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

"Food Stamps are a non-cash benefit and aren't counted. "

Neither are unexercised stock options and being able to write off all your personal expenses as business expenses. Just sayin'...

"Ditto for a welfare recipient's rent money because that gets paid directly to the landlord."

Just like Uncle Sam PAYS corporations like GE to be the biggest Pentagon contractor to the tune of $1 billion in tax refunds every year. Either way somebody is paid to be a 'kept' bitch...

mwarden's picture

they also don't understand that when you use "household income" as your measurement, with modern households often times having two earners, divorce rates seriously screw with your data and show "income loss" when none has actually occurred. pre-divorce you combine two earners' incomes, and after the divoce you have two separate households each earning a fraction of their previous combined income. no wage loss event has happened here. it's a data skew.

earleflorida's picture

gerrymandering should be rendered unconstitutional! it is not, a true, representation of the intrinsic plurality!

term limits should be on every states electoral ballot... and a constitutional amendment should be voted upon before... if not sooner in the year of our lord-- 2016!

yes, the politicians have their made man in the slot if said laws should pass. but, it is a start? 


blunderdog's picture

"Middle Class" has always just been a euphemism for "working class" anyway.

Spastica Rex's picture

You're confusing the gentry with the peasantry.

blunderdog's picture

Not at all.  Most of the peasantry have been raised to confuse THEMSELVES with the gentry.  The average $100K working stiff is a VERY far cry from "gentry."

Spastica Rex's picture

Oh, hoh, hoh! - Excuse me, I know the peasantry, sir, and someone making $100K is no peasant.

blunderdog's picture

I didn't call the "working classes" peasants, you did.  They certainly ARE NOT "gentry."

If your entire lifestyle is dependent on your earnings from your own labor, you're working-class.  It's pretty simple.

Given that such quaint concepts as "job security" and "pensions" (and even "retirement," to be honest) are being jettisoned, this will become much clearer over the next decade.

Spastica Rex's picture

The "working classes" are not the "gentry."

Precisely. Kind of by definition.

You know, "gentry" isn't even a social term that's used these days. I was playing with it to peel off a portion of the "99%" who think they're "working class." I'm of the opinion that the "1% vs 99%" meme is LOL funny. Our new feudal system requires patronage and fealty at many, many different levels.

hooligan2009's picture

median household income for the US was under $50,000 a year ago and I don't think it's gone up much. I agree that if you work you serf.

i am still of the view that the net contribution of tax payers has to increase by 14,000 per household to repay the debt that the people have incurred via mobocracy to gain their lifestyles. i don't care whether thats from benefit cuts, defense cuts or tax increases..its just the maths.

do that for ten years and america will be out of the bottomless pit that goes for being in hock to the chinese, the arabs, the japanese and the german banks.

the spectre of interest taking more than 50% of taxes ought to come a haunting in just five years from today.

Five8Charlie's picture

If you are working, you are a peasant. Not gentry.


Says I, the peasant.

reader2010's picture

Your job skills are superannuated and our slaves in China are much cheaper too.

fig_newton Trader's picture

Hello I have been arguing with a colleague based on the Feds crazy policy. If of course is a Keynesian and thinks its a good idea. To further own him and put him in perspective I would like to really elaborate on what will happen if the fed raises int rates. As I'm fairly new and young I want to get more knowledge on this. Anyone care to provide a little detail about the possible implications of rising int rates for a newbie. Thanks

besnook's picture

compound interest is an exponential chart. that means that increasing interest payments on the deficit will turn vertical . it could not reach 5% without hte usa defaulting.  the rest of the first world is in the same boat. the solution is to default now with a plan or default later in chaos because the way these things go is things happen slowly then it happens suddenly because the vertical side of the exponential chart explodes in a short time can't be stopped without disaster.

hooligan2009's picture

two ways you can do this, one is average coupon (which is meaningless when you get large yield swings or highly active fed policy) or use average market yield

substitute either coupon or yield in the statement below:

plot the history of average market yield at fixed calendar dates, say in three year lumps of 30 sep 1996, 30 sep 1999....30 sep 2012 and calculate the volume of treasury debt on issue against this yield. this will give you the weighed average yield of treasury debt on issue and the amount represented by this yield in US$.

forecast the amount of treasury debt on issue subsequent to your forecast of the fiscal deficit and average market yield for further three year calendar dates..30 sep 2015, 30 sep 2018...30 sep 2027.

you can research this yourself using the Fed's databases OR you can find someone to grab Bandk of America Merrll Lynchs all maturity bond index and its Treasury Bill index at each of these dates (I reckon about two weeks work yourself or 2 hours work via a buddy at Merrill's). I think the bond index you neeed is G0V0 and G0L0 for tbills. the good news is that almost anyone who has a Bloomberg can get this data for you using Merrills IND functions.

you must distinguish your case between treasury debt on issue and fed paper on issue.

the case i have set out is for treasury debt, which has been manipulated by the Fed since the GFC.

someone else will no doubt give you a lead on fed paper on issue.

be careful also that you don't confuse Fed Funds with other Federal Agency debt like Freddie Mac and Fannie Mae for which there is a further 4-6 trillion on issue (depending on what assumptions you make about market values).

happy hunting!

for me, I am thinking about whether the inflation is a monetary phenomenom is directly related to the interest rate set by the Fed. I.e. the Fed Interest rate causes inflation.

Lost in the ether's picture

I find the chart to be a bit biased. Does a chart exist that includes 100-110, 110-120, 120-130 up to 200k. The chart is lumping mid to upper middle class with the rich. I do find the drop in the 40-80 k range to be disturbing. Who made the gains?

mwarden's picture

the chart is showing households (tax units), not jobs. households have had multiple earners since, say, 1970. divorce has also been legal for quite a while, as well. i'll let you figure the rest out.

PGR88's picture

Redistribution works best for those doing the redistributing

Spastica Rex's picture

A more unequal society is a morally superior one because the deserving are rewarded. The USA is approaching the level of China and Mexico.


Flakmeister's picture

Its all explained by Social Darwinism...

hooligan2009's picture

there go my animal spirits...i better get a haircut

Spastica Rex's picture

Don't despair! With hard work we can someday rise to the level of  Colombia, or even The Central African Republic!

hooligan2009's picture

i have a new philosophy that i am living by...neither a tax payer nor a beneficiary be!

muppet_master's picture


is RAPING & KILLING the middle class with his stupid kenyan-kenyiasian-printer.....don't worry printer won't last forever..

by the way, somebody sold 999,100 shares AFTER HOURS @ 1721 EST, and SPY dropped to $143.7, down from the close of $145.37, but the next trade was 400 shares and that brought up the price "back to normal" of $145. LOL !!! "back to normal" with a measely 400 shares, never mind the 1mm sell shares.


hooligan2009's picture

perhaps we should switch from a the market value of this $500 billon company is the weighted value of the last trade times shares traded and the number of shares on issue at the previous trade!

PeaceLover's picture

careful your not supposed to see that.

Rigged(kind of like trusting online gambleing) they shares are to get it inline there isn't anyone on the other side to ask or bid.. it's a late night ajustment.

Night trading and can and will burn you.
You may be the fool they lay it off on.

I trade also but large lots in the AM cash only market.




Bazza McKenzie's picture

While the chart is useful info, it does not show what it is purported to do.  It shows growth at the bottom of about 3% of jobs and at the top end (90K+) of about 9%.  So most of that thinning out is the movement of people from mid level incomes to higher incomes.

That is because the chart describes Washington DC, not the US, where the picture would be different.  The chart is actually an illustration of the enrichment of most of those in government and its cronies, not of the hollowing out of the middle class.

mwarden's picture

Also it is not showing "jobs". It is showing "households", i.e. tax units. It's an incredibly lazy way of trying to show what they want to show, and as a result it doesn't really show what they want it to show. Households with two earners become two households each with one earner making significantly less. Was there a loss of wages in a job somewhere? No. And yet the data in this scenario is (mis)interpreted as showing just that.

David99's picture

ZH is only doing good job and reporting correctly. Tyler is a real true person though I have never met him. FED+BOE+ECB+BOJ are the biggest manipulators and JPM +GS +20PD's act on their behalf in this Ponzi Casino. It is all rigged Ponzi Casino. JPM & GS do maximum manipulations from London as no regulators are looking what is going on daily. London is the best place to manipulate Ponzi Casino as no regulators as they are watching porno. Manipulations of highest order without any regulations as every one has been purchased and regulators watching porno. In last 10 trading days, Rio Tinto manipulated by +25% gain and regulators watching porno. JPM doing it. It is just Casino and nothing else. Regulators are watching porno, don't know how Rio Tinto is manipulating daily. On LSE, there is no checks and balances and maximum manipulations daily by Rio Tinto. The market is Casino and the biggest manipulated stock is Rio Tinto and JPM is pulling up daily and no regulations for Rio Tinto in London

SilverMoneyBags's picture

Its more than clear that these policies are doing nothing more than transferring the wealth from the 98% to the 2%. And Democrats claim that they care about the middle class and poor, what a joke. They trick you into thinking your actually getting something from the government but they turn around and take everything from you including the purchasing power of the money they just gave you.

max2205's picture

Ben also fucked up by not letting the system clear. There are people who made 80k who now demand 120k. These people weren't worth 60k.

The world is fucked up

Optimusprime's picture

I'm sorry, Tyler, but this is illiterate: "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".


Come again?  I assume you mean to say that the the destruction of America's middle class accrues to the benefit not "at the expense" of the poorest and the wealthiest.  Slow down just a bit, take a deep breath, and say what you mean!


q99x2's picture

I am not giving up my spot in front of the 7/11 for no middle classer.

H E D G E H O G's picture


MeBizarro's picture

Part of this is the rise and importance of federal spending but this is just a microcosm of global trade especially since 2000 and its effect on the developed world.  The US has chosen to follow the 'Anglo' model which has been pretty much an unmitigated disaster for the UK and hasn't worked out too well for the US either if you look at economics statistics since the end of the Cold War. 

The top 15-20% will do pretty well and the rest are going to hustle to largely get by.  If you really cut back the safety net and increase the age of retirement programs enough (say a minimum of 70), we can return to the 'good ole days' when most people either worked until they either dropped dead literally or were too physically/mentally incapable of holding a full-time job.  

rustymason's picture

"... or were too physically/mentally incapable of holding a full-time job."

Based on the products and services I've purchased over the last couple of years, I think the new golden era has arrived.

SpykerSpeed's picture

And if you're a recent college grad who can't program a computer to send a manned-rocket into space and back, you're pretty much out of luck.

q99x2's picture

GS been shuffling in the client's money all this week. Probably going to be another big spike in the distribution inequality shortly.

rustymason's picture

That's what Marxism is all about: concentrating money and control into the filthy hands of a tiny "elite" of Tribal banksters.

blunderdog's picture

It's what we do here in the USA, but it's not what "Marxism is about."  Marx was the guy who first pointed out the phenomenon in such simple terms. 

IridiumRebel's picture

Read "World Systems Analysis" by Wallerstein and you will see the economist's wet dream of a theory about Marxism. The problem is that it does not take into account that little thing called HUMAN NATURE. You know? That shit called motivation? Wanting more than what the government affords to give? Yeah.

blunderdog's picture

Marxism and communism aren't synonyms.

Oldwood's picture

You would be correct if there were no competition. If governments allow monopolies to exist, price will be totally defined by demand as supply can be deliberately restricted, but if competition is allowed, excess profits cannot persist. Liberals are always happy to see companies compete but not so much for the employees.

Hohum's picture

It seems a lot of you want to return to the heyday of the 1950s.  Wasn't that the decade in which the rich (say top 10% of households) had a GREATER tax burden and GM workers made as much as college professors?  What utopia do you knuckleheads want anyway: the 1890s?  Or some Ayn Rand wet dream?

mwarden's picture

Yes, but there is a problem with charts like these: they use tax units (households) and yet interpret it as if it's measuring per-job salaries/wealth. If you have a two-earner household, then you have one tax unit earning $x/yr. If that household then goes through a divorce, splitting the income earners, then you now have two tax units with the same number of people still earning a combined $x/yr. But according to charts like this, income has dropped 50% per household, or everyone fell out of the $x/yr income class (since you now have two tax units each earning far less than $x/yr).


At the high end, you are much more likely to have a single-earner household, and even if you didn't, the disparity between the two earners is generally high enough that a divorce does not pull the higher earner out of the bracket he or she was already in.


There have been some studies that take this distortion into account and have shown that median incomes have been rising. Rising slowly, yes; but certainly not falling.

jomama's picture

you mind posting any one of those studies we can read that concludes that?

Mr Lennon Hendrix's picture

Survival of the fattest.

David99's picture

Don't buy any stock at these high levels as crash is coming. FED, BOE, ECB, BOJ are pumping but for how long?