It’s The Middle Class, Stupid!!!

The conventional view has wages for the middle class, particularly men, stagnating over the past 40 years. But Michael Greenstone, economics professor at MIT and director of The Brookings Institution's Hamilton Project, says the situation is much worse than that.  Greenstone tells The Daily Ticker that after studying the data more carefully he found "that a lot of men are no longer in the workforce or are working part time. If you put them back in, the earnings of the guy in the middle have declined 20% over the last four decades," he says. "As a result, the median earnings of men are back to the levels that prevailed in the 1960s." In the latest jobs report released Friday, the average hourly earnings for men and women rose a penny to $23.58 an hour. That caps a 1.6% gain over the past 12 months, which is not enough to keep up with 2% inflation as measured by the Consumer Price Index. Since 2001, employment has grown 8.7 percent in lower-wage jobs and 6.6 percent in high-wage ones but they've fallen more than 7% in mid-wage jobs. The situation since the Great Recession is similar: jobs in the mid-range paying $14 to $21 accounted for 60% of jobs lost but only 22% of the job gained while lower wage jobs paying a median wage ranging from $7.70 to $13.83 represented 58% of all new jobs. Despite the decline in middle class wages and jobs, Greenstone, a former chief economist for President Obama's Council of Economic Advisers, says the labor market today is much healthier than it was four years ago. "In the October 2008 jobs report the economy lost 500,000. This month we gained about 170,000 and there were positive revisions for the previous two months. The future looks much brighter today than it did 4 years ago," says Greenstone.  Without growth in middle class jobs, recovery from the recession will continue to stagnate.