How We Lost Our Middle Class

Financial FAQs

We now have an even better reason to lament the decline of our middle class. New research by this year’s Nobel Prize winner in the Economic Sciences, Princeton Econ Prof Angus Deaton and his wife Anne Case, have revealed what happened to those 45-54 year-old high school educated whites that were once able to rise to the middle class when there were jobs that required more manual than mental skills (such as manufacturing jobs). They are dying in record numbers.

Drs. Deaton and Case discovered that incomes declined 19 percent and death rates increased 22 percent in households headed by someone with a high school education from 1999 to 2013; the higher death rates largely due to exploding suicide rates, and the abuse of drugs and alcohol.

This new study uncovers the disillusionment and ongoing depression of those that lost the most from globalization and overseas job flight—the least educated whites that once thought their jobs were guaranteed by the fact they were part of the ruling class.


Graph: Krugman-NYTimes

This Paul Krugman graph shows the deaths from all causes for both white and Hispanic populations. The red line trending upward since 1990 is that of US White, non-Hispanics, vs. the declining blue line for US Hispanics. In other words, the US has the only (white) population of all developed countries whose death rates are increasing.

This truly horrific, new evidence of their plight might also highlight a reason for the flight of predominately white, lesser educated middle-aged males to the Tea Party that blames all government for their ills. It could also account for what goes with depression; an irrational opposition to any authority, which accounts for the popularity of Dr. Ben Carson and Donald Trump, in particular.

Yet opposition to any government programs has hurt this segment of society the most, as they are mostly situated in the poorest red states that need and depend on government transfer payments—such as social security, Medicare, Obamacare and food stamps.

In fact, it has been too little government—the deregulation of whole industries which protected those jobs—that has allowed many jobs held by high school educated white in particular to migrate overseas, resulting in a decline of manufacturing jobs to 14 percent of employed workers from 22 percent in the 1960s.



Big Business has almost always lobbied for freer trade (meaning lower tariffs), accompanied by fewer worker protections, as well as the ability to avoid U.S. taxes by keeping their foreign profits overseas. Then there was the demise of union collective bargaining, beginning with President Reagan’s firing of the PATCO Union traffic controllers that has led to some twenty-five right to work states where union membership is discouraged, union membership and dues aren’t required, so that employers are allowed to hire and fire their employees at will.

The result is business interests and their lobbyists have been able to keep the national minimum wage at $7.25 per hour (though individual cities and states are beginning to raise it). It has actually shrunk since 1968 when inflation is accounted for, which accompanies the greatest income inequality since the Great Depression

Today’s middle class entry-level jobs belong to computer and software engineers. The less educated are now victims of such income disparities. In fact, the overall current decline in middle class incomes and wealth can be explained as well. It was active government policies that intervened when and where the private sector wouldn’t with New Deal legislation that created our middle class after WWII, as I’ve said before.


Graph: New York Times

In the late 1960s, more than half of the households in the United States were squarely in the middle, says the New York Times. Middle class is considered to be earning in today’s dollars, $35,000 to $100,000 a year. Back then few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.

But their share has been shrinking since 2000, to 43 percent of households today.

So the rise of income inequality highlighted by Professor Deaton is no accident. It has accelerated since the end of the Great Recession with such actions so that almost 100 percent of the income and wealth gain since 2008 has been garnered by the top 1 percent income bracket.

The study follows up on Dr. Deaton’s 2013 book, The Great Escape: Health, Wealth, and the Origins of Inequality, “a work that maps the origins of inequality and its fallout spanning 250 years of economic history in the world,” says a review of the book.

The result, as Professor Deaton predicted is the hurt to the middle-aged, high school educated has only grown. “There is a danger that the rapid growth of top incomes can become self-reinforcing through the political access that money can bring. Rules are set not in the public interest but in the interest of the rich, who use those rules to become yet richer and more influential.”

Harlan Green © 2015

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About populareconomicsblog

Harlan Green is editor/publisher of, and content provider of 3 weekly columns to various blogs--Popular Economics Weekly and The Huffington Post
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