As you’ve read elsewhere and heard from politicians ad nauseum, the middle class in America is shrinking. The consequences for society are significant and should not be underestimated. Let’s first review the facts, as reported recently by the Pew Research Center, then explore the reasons and possible consequences.
Pew observes that the number of adults considered “middle class”—about 121 million—is now equal to the number both above and below them by income. Look back to 1971 and you’ll see a quite different distribution—instead of half, 61% of Americans were in the middle class.
Pause for definition: Pew considers “middle income” as two-thirds to twice the median household income. In 2014, the middle extended from $34,186 to $102,560 for a family of two. A family of four with income between $48,347 and $145,041 is “middle income.” You get the idea.
Middle income families today also take home a smaller share of total income. In 1971, with 61% of the adults, the middle class took home 62% of total income. Now 50% of adults, the middle tier takes home 43% of total income.
The winners, of course, are the upper income households. About 29% of adults live in the bottom tier today, a bit more than the 25% in 1971. The ranks of the upper income group grew substantially, however, from 14% of the total then to 21% today. Read more »
I recently participated in a discussion of Governor Cuomo’s proposed $15 minimum wage on WXXI public radio’s Connections with Evan Dawson. A listener contacted the host, referred to the recently-passed increase for fast food workers, and said, “Hey, I’m a skilled machinist earning $18/hour. Why should someone at McDonalds earn nearly the same?” That’s an interesting question—it points out that the $15 minimum wage could have far more impact than we might think at first blush. First I’ll summarize what research tells us about the obvious and short run impacts, then tentatively explore the broader implications raised by this comment.
On the left, we’re led to believe that a minimum wage rise will significantly improve the well-being of the poor and that employment could actually increase as a consequence. The right declares that jobs for the most disadvantaged would disappear and that the increase might trigger a recession.
An across-the-board minimum wage increase to $15 an hour is very different from the incremental increase we’re experiencing right now in New York. The minimum wage statewide rose to $8.75 at the end of last year and is scheduled to increase to $9 on Dec. 31. The federal minimum wage remains at $7.25. Read more »
Dissatisfaction with the NYS Education Department’s testing regime led many parents to allow their children to “opt-out” of state exams last spring. And now state leaders are engaged in a tactical withdrawal. With State Education Commissioner John King off to Washington—replaced by former Florida educator Mary Ellen Elia—Governor Cuomo is placing the blame for the botched Common Core rollout on State Ed’s doorstep and is calling for a reboot in time for his State of the State in January. Board of Regents Chair Meryl Tisch indicates her openness to changing the state’s teacher assessment system, the Annual Professional Performance Review (APPR).
Elia has been touring the state on a charm offensive. While noting that the tests are not optional under state law, she recently announced that next year’s math test would have fewer multiple choice questions and the English language arts (ELA) test would include fewer reading passages. Read more »
I’ve a weakness for dystopian literature (think Cormac McCarthy’s The Road). The premise of these books is a disaster that fundamentally alters the trajectory of the planet. The apocalypse is typically human-caused, some act that taps into our collective guilt about environmental degradation, warlust or technological hubris.
An economist’s dystopia is portrayed in Kurt Vonnegut’s Player Piano. Instead of a despoiled planet or some biological or digital monster, Vonnegut’s first novel portrays a society nearly bereft of work. Set at a thinly disguised General Electric (where Vonnegut once worked), World War III prompts an acceleration in automation, allowing the U.S. to win the war. A decade later, automation has become near total. The only people needed are the very best engineers, who spend their days seeking new efficiencies, displacing yet more human involvement. They’ve been freed from work—utopia, right? Read more »
A friend characterized many policy debates as disputes between “faith and reason.” The political season—particularly the primaries—involves repeated “professions of faith.” Candidates appear before the high priests of their sect and are judged on purity and zeal.
Unfortunately, uncritical faith leads to irrational policy. Consider Republicans’ faith in tax cuts. The lesson of the 1964 income tax cut—a Kennedy initiative, I remind you—was that high taxes can discourage industry and that cutting tax rates can paradoxically yield more tax revenue as the economy expands. When Ronald Reagan followed Kennedy’s lead, the tax rate on the highest earners was nearly 70% and almost surely discouraged enterprise. Cutting taxes was a reasoned response. Now an article of faith in republicanism, raising taxes has become a sinful act that invokes moral sanction. Even closing some of the loopholes that riddle the tax code can be deemed “raising taxes.” Reason responds that taxation is necessary and must be balanced—reductio ad absurdum surely applies: Reducing taxes to zero would be absurd and would lead to a very different society than what we now enjoy. Read more »
Newly appointed NYS Education Commissioner MaryEllen Elia will require the wisdom of Solomon, the patience of Job, the confidence of Donald Trump and the guile of Machiavelli to succeed in her new job. The divisions both between and within stakeholder groups have never been deeper.
First, she has to figure out who she’s working for. Is there a more complicated reporting relationship in state government? The Commissioner of Education is hired by the NYS Board of Regents. Which is appointed by the NYS Legislature. Not the NYS Senate or the NYS Assembly, but the entire legislature sitting in joint session. As there are 150 Members of the Assembly but only 63 Senators, the Assembly really makes the decision. Since 2009, the Chancellor (the person who leads the 17-member Board of Regents) has been Merryl Tisch, ally of the formerly-all-powerful Sheldon Silver. After Silver lost his post, the Assembly has shown more independence, replacing two regents who were supportive of Tisch and her endorsement of the Common Core and strong teacher accountability. If you have to report to a committee of 17, you’d better hope that the committee is either unified or strongly led, conditions that appear to be waning. Read more »
The Common Core opt-out movement built up quite a head of steam this year. Although opposition to testing is hardly new, frustration over the Common Core standards, anger at Governor Cuomo’s budget power play over accountability and other factors spurred the formation of a large and diverse refusenik coalition.
State Education plans to use the tests anyway: “We are confident the department will be able to generate a representative sample of students who took the test, generate valid scores for anyone who took the test, and calculate valid state-provided growth scores to be used in teacher evaluations.” We’ll see. The Democrat & Chronicle reports the refusal rate for the math test was at least 25% for every Monroe County district but Brighton and Rochester. Read more »
Vladimir Putin’s most ominous bit of saber rattling over the Ukraine has involved allusions to the “nuclear option.” For him, that’s not a metaphor.
The problem with nuclear weapons is the collateral damage. Sure, you might win the battle. But everyone loses the war. I worry that both Governor Cuomo and the New York State United Teachers (NYSUT) are playing with “nuclear” weapons.
Let’s agree, first, that public education in NYS could be, should be, must be improved. We’ll not make an impact on urban poverty, particularly in Rochester, if we don’t raise the levels of literacy and numeracy among children in poverty. Eventually, young people have to make their own way in the world and the labor market has no mercy on people without the academic basics. Second, let’s agree that both Governor Cuomo and New York’s teachers want children to succeed. The governor isn’t an evil megalomaniac clawing his way to national prominence on the backs of children. And teachers care about far more than just their paychecks and prerogatives. Read more »
Yes, Jesus warned us of the persistence of poverty, but we can do better here in Rochester. There is renewed energy directed at the issue, both here and in the nation. The Poverty Task Force announced by Governor Cuomo will continue to focus attention and, hopefully, resources on the problem.
Ah, but what to do? Several of my colleagues at CGR recently completed a global scan of anti-poverty programs. And they concluded that there aren’t a lot of new ideas out there, although size and execution of established programs can be improved (e.g. the Earned Income Tax Credit, economists’ favorite). Read more »
By all accounts, the Affordable Care Act’s front door, healthcare.gov, performed admirably for consumers in its second year (although “back end” problems remain). Just to keep track, I registered on the site and have been getting a steady stream of emails and text messages ever since—29 text messages since October 24! They are filled with teasers like, “8 in 10 people who sign up can get financial help. You could too!” plus special messages for special days: “Cyber Monday: Shop for health plans today” and “Start the New Year with new health coverage.” And plenty of countdowns: “Only 9 days until the Dec 15 deadline” and, on Sunday, “Act now: Only hours left! This is your last chance to enroll . . .” Except that if you claim to have tried by Sunday, you’ll have until 2/22 to sign up for March 1 coverage. And the deadline to avoid an income tax penalty will likely be extended right up to Tax Day, avoiding shock and horror when the penalty becomes real. Read more »