Wednesday, August 29, 2012

Jared Bernstein: What the heck happened to the middle class?

The Growth of Inequality: This one has to be high up in the mix. Yes, overall economic growth has been slower over the period when middle-class wages and incomes have been stagnating, but growth has been positive—real GDP is up. And productivity growth actually accelerated over the last few decades. Back when I studied econ, it was generally asserted that as productivity rose, so did living standards. And there’s logic to that—if an economy can produce more goods and services per hour, its citizens should be better off.

But that’s only true on average. If, due to other factors, the distribution of that growth eludes the middle class and the poor, then society may grow richer on average, but for the middle class, growth is nothing more than a spectator sport. And the evidence suggests that in recent decades, that's exactly what's happened.


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