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EconomicPolicyInstitute June 15, 2012

While “middle class” is difficult to define, it should definitely not include those with incomes of $250,000 or more. This week’s Economic Snapshot shows that over 87 percent of taxpayers have less than $100,000 in adjusted gross income, according to IRS data. It also illustrates just how far removed individuals making just under $1 million—an income higher than that of roughly 99.5 percent of Americans, and nearly 20 times the average household income—are from the middle class.

Informing the dialogue

This week reporters sought EPI’s research to understand how public-sector job loss has affected the labor market, what the labor market holds for new graduates, what the decline of union membership has meant for workers, and why the last ten years can be seen as a lost decade for families.

  • The Atlantic’s Derek Thompson cited Josh Bivens’s research to show that the 24 months following the official end of the Great Recession saw more job creation than the 24 months following the previous two recessions—with the key exception of the public sector, which continues to shed jobs:

To illustrate exactly how near to high heaven the Obama recovery stinks, Mitt Romney put this graph in his official Plan for Jobs and Economic Growth. It shows the Obama recovery losing nearly 1 million jobs in the 24 months after the end of the recession, clearly the worst in modern history. But here is the same graph, via Josh Bivens at the left-leaning Economic Policy Institute, adjusted for private sector jobs only. Note the subtle change in the three blue bars to the right. Obama’s recovery is suddenly the best in 20+ years. The key distinction between Romney’s graph and EPI’s graph is the public sector, which withered under Obama despite the stimulus.

  • Michael Tomasky of Newsweek/The Daily Beast explained in greater detail why this recovery has not seen the public-sector job growth of past recoveries. He wrote that a “very fascinating chart via Media Matters but originated by the Economic Policy Institute on public-sector job growth during recent American recessions” shows that in the recessions of 1981, 1990, and 2001, “while the private sector was draining jobs, the public sector was gaining jobs.” Tomasky went on to write:

Why did this happen, even though the economy was contracting? Because the government kept spending money. You can “blame” the Democratic congresses that were in place if you want to, but there’s no blame to be spread. This was a good thing. People were working and spending money. The increase in public payrolls was helping to offset the contraction of private ones.

Public-sector job loss this time, though, has contributed mightily to overall stagnation. EPI had much more to say on the subject in an excellent report issued last month.

  • Similarly, Daily Kos used EPI’s research to show how the decline of public-sector jobs has slowed the recovery, noting that the current recovery is the only recent one with public-sector job losses over the first 31 months: “Noting that the private sector had gained 2.8 million jobs while federal, state and local governments shed 584,000 just since June 2009, EPI concluded that the public sector job losses constituted ‘an unprecedented drag on the recovery.’”
  • National Journal’s Stephanie Czekalinski cited EPI’s data to show how wages for young workers have dropped during the Great Recession and its aftermath. She wrote, “In 2011, young college grads earned an average of $16.81 per hour – about $35,000 annually, according to the Economic Policy Institute.”
  • And the Huffington Post cited EPI’s data to show “how the rise in inequality has corresponded with the decline in union membership. As EPI notes, that divergence in income growth, especially noticeable since 1979, corresponds with a decline in union influence, as an increase in union membership would help to boost worker incomes.”
  • Finally, EPI President Lawrence Mishel told McClatchy’s Kevin G. Hall that the last ten years can be considered a lost decade for working families, as they “made almost no progress on wages throughout an entire business cycle.”

A new book by Peter Edelman gives a glimpse into the nation’s growing poverty crisis

In his new book So Rich, So Poor: Why It’s So Hard to End Poverty in America, lifelong antipoverty advocate Peter Edelman gives a sharp analysis of how this country can be so wealthy yet have a steadily growing number of unemployed and working poor. He explains that the income disparity in this country is now wider than at any point since the Great Depression—and is especially stark for some demographics, particularly young people and young people of color.

Edelman will discuss his book and sign copies at Washington’s Busboys and Poets (2021 14th Street, NW, Washington, D.C.) on Thursday, June 21, from 6:30 to 8:00 PM.

 

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