Chart Of The Day: The Death Of America's Middle Class

Tyler Durden's picture

There is one chart that everyone should see that is part of Reuters' must read special series: The Unequal State of America: Redistributing Up - it is the chart we have said over the past 4 years is the only one that matters for America - that showing the flattening of America's wealth distributon Gaussian curve, aka the plunder and accelerating destruction of America's middle class, at the expense of the poorest and the wealthiest. This is nothing but the inevitable outcome of a co-opted, conflicted and controlled marionette government, which does the bidding of the wealthiest lobby powers (read corporate shareholders and Wall Street), partitioning the bulk of the wealth to the richest, while sending the scraps to the poorest in order to keep itself in power due to the power of the ever poorer, democratic majority. Alas, since there is never a free lunch, and since the Fed does not create wealth but through its currency debasement merely accelerates the transfer of wealth, someone ends up footing the bill? Who? None other than that part of the US population which made the United States of America the greatest country in the world, and is now watching it implode first slowly, then fast.

The chart in question:

How does Reuters frame this ever so critical topic that only impairs the ever more disenfranchised, ever declining middle class, and thus few actually bother discussing:

In the town that launched the War on Poverty 48 years ago, the poor are getting poorer despite the government's help. And the rich are getting richer because of it.


The top 5 percent of households in Washington, D.C., made more than $500,000 on average last year, while the bottom 20 percent earned less than $9,500 - a ratio of 54 to 1.


That gap is up from 39 to 1 two decades ago. It's wider than in any of the 50 states and all but two major cities. This at a time when income inequality in the United States as a whole has risen to levels last seen in the years before the Great Depression.


Americans have just emerged from a close presidential election in which the government's role as a leveling force was fiercely debated. The right argued the state does too much; the left, too little. The issue is now at the center of tense negotiations over whose taxes to raise and what social programs to cut before a Jan. 1 deadline. And the government's role will be paramount again next year if Congress takes up tax reform.


The federal government does redistribute wealth down to struggling Americans. But in the years since President Lyndon Johnson took aim at poverty in his first State of the Union address, there has been an increasingly strong crosscurrent: The government is redistributing wealth up, too - especially in the nation's capital.


The beneficiaries are not the billionaire financiers and celebrities who
have come to personify income inequality in the 21st century. Yet the
Washington elite are just as much part of the trend, having influenced
laws and decisions that alter the entire country's distribution of

Read more here.

In summary: crony capitalism for the wealthiest, scrappy socialism for the poorest, and everyone else (that soon to be extinct creature known as the middle class) left to fend for themselves.

Some other charts:



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A. Magnus's picture

Gee, the same people who paid the politicians off to jimmy the tax code so they can keep more of the money they stole from the taxpayer through other means are now wealthier for doing so?  Who woulda thunk?

JKearney3153's picture

a tiding of things to come? (instead of zombies hunting humans, it's the middle class hunting gold owners)

alien-IQ's picture

I think you'll find that's where most lobbyists live.

Crtrvlt's picture

and defense contractors 


TruthInSunshine's picture


Lobbyists, defense contractors, government contractors in general, and federal employees (D.C., Maryland & Virginia are all full of teat suckers)...

New York City (especially Manhattan) & Washington, D.C., the two biggest welfare slums ever to blight the face of America.

But hey, only 1 in 7 EMPLOYED AMERICANS works for federal, state or local government, so let's get some more government hiring rolling along, amIright Paul "When Mars Attacks" Krugman?

Federal workers earning double their private counterparts


Thomson: Federal pay twice the average worker's
ronaldawg's picture

Federal wages FROZEN?  so what?  Haven't they hired 111 federal workers PER DAY at the old inflated wages FOR THE PAST YEAR?

Shouldn't the FEDERAL Employee wages be immediately CUT by 50%??

At the "frozen" rate, income parity will occur in 30 years (10 years after we go broke).


The Alarmist's picture

Look at that graph again. It plainly shows an unholy alliance of the poor and Criminal Elite against the middle.  Are the rewards split "fairly?" Perhaps not, but that is not what matters.  What matters is the the votes of those who benefit from plundering the middle have been cast. 

economics9698's picture

1.  Inflation.

2.  Federal payroll taxes.

3.  Immigration.

Michaelwiseguy's picture

Too many Hummer Homes built that need to be maintained. What do we do about that?

RockyRacoon's picture

Most folks understand claw-backs when the concept is explained to them.  Corporate CEO pay, and such, are fair game under the circumstances where the money "earned" is recovered for illegal, lack of performance, or other reasons.  Odd how the same concept of claw-backs can be applied to the "wealthy" in the form of taxation is not considered.  Wealth transfer has been taking place for quite a while now, upward redistribution.  Just seen from that perspective, one wonders how it can't be equitable.  Just a thought.  If all these issues were easy, they'd be settled by now.

marathonman's picture

The middle class are caught in a nasty pincer movement.  The free shit/banker caucus on one side and the banker/warfare caucus on the other.  They are being cut off and overrun.  They will be wiped out.  FORWARD indeed.

Seer's picture

Anyone interested in numbers that at least have something behind them (other than someone spewing stuff) can check here:

Even IF you hacked govt to ZERO we'd still have massive debt, aging demographics and declining resources.  Who are you going to blame then?

I am on to you's picture

It didnt happend yeasterday,they had a long run.

Imagine if,no job were send to China,it would look a lot different.


And its not only US,no its the developed world 360,as some call it:



Where have all the jooobs gona,China picked them every one,when will they ever learn.

And it wasnt, the working class ,who send the jobs to China,one can argue,they//we loved it in the begining,due to short sight,here you can put in Edward Bernays,Lucky Punch/Strike?I smoke Camel when i am streesed,said the doctor,Regan just smoked Chesterfield?No?Oh yes sir?Consummerism!Oh another, ISM.

Like the first snow,chilling the nose is fun,but t,here is a price to pay,if you dont stop,first is for free.

So who,send the job to China,was it Rothschilds,since they are so deep in to weatherstations over there,why would that be!

Behold the great pensionfunds?Would they hold the workers money?

Well to save the Danish Banks,240 billion was released from the pensionfund,they just forgot to tell it,and remember its a tiny contry:

I blame them!!!The wizzard from Oz!

marathonman's picture

That's why the debt will either be hyper-inflated away or defaulted.  And government will never go to zero.  There are too many grifters relying on that system to let it fail completely.  The aging demographics will take care of itself eventually and the declining resources issues are over-stated.

847328_3527's picture

Not all Federal employees' wages were "frozen":


General Motors workers could get up to $30,000 in bonuses under new UAW contract (updated)

prains's picture

Ladies and Gentlemen


It is no longer a whodunnit!


We all understand it's the Oligarchiancorptocraticcronybankster with the chequebook in the closed door boardroom. No more clues required.


The question is what are you going to do about it ?



r3phl0x's picture

Duh, I'm going to take it like a little bitch, and buy an iPhone6!

Anusocracy's picture

The middle class did it to themselves.

They've been brain dead for at least a century.

Seer's picture

It depends...

It depends on whether you're employed by one of the controlling interests or not, or whether you are in business for "yourself" and peddle to the controlling interests.

If neither of these then your income should not be the deciding factor on whether you are brain dead or not.

Just saying...

Dugald's picture

Oh, fair go sport, you have not had television that long.......

El Viejo's picture

And with the fixed income wages frozen with low interest the rich will soon get their money too.

Trickle down poverty.

Michaelwiseguy's picture

The federal government does redistribute wealth down to struggling Americans. But in the years since President Lyndon Johnson took aim at poverty in his first State of the Union address, there has been an increasingly strong crosscurrent: The government is redistributing wealth up, too - especially in the nation's capital.

President Lyndon Johnson was one of the worst and did the opposite of his inauguration speech by combining the Social Security Trust Fund with the General Fund of the Federal Government. This act served to mask the growing percentages of military industrial complex spending and other growing percentages of government agency spending.

We need to separate the SS Trust fund from the General Fund now.


adr's picture

Or we must remove the SS trust fund completely, deleting the ability for the government to steal 15% of a working man's paycheck under the guise of returning it later as a way to live in retirement.

Flakmeister's picture

You are under some delusion that the employer would remit to the worker the 7.5% coming from his end...

adr's picture

That was never part of your wage to begin with, but a cost of actually hiring someone, like company paid health benefits. I would gladly allow my company to retain an extra 7.5% in order to gain back that same percentage.

There are good companies that migt use the aggregate savings to actually hire more workers. The base salary at my private company is $35k for an account assistant. We pay $55k plus benefits for a key account manager. I can tell you that if I put a job ad out there, instead of doing personal recruiting, I would have a line 10 miles long outside my door.

MeBizarro's picture

If you think your company would contribute even more than a small fraction of that back to their workers whether in direct pay or in retireements benefits, your crazy. 

Dr. No's picture

I dont care if they give it back.  Keep it for all I care.  It is my employers money.  I make a fair wage at my employer.  If my boss can keep more of his money, great.

Dr. No's picture

Id rather my employer keep his 7.5% than give it the to the gov.

nc551's picture

That is your 7.5%.  Your employer factors in all of the cost of hiring you into your wage... you'd get every dime yourself that they have to spend on you.  The total cost of of all that stuff is your actual wage potential.

Dr. No's picture

It aint my 7.5%.  I get paid a fair wage, or I would have quit.  The gov mandates a employer match of 7.5% SS taxes.  I pay 7.5% and the employer pays 7.5%.  It is a tax.  If my employer can keep more of his money great.   From your post, you believe if the goverment gives a tax break to a company, the company should shovel it right back to the employee, or else not get a tax break?  You are a socialist commie. 


And if you think all money going to SS is not a tax, rather contribution to future distributions, "who is being naive now Kaye?"

AlamoJack's picture

IT'S NOT an illusion.  When the free market reigns, that's what happens. 

BorisTheBlade's picture

Well, it seems as of now there is a free market for middle class and communism for super poor and super rich. I wonder what happens when extremes are done canibalizing middle class through taxes and wealth redistribution.

EscapingProgress's picture

Tax incidence, look it up. You are the delusional one if you believe that the price elasticity of labor is highly inelastic and the price elasticity of demand for all goods and services is highly elastic. Producers can offload the majority, if not all, of their tax burden onto their employees and customers.


Seer's picture

I tend to agree.  It'll get there: but, when it arrives you'll find that that situation is about as ugly as the current one (we'll find out what WORK really means then).

Most humans throughout history knew nothing of "retirement."  And, well, that's pretty much the way it is today too.  And with growth turning negative one would be a fool to predicate one's life on some sort of "retirement."

Debeachesand Jerseyshores's picture

LBJ also did two other things that gave him a Budget Surplus in his last Fed  budget.


1st, he extended the Federal Year,which have ended on June 30th 1968 to Sept 30th 1968.

Are first and only 15 month Federal Year.

2nd,he and Congress added a 10% surcharge on Federal Taxes owed for the 1968 Tax Year,which gave the Feds a $500Million surplus for that year

TheSilverJournal's picture

Unfortunately, most think that more government is needed to save the middle class. The reality is that it is the federal government and the Federal Reserve that is actively destroying the middle class.

Seer's picture

No, the Fed and the govt are unable to keep it propped up anymore.  Consider that it's the middle class that provides their protective buffer; do you really think that they deliberately want to lose the shield?  The growth paradigm that has allowed there to be this middle class protection is ending.  TPTB know this and, well, they're going to circle the wagons until it's all over.  Go ahead and eliminate TPTB and see if you can restore a middle class on the backs of huge debt levels and declining resources.

At some point we've got to admit that this System (which is more than just the Fed and the govt) is failing and we've got to move along.


The Making of Middle-Class America
When the French aristocrats Alexis de Tocqueville and Gustave Beaumont toured the United States in the 1830s, both were struck by the degree of equality and social and physical mobility they witnessed in the American people. While each oversimplified, America's agrarian economy, cheap and available land, and voting laws did promote a certain equality relative to Europe. In the same era, however, the American industrial revolution was shaping a middle class and its institutions. The various embargoes of the early part of the nineteenth century caused many artisans to bring in and manage apprentices and lesser-skilled help; the rise of factories created a similar managerial class. Factories, of course, could not be homes also, and as a result more people began leaving home to go to work and cities began to divide into industrial and residential areas, which further broke down along class lines. Women were left at home, and the "woman's sphere" and cult of domesticity began to take hold. Childhood was also transformed in this era, as middle-class couples married later and had fewer children. The cult of domesticity often dovetailed into or crossed paths with other movements of the time, such as the Second Great Awaking and reform crusades including temperance, abolitionism, and women's rights. Other reformers included utopian communities, which were often, but not always, religious, and voluntary associations.

brettd's picture

Middle class replaced by government class.

Think Italy.

nufio's picture

thredjacking but.. does not this chart show that the middle income people have moved to the high income and low income groups? and tilted more to the high income group?

nufio's picture

maybe if they adjust for real inflation the bars on the lower end will be taller.

CPL's picture

Yeah, we've all heard of those record breaking Xmas bonuses in the past thrity years.


You like real estate?  I have this bridge in brooklyn...

ratso's picture

Doesn't anyone find it odd that the death of the middle class correlates so well with the destruction of the unions started by Regan and followed upsince then by right wing zealots like Grover Norquist and the tea party crazies.

akak's picture

Yes, I find it odd.

That is assuming that you are "it".

AlamoJack's picture

It's another of govt's ploy to degrade income so that illegals can benefit.  I am a right to work guy, always have been in TX, but I can read the handwriting on the wall.