May 6th, 2014
06:48 PM ET

Analyst: America's middle class falling behind

Watch "Fareed Zakaria GPS," Sundays at 10 a.m. and 1 p.m. ET on CNN

Fareed Zakaria speaks with David Leonhardt, editor of the New York Times’ ‘The Upshot,’ about his latest research – and why the American middle class may no longer be the richest in the world. Watch the video for the full interview.

The most startling piece of data was this shift that has taken place in the American middle class. One way of looking at it, which you presented, was if you look at the median income...


…of an American – and that's not the richest person, not the poorest person, it’s the person smack in the middle. And I think the Census Bureau defines it at about $50,000 a year, someone earning $50,000 a year. Look at this chart. Since 1981, that's what's happened.

It's not a good story, is it? In 1981, we had, by far, the richest middle class in the world. And what has happened since then is that income growth in these other countries has been substantially faster for the middle class and the poor.

Now, this is after tax income. That's a question a lot of people have. It's after-tax income. It includes direct government benefits, things like Social Security. So this is really what people have to spend. And it's really worrisome. And it's not just a 30-year trend. You also see it if you look since 2000. In some ways, it's more pronounced in the last 15 years.

This is the stunning one. You see all these other countries had much stronger income growth at the median level. But then since 2000, I mean the United States barely grew at all.

Zero. And so the obvious question is what's going on here? And there are a few things going on here. One, we have had economic growth that is quite similar to many of these other countries. Obviously, we've had faster growth...

Overall economic growth.

Yes. Faster growth than Spain, particularly recently. But it's not as if the U.S. is growing a lot faster than Sweden or than Canada. It's quite similar. But more of the bounty of our growth goes to a smaller group of people. So our economy gives more money to the executives at the top. And since the bounty as a whole, the pie as a whole, is growing similarly, if you give more of that to fewer people, there's less left over for everybody else. Not only do we have more pre-tax inequality, but those other countries, do more to – and it's a dirty word here, right – redistribute income…

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Topics: Economy • GPS Show • Inequality

soundoff (293 Responses)
  1. Rick McDaniel

    As jobs disappear in America, and they ARE.........the middle class vanishes.

    May 10, 2014 at 2:43 pm |
  2. famtraders

    Fluor, Jacobs, CBI , Halliburton and all these big corp. use American name, take the projects and transfert it to India, Manila etc. They have all the TAX loop holes and pay nothing.
    It was Teddy Rosavellete who created Middle class in America otherwise America always loved low wages and slavery (south especially)
    So far inflation is in control, but thanks to FED & Bernanke this will create a ripple effect. FED has already printed 500 years of money and it is a matter of time that US$ collapse is coming because of these Gangsters. GOLD is telling us something. Watch Gold move, never happened in 100 years.
    END the FED and make a law to bring jobs home. Don't use American name if you can't keep jobs here and pay TAXES.

    May 10, 2014 at 7:27 pm |
  3. chrissy

    And AUDIT the Federal Reserve already damn!

    May 10, 2014 at 9:31 pm |
  4. David Rand

    I suppose some of the problem stems from the growth of the some point, you slow down in opportunities and others catch up. High tech has a ceiling for employment, and of course we lose our manufacturing jobs to 2nd & 3rd world nations. Question is, how do you develop a new sector of economy to pick up the employment of Americans? Its a tough question/answer. The other option is to stop free trade, tax imports, and allow manufacturing to start a-new in the USA, but I don't think this is realistic. It would just create high inflation etc.. But, its an interesting pro/con to consider.

    May 11, 2014 at 4:15 am |
    • Yorker Dave

      How about allowing the US to finally join the global economy and allow Americans to work for foreign companies, and borrow from foreign banks and buy health insurance from foreign companies.......You ask why have we not done so already? Because of restrictions by our own government backed by American corporate interests.

      May 11, 2014 at 9:40 am |
  5. joe sarr

    I didn't see any outrage in their face!!! Enemy Within

    May 13, 2014 at 2:47 pm |
  6. Li Tai Fang

    Always refer to the Golden Rule: he who has the gold makes the rules.

    May 13, 2014 at 7:28 pm |
  7. David

    Where are the companies at? At foreign countries, using cheap labor

    May 13, 2014 at 7:49 pm |
    • Yorker Dave

      If you are asking this DAVE, the foreign companies are from all over the world: Europe, Asia, South America, Etc. These are companies that want to hire American workers at better wages than American companies are paying now. I should know, as I currently work for one of them. But many foreign companies cannot get access to American workers due to American corporate interests. In addition, do you know how many foreign banks and insurance companies would like to do business in the USA and are restricted by our government restrictions – backed by American companies?

      May 14, 2014 at 4:55 pm |
  8. Freduardo

    More of the gains in wealth have been by the top .5 percent but what is also going unreported is that the number of illegal aliens in the country are much much larger than the 11 to 12 million figure normally mentioned. The number is easily twice that and 30 million is more like the true number. This has put a pressure on wages that has held middle class wages down since Ronald Reagan gave millions of illegals amnesty and eventual citizenship. Far more illegals than the 3.5 million that was the commonly quoted number in the mid 80s gained citizenship from Reagan's amnesty. Every year
    between five hundred thousand and a million illegals cross the border into the US and never move back. A few are deported but far less than is the published number. The effect has gutted out the US middle class by keeping a pressure
    from the bottom of the wage chain. After a few years these same illegals gradually are competing directly with native
    born white, black and Hispanic workers who don't have a degree or are working in a field that has nothing to do with their degree. The large corporations have kept this cycle going to suppress wages for decades now and all it takes is
    campaign contributions to members of Congress and presidential candidates. The US middle class has had their country and way of life jerked out from underneath them in thirty years and it's not even mentioned in the news. Of course WHO controls the news media and movie studios? This is a real world "Trading Places" on a much larger scale than the movie but it's happened over the last thirty years.

    May 14, 2014 at 12:57 am |
    • wake up America

      very good comment. but it is a little more complex than that. you see, in 1847, those so-called "Anglos" committed the most horrible act of murder followed by thieving, when they marched their US cavalry into California, Arizona, Texas and New Mexico, which were all lands part of the sovereign nation of Mexico. this was a highly illegal act! now you want to talk about "them" foreigners??? YOU were them "foreigners", not so long ago. and don't even get me started on what happened in the Eastern US from 1620 until 1847. another brutal act of murder followed by thieving. them "foreigners" came as simple, humble "pilgrim fathers" to Plymouth Rock, Massachusetts, and the next thing those poor natives knew, them "foreigners" had stolen the entire country from them, right before their eyes, and murdered 3 million of the natives and ruthlessly shoved 6 million more onto reservations! put that in your pipe and puff on it for awhile, and you will realize that the term "illegal foreigner" is very relative, depending which side of the fence you are on!

      May 15, 2014 at 1:18 pm |
  9. Freduardo

    The percentage decline of American students enrolled in Ivy League schools is dramatic but it would interesting to see the
    even larger decline of the non Jewish white males. The US is eating it's young. This is the real "Trading Places" and
    Fareed Zakaria is a poster boy for those reaping the benefits.

    May 14, 2014 at 1:14 am |
    • wake up America

      instead of pointing your racist finger at an awesome super-achiever like Fareed Zakaria, a very easy thing to do, why don't you look a little deeper at why so many Asians are attending graduate school in the US as opposed to whites. Most Asians are raised with a lot of discipline, at home, a stable family situation, a minimum of "spoiled brat" behavior is tolerated in their world. now look at many white kids. they are being raised with every material thing imaginable, spoiled brat behavior is par for their course. so they can't be bothered with graduate school. so if more white people cared to work their behinds off, like Fareed Zakaria, and get a graduate degree from Harvard, like Fareed, and be as well-read and knowledgeable and well-traveled as Fareed, and write 4 books, like Fareed, and be super-ambitious, like Fareed, then they might also get to have their own GPS show, like Fareed, and get invited to give the commencement address at Harvard, like Fareed. until then, just pointing your finger and crying unfair, is laughable!

      May 15, 2014 at 1:28 pm |
      • kaleotu

        Well said, Wake Up America. Also, we are so drastically behind in education investment. Here in Pennsylvania, there's not even a funding formula for its 67 counties that would allow inner city kids a fighting chance. So maybe it's not just cultural motivation, but also the tools needed to succeed. The low test scores and graduation rates are a frightening indictment on state politics. The future is being held hostage by leaders who can't lead.

        May 15, 2014 at 5:02 pm |
  10. Anton

    Some slightly fuzzy numbers however.
    If someone makes 10$/hour in 1990 and receives a 5% increase, he's still making more money than someone who made 5$/hour in 1990 and received a 40% increase.
    Some of these other markets experienced enormous growths because they were catching up to a global standards.

    May 14, 2014 at 12:06 pm |
  11. kws11

    Sometime I just stare at my screen for awhile, blinking in disbelief at a headline. Does CNN keep some of their writers in suspended animation somewhere? Was this guy paying attention during the past two elections, or during the economic news over the past 10 years or so? WTH?

    May 15, 2014 at 1:39 am |
  12. Socrates

    The middle class is in the process of extinction in the US like in any other country, while the 1% is getting better and better. The greed of the 1% know no limit.

    May 16, 2014 at 10:50 am |
  13. Wanwimon

    Not necesarily true. Inside secours say Wayland Flowers actually didn't die, he's just gone undercover to control Fareed. And Chuck is being controlled by the same guy who used to jam his hand up Walter Cronkite's dusty sphincter. Allegedly.

    July 7, 2014 at 11:04 am |
  14. Tania

    It is not McCain's values that are the issue.It is the lesheradip skills, and that is what is so needed right now.Remember the Republican advertisement, that kept quoting the parts of the Debate where Obama agreed with McCain?I don't think Obama is that Marxist, nor do I think that everything Marxist is bad. There is this tendency to lump the whole package into one bucket and label it as bad, because some elements of it are bad.IF given the choice between a government that redistributes wealth up, versus one that redistributes down, I prefer down (I am more likely to end up there).But really I prefer that each just pays their fair share in the cost of running the government, corporations are allowed to profit per their value added but NOT allowed to manipulate to avoid paying the true cost of the infrastructure that helps them profit, or the externalities they inflict on others. Obama is fine with lowering corporate tax rates as long as the loop holes are cut out.Think about that.What does that really say.He seemed to get less and less Marxist as the campaign progressed, and as he continued to study the actions and results of leaders he admired. He seems to have an insight and ability to see what is going on.But it doesn't matter how much he learns, and how well he applies the leanings. You will never see the good, only the bad.We have corporations that pay NO tax, and still profit, and pay multi millions of dollars to top executives, due to tax breaks (loop holes).Obama is seeing the web of favors, lobbiests, and corruption that has enacted laws to favor the interests of large corporations over that of small businesses and individuals.It is a mess.It needs to be cleaned up.It is this very mess that puts our country at risk of Socialism.To save Capitalism we need to clean it up, and regulate it, so that the holes (the profit without value added) are closed as much as reasonable.Explain why the same group that was mostly in favor of the Financial bail out; is not in favor of the auto industry bail out?Personally I am not in favor of either bail out.But what does the split tell me.Who does each bail out serve?Who is looking out for who?While I didn't vote for Obama, if I were voting today, I think I would.Unity matters.Leadership matters.A slight left lean is not going to destroy this country to the same degree that corruption will.I am glad that the Dems did not get 60 Senate seats.

    July 21, 2014 at 3:09 pm |
  15. Kyusung

    A psychiatrist is a phcsayiin who specializes in the diagnosis and treatment of mental disorders. I have a bachelor’s degree in the social services field. For several years, I have worked with children who have been diagnosed with mental disorders. It is upsetting to see children victimize at an early age and even more disturbing to see them as predators as early as 5 years of age, however knowing that I am doing my part to assist them in becoming functioning youths and adults is rewarding. The empathy, confidentiality and maturity of a medical assistant are definitely needed in this area. I enjoy establishing a rapport with these clients and helping them to find adequate coping skills to deal with their disorders, therefore I would like to work for a psychiatrist.I would not like to work for an emergency phcsayiin for several reasons. I will explain a few. Patients who come to the emergency center typically have serious injuries or trauma. I would not like to have my mind constantly focused on who is coming thru the door and how sever the prognosis is. Knowing myself, I know that would be my focus and I would not be very productive. Also, in the emergency room the staff has to be prepared for anything, I would prefer an area that focuses on a particular specialty. Most importantly, I do not wish to see excessive amounts of blood loss on a regular basis. Actually, not even a minimal amount of blood loss on a regular basis. Giving my opinion and thoughts about this specialty, I would not be an effective employee.

    July 25, 2014 at 10:01 pm |
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