to move up in the world.

$this->bbcode_second_pass_quote('', 'I') was also blessed with a wife who had good common sense and few materialistic ambitions.


We are lucky men.

$this->bbcode_second_pass_quote('', 'T')wo years later, I saved up enough to do a cash deal on a larger four bedroom home. So, we have lived mortgage free for about 22 years now.

Our goal is to one day build the home we want. A McMansion isn't going to cut it. I just can't plop down $800,000 for a house I know I could build with my own hands for $200,000.

$this->bbcode_second_pass_quote('', 'A')nd, in addition to a free and clear home, I have enough retirement savings to earn about $30K a year, right now, if I parked the savings in a mix of income trusts.

It's always good to hear from someone who is actually capable of retiring comfortably these days. All I ever hear anymore is how the boomers are going to all work till they're dead.
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Re: Middle Class Families in Worse Shape Than Ever, Study Fi

Unread postby Vexed » Mon 23 Oct 2006, 00:02:54

AgentRepublican wrote:
$this->bbcode_second_pass_quote('', 'W')hy sad? America lets people choose their paths as they see fit.....


AgentGuiltyLiberal responds:
$this->bbcode_second_pass_quote('', '
')Cause I know what Americans are doing to the rest of the world in order to get what they want.

I know the giant I am riding, we are all riding, is ruthless.

And I know that however I look at it, I am a part of it.

You can only extract yourself with self-delusion.
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Re: Middle Class Families in Worse Shape Than Ever, Study Fi

Unread postby thuja » Mon 23 Oct 2006, 01:26:12

$this->bbcode_second_pass_quote('Vexed', 'I')
How about a different example. My numbers.

Mortgage+insurance/taxes= We rent / 800$ month

-one day my wife and I will build the home we want.

Utilities= 50$

Food= 400$

Car payment= 0$

-we don't buy cars unless we can pay cash

School debt= 150$

Daycare= 0$

-We will have kids when we have time for them, and something
to teach them worth learning. Right now we are focusing on
developing ourselves. Skills. Talents. Achieving goals.

Retirement= 0$

-Whatever we have left at the end of each month goes into
savings.

Gas for car= 200-500$

-Depends on which of our cars we drive :) I love my new sports
car but its a gas guzzler.

Miscellaneous= 500$

-The family you are talking about, if they are average Americans,
probably spend most of their Misc. cash paying credit card
interest. My wife and I have never had credit cards. We fear
them. When we first met both of us could name more thrift store
chains than department store chains.

Total= 2100-2400 per month$

By putting ourselves in a position where we are only spending $1200 per person per month, we have watched our savings and investments grow substantially.

I am not saying: "I got mine."

I am saying my wife and I spent a lot of time thinking about what we wanted and the best way to get there. We knew there would be periods where we would work 15 hour days and eat Ramen. We knew our path would be a lot harder if we buried ourselves in a huge mortgage, or had kids right off the bat.

Now, because of our planning, we have much more control of our lives. This does not mean that I look down on folks experiencing tough times. I have argued both side of this issue, and I do believe "the system" has a great deal to do with the decay of the middle class dream. My grandfather raised 5 kids solely on his paycheck, and they lacked nothing essential.

But the example you give Thuja is a bit different in my head.

It reminds me of too many folks I know personally who really haven't taken any responsibility for their actions of late. I have never felt the world owed me anything. Many folks I know, do. They don't have a clue how blessed they are.

I have friends who have bought homes they couldn't afford because they were competing with peers.

I have friends who have decided to have kids before they were anywhere close to being able to financially support them.

They really feel they deserve to have things work out for them. I hope things do work out for them.

But, in the cases when I have watched things go sour, they almost always seem to find someone or something else to blame. They never look in the mirror. Because if they were looking in the mirror, and being honest with themselves, they would have to face the truth.

This is the world we live in. Prepare for it.


Hey Vexed sounds like you have done some good financial planning. Yes- without kids the world is your oyster. You can survive and put away a fair bit of money if both partners are working average wage jobs (35k a year). In your example- 2400$= about 3000/month pre tax or about 36 k a year.

That means one of you could work a normal job, hopefully with medical benefits while the other puts aside money for savings, retirement or downpayment.

The problem is having kids. Things get much more complicated. You have to choose to either

1- have one partner stay at home full time- thus losing the extra wages.

2- Have the partner work and pay for additional transportation costs and daycare.

3- Or do a combination of 1 and 2.

There is a further complication because if you have two or more kids most people want to move up to a three bedroom house. This costs more money for rent or mortgage.

So, as I have said before, it ain't like it used to be. So...if you want to have kids, go in with eyes wide open and with a strong mind for budgeting and reducing expenses. Otherwise you will end up like most of the middle class, stresses, falling behind and in massive debt.
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Middle class Americans losing homes/jobs, sleeping in cars

Unread postby Caine » Fri 16 May 2008, 23:29:35

Middle class Americans losing homes/jobs, sleeping in cars

video link

Cars are the very last thing most Americans will ever give up. Can only pry the steering wheel from their cold, dead hands. Maybe the women in that video could afford an apartment if they would just sell or give back their cars, move closer to work, and buy bicycles. :roll:

*edit* Ooops. I just noticed there is already a topic about this here. :oops:
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The Coming Collapse of the Middle Class

Unread postby Bongoman » Mon 26 May 2008, 17:21:38

http://youtube.com/watch?v=akVL7QY0S8A
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Re: The Coming Collapse of the Middle Class

Unread postby oswald622 » Tue 27 May 2008, 13:46:08

thanks, that was a great vid.
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How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby Sixstrings » Thu 25 Mar 2010, 05:12:49

Some illuminating charts from a mybudget360.com article (I'm having problems getting the url to paste for some reason, but the url on the first chart links to the entire article):

$this->bbcode_second_pass_quote('', '[')img]http://www.mybudget360.com/wp-content/uploads/2010/03/manufacturing.png[/img]
http://www.mybudget360.com/how-the-midd ... atrick.net


Ok, here you can see the rise and fall of American manufacturing, from the Great Depression until today. Note that in total manufacturing jobs, right now in 2010 we've collapsed down to what looks like 1942 levels. And that's not even on a percentage basis, so it's even more stunning when you consider we've added 180 million people since 1942.

In short, this chart shows the rise and fall of US manufacturing.

In the next chart another data point is added, showing the growth of the real estate and financial sectors:

$this->bbcode_second_pass_quote('', '[')img]http://www.mybudget360.com/wp-content/uploads/2010/03/fire-and-manufacturing.png[/img]


As you can see, over the course of sixty odd years the financial and real estate sectors replaced manufacturing as the primary engine of the economy. Note the gap between financial and real estate jobs vs. manufacturing. In around 1939 there's an 8 million job difference, and today we have a 2 million job difference. What that means is that we have 4 times as many people in finance and real estate vs. manufacturing, as compared to 1939 division of labor.

Now one could argue that finance and real estate pays pretty well, but both sectors require infinite debt growth. This is a far more unstable foundation for an economy than manufacturing, because in terms of GDP growth you get diminishing returns at the upper reaches of compounding debt.

Some quotes from the article itself:

$this->bbcode_second_pass_quote('', 'A')s the manufacturing base slowly drifted away starting in the late 1970s the financial and real estate part of the employment equation exploded. With massive amounts of deregulation, capital flowed to any industry regardless of the long-term implications to the U.S. We are seeing some of those longer term trends now hitting us. At this point, it is like reversing the Queen Mary in the middle of the ocean.

Many multi-national companies are doing well in this recession even though we have an underemployment rate of 20%.

If you would have asked someone if you could envision a 70 percent stock market rally while 20% of Americans were unemployed or underemployed people would have laughed. But that is the new structure we currently have with the corporatacracy running the system especially when it comes to financial reform.


And finally one more chart illustrating the compounding debt bomb we have in this country, and why the middle class can no longer utilize debt as de facto wages:

$this->bbcode_second_pass_quote('', 'T')he middle class today has it very different from the same family in the 1950s. Back then, one blue collar income was enough for the purchase of a modest house, a car, and a bit of money for savings without going into massive amounts of debt. That is no longer the case. Even though in the last year debt loads have fallen (because of bankruptcy and millions of foreclosures) American households are still highly over leveraged with debt:

Image

Here is some stunning data for comparison:

1953 Household Debt (mortgages, auto loans, etc): $106 billion
1953 GDP: $379 billion
2010 Household Debt: $13.5 trillion
2009 GDP: $13.1 trillion
*Real US GDP (2000 Constant Dollars)

So we went from household debt being 27 percent of GDP to where we are today where household debt is nearly 100 percent of GDP. This is clearly unsupportable and as the chart above shows, we can expect more deleveraging in the years to come. As Stein’s Law will have it “if something cannot go on forever, it will stop.”


Look at the curve on that consumer debt growth chart.. it's almost perfectly parabolic, and breaks right where you'd guess it mathematically has to. But of course the bigger problem isn't even consumer debt but the public debt. As credit runs dry, the consumer will have to go without, but the federal government can't function without greater and greater amounts of debt.

So, my Joesixpack armchair economist guess is that it is impossible for us to ever get the consumer debt bandwagon going again unless we have either a massive monetary deflation or debt-erasing hyperinflation. And that's a real problem for a society that has supplanted wages with debt, while at the same time destroying its manufacturing foundation.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby TreeFarmer » Thu 25 Mar 2010, 07:45:38

When people make these posts about manufacturing they never make a distinction between Manufacturing and Manufacturing Jobs. The US is still a world superpower when it comes to manufacturing, we just do it with more machinery, not with people. Machines have replaced a lot of people in the US. How? As machine technology increased, and thus productivity per $ spent on machines increased causing the cost of using a machine to decrease, the cost of labor continued to rise. As a result, machines have steadily replaced people in the US.

The reason we did not grow manufacturing jobs is because our labor is expensive and at the low end (which is where we would be adding jobs) we can't compete with Mexico and China.

TF
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby dsula » Thu 25 Mar 2010, 08:23:03

$this->bbcode_second_pass_quote('TreeFarmer', 'W')hen people make these posts about manufacturing they never make a distinction between Manufacturing and Manufacturing Jobs. The US is still a world superpower when it comes to manufacturing, we just do it with more machinery, not with people. Machines have replaced a lot of people in the US. How? As machine technology increased, and thus productivity per $ spent on machines increased causing the cost of using a machine to decrease, the cost of labor continued to rise. As a result, machines have steadily replaced people in the US.

The reason we did not grow manufacturing jobs is because our labor is expensive and at the low end (which is where we would be adding jobs) we can't compete with Mexico and China.

TF

An injection mold automata spits out plastic crap without the help of any worker. So why is it all 'made in china' then, if labour cost is insignificant compared to captial investment?
Germany is a manufacturing and export power house, even with sky high labour costs. Why? US workers are not too expensive. But the US got lazy and cheap and fat. Lack of invovation, lack of small business who are proud of what they do, all just want the big bucks and want it now.
A beautiful example: The German stuffed animal manufacturer 'Steiff' pulled all manufacturing out of china and back to Germany because of lack of quality and lack of consistency. Steiff is top notch quality in stuffed animals.
On the other side I just visited a local company here "vermont teddy bears". To my shocking most manufacturng building were stocked with boxes 'made in china'. Where are the machines I asked? Well, they are in china now.
While other nations thrieve in offering top notch specialized goods taking advantage of their know-how, education and tradition. The US keeps on sending even the sad rest of their manufacturing to china, all in the name of 'cheap' 'cheaper' and 'cheapest'.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby shortonsense » Thu 25 Mar 2010, 08:58:52

$this->bbcode_second_pass_quote('Sixstrings', '
')So, my Joesixpack armchair economist guess is that it is impossible for us to ever get the consumer debt bandwagon going again unless we have either a massive monetary deflation or debt-erasing hyperinflation. And that's a real problem for a society that has supplanted wages with debt, while at the same time destroying its manufacturing foundation.


Well...I like the graphs...but I'm not sure if making the assumption that only nonfarm manufacturing jobs declining automatically equates with an evaporating middle class. I'm sure that a $40G/year manufacturing job is good....but a $40G/year service/retail/real estate job is just as good.

Certainly manufacturing jobs have left the country over the past few decades, and for well known reasons, and if they had stayed in this country but the union workers had taken the same wages to bolt wheels on cars that some guy in Mexico finds acceptable, the value of those jobs to the economy as a whole would have evaporated as well, so does it even matter?

As far as the debt and stuff, I'm betting your "almost parabolic" runs hand in hand with home ownership and mortgage values, so of course as homes got bigger and more expensive in real terms, the debt load would corresponding increase as well. If people would just stop buying the silly things with a mortgage, the downswing could be just as interesting as the upswing was.

My opinion is that mixed in here is something even trickier, which is the growth of 2 income households disguising an overall real drop in standards of living, to a large extent triggered because of increasing college education and health care costs. Which then brings up the question of, if everyone is out making money to buy those more expensive houses and such, who the hell is raising the kids to be reasonable citizens versus what we appear to be getting instead.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby dinopello » Thu 25 Mar 2010, 09:09:41

I didn't see any mention of the rise of IT workers. Back in the 70's there were practically no software developers, network and database administrators, etc.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby mcgowanjm » Thu 25 Mar 2010, 10:14:24

I can tell you exactly how. The Bottom 90% were given no
raises with concurrent inflation.

The Bottom 90% were not able to take advantage of Interest rate rise to 14% in 1981.

The Bottom 90% were given pensions, 401K's, and loans in lieu of raises from then on.

All to be /are being defaulted on now. As the only thing of worth
they now own, their home and it's mortgage is being financially forced underwater. And no bailout for them.

bush43 wipes his hands on the shirt of a POTUS.

Imagine what bush43 and his Top 50 000 think of you.

Slaves.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby Plantagenet » Thu 25 Mar 2010, 16:22:35

Thank you, sixstrings, for all the work you did writing your informative post.

Its all about profit.

The stagnation in manufacturing of the last 30 years occurred because American workers were undercut by cheap foreign labor.

The same factory work American's used to do is now done more cheaply by Mexicans, Vietnamese, Chinese, Peruvians, etc. etc.

There is still a lot of high tech manufacturing at high wages that could be done in the US, but high taxes and burdensome government regulations make even that kind of work more profitiable if done overseas.

Peak Oil should make shipping more expensive, but nuclear powered ships using the new small modular nuclear plants might actually result in even cheaper shipping in the future.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby mos6507 » Thu 25 Mar 2010, 18:21:48

$this->bbcode_second_pass_quote('', '
')There is still a lot of high tech manufacturing at high wages that could be done in the US, but high taxes and burdensome government regulations make even that kind of work more profitiable if done overseas.


You make it sound like those regulations are useless. Do you realize how polluting it is to make ICs? I know of one superfund site (the old MOS technologies facility, from which my handle originates). Part of externalizing costs is offshoring our pollution, which is nothing to be proud of.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby Sixstrings » Thu 25 Mar 2010, 20:00:19

$this->bbcode_second_pass_quote('Plantagenet', 'T')hank you, sixstrings, for all the work you did writing your informative post.


Well, I didn't really do any work remember the charts are from a lengthy article on mybudget360.com. I think I did pretty good with some of my own analysis though, so I'll take your compliment anyway. :) We live in fascinating times, which in the end may ultimately compare to the hyperinflationary chaos of Weimar Germany.

By the way, I just realized these mybduget360.com articles have no author byline. Looking back at the archives, it's one great article after another and lots of charts. I have no reason to not trust their data, but I have to wonder who's writing all these articles (maybe it's like Zerohedge, where the author wants to keep his anonymity).

Here's another great chart from one of his articles:

$this->bbcode_second_pass_quote('', '[')img]http://www.mybudget360.com/wp-content/uploads/2008/12/incomedistribution.png[/img]
$46,000 does not go a long way. In a recent Census report there are 110,000,000 households in the United States. What this data tells us is that 55,000,000 households are living on $46,000 or less a year.

Right off the bat, this family is spending 47% of their net pay on a median priced home. We didn’t even account for any pre-tax retirement account investing. Given the recent stock market performance and the loss of $50 trillion in global wealth, maybe that wasn’t such a bad idea. The bottom line is the average American family is being squeezed from every angle. What we need is a focus on jobs and our economy, not bailing out banks.
http://www.mybudget360.com/how-much-does-the-average-american-make-breaking-down-the-us-household-income-numbers/


Hm, that chart sure leaves no doubt about which class the government favors eh? 8O Welcome back to 1880 folks, the age of Robber Barons.

But I love graphs like this because I always learn something.. like there are actually more people middle class and higher than I thought. They actually account for a full 1/3 of the population. That explains why we haven't seen anyone protesting in the streets and such.. 1/3 living comfortably is actually just enough to keep everyone in check. This is because the poor tend to suffer quietly, since everyday survival takes all their energy. You'll never have people marching in the streets until the upper middle class starts taking some serious hits to their income (which is what you see happening in Greece).

$this->bbcode_second_pass_quote('', 'I')ts all about profit.

The stagnation in manufacturing of the last 30 years occurred because American workers were undercut by cheap foreign labor.

The same factory work American's used to do is now done more cheaply by Mexicans, Vietnamese, Chinese, Peruvians, etc. etc.


Yes, capitalism is all about profit at every level. In a well-balanced firstworld society, the government plays a fair mediator between business and labor. It's up to the government to ensure that economic national security isn't comprised, because business by its nature only cares about profit and will never see to the national interests.

In the US, government has been far too much on the side of global big business. This has compromised our economic national security, as witnessed by all the manufacturing jobs going to China and more and more intellectual work farmed out to India (in addition to low wage immigration to the US, both legal and quasi-illegal).

We lost our oil independence in the 70's, then we lost our manufacturing independence, and just a few years ago we crossed the line on agriculture and we're no longer food independent. All these compromises to big multinational corp profits have resulted in a weaker United States, and ultimately weaker national security.

Now contrast our style of government with, say, Germany. They're big global capitalists too, but somewhere along the line the German government refused to sell out their national security -- they kept their manufacturing base, whereas we literally packed the equipment up and shipped it to China. This whole state affairs is so outrageous, it's really economic treason.

$this->bbcode_second_pass_quote('', 'T')here is still a lot of high tech manufacturing at high wages that could be done in the US, but high taxes and burdensome government regulations make even that kind of work more profitiable if done overseas.


Don't forget, there's a whole supply chain involved. It starts with toys and ends with everyone else. All the worlds industry-fueling raw materials are now focused on the Asian market. So even if you are going to manufacture high-end, high tech stuff then as a CEO you'd still want to be in China because that's where the whole manufacturing and resource supply chain is centered.

This is like a John Galt situation, as more Americans drop out and set up shop in China then our own supply chains become weaker and it's even more difficult to locate new manufacturing domestically. The only thing that can reverse this trend is if the dollar falls through the floor and American labor becomes cheaper. So we may in fact get a lot of manufacturing back, but it will all be for sub-livable wages (no more Henry Ford model of workers being able to afford the whole range of consumer products).

And you're right about regulation, but then those aren't all bad. A lot of China is an environmentally toxic wasteland, cancer clusters and all. Big business loves it, of course -- all the pollution you can spew for the cheapest price, what's not to love eh?

But again I'll refer you to the German example.. they have a very liveable, highly regulated firstworld country and yet they STILL kept their manufacturing base.
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Re: How the Middle Class Slowly Evaporated in the Last 40 Years

Unread postby Sixstrings » Thu 25 Mar 2010, 20:05:51

$this->bbcode_second_pass_quote('mcgowanjm', 'I') can tell you exactly how. The Bottom 90% were given no
raises with concurrent inflation.

The Bottom 90% were not able to take advantage of Interest rate rise to 14% in 1981.

The Bottom 90% were given pensions, 401K's, and loans in lieu of raises from then on.

All to be /are being defaulted on now. As the only thing of worth
they now own, their home and it's mortgage is being financially forced underwater. And no bailout for them.

bush43 wipes his hands on the shirt of a POTUS.

Imagine what bush43 and his Top 50 000 think of you.

Slaves.


Exactly right. You manage to say in 7 sentences what it takes me 7 paragraphs to try to say. :)
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Sixstrings
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