The 'Vanishing' Middle Class

Stan Writes:

I believe it's an economic fact that the rich are in fact getting richer and the poor do seem to be getting poorer. Where do you see this heading in another 20, 50, 100 years? I have a vision of the future where the top 2% of the people have 98% of the wealth in our capitalistic society. Look at the old model of getting rich: being an entrepreneur, inventing something or natural resources. Now look at the way things stand today. You have all the Wal-Marts and Sizzlers putting the local stores and restaurants out of business. Technology is so complex and competitive that a single person or team wont be able to get a concept or product to market - no more Edisons or Bells. You can't mine for gold or drill for oil anymore since the big corporations have that area covered. Most entertainers (especially musicians) and sports players are not what we would consider really really rich - and look at how competitive those markets are. In reality the entertainment and sports industries are simply another funnel for cash to flow from the masses to the elite. Same with the lottery, which many Americans regard as their only way into the upper class.

Keep in mind that I'm not saying we should go socialist or communist but I think someone needs to look at the big picture - long range. That's something that we seem to have a very hard time doing. I have no idea what the answer is here - but I think it's worth thinking about. Any thoughts on this?

Well, given that the number of people at or below the poverty level is shrinking and the Poverty Threshold steadily increases, and a large percentage of people in poverty are immigrants, about 2-to-1 over native-born people. And they usually don't stay there after the first generation, with certain ethnicities that value education and assimilation leading the pack, so I'm not so sure this is an economic "fact".

Census Bureau on Poverty:

The number of people below the official poverty thresholds numbered 35.9 million in 2003, or 1.3 million more than in 2002, for a 2003 poverty rate of 12.5 percent. Although up from 2002, this rate is below the average of the 1980s and 1990s.

As I mentioned in other places, most of our population growth is immigration, which obviously drags the average down. Not that these immigrants don't contribute to the economy, it's just that the rate of immigration has been accelerating.

Update via Econlog:

it has become harder to stay in the income range of $35,000 to $50,000 is correct, if what you mean by "harder to stay" is that it has become difficult to avoid being squeezed up into a higher category.

Update via Ace of Spades