tag:blogger.com,1999:blog-26706564.post116596733997495529..comments2024-03-25T07:51:47.758-04:00Comments on Thoughts On Economics: Krugman Gathers No MossRobert Vienneauhttp://www.blogger.com/profile/14748118392842775431noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-26706564.post-1166359798844308312006-12-17T07:49:00.000-05:002006-12-17T07:49:00.000-05:00«the misleading impression that income between $10...«the misleading impression that income between $100K and $500K is "middle income"»<BR/><BR/>But note that Paul Krugman writes «relief to middle-class wage earners», not "middle income".<BR/><BR/>That is sort of right: the «middle class» is defined in terms of function, not in terms of income, and its income is anything but middle.<BR/><BR/>From USA tax returns the middle income earners are in the 3 middle quintiles (by definition :->), but the middle class is in the top quintile, with individual (''adjusted'') incomes of $60,000 and over, up to the top 5% with $100,000 and over.<BR/><BR/>In practice "rich" means top 5%, "middle class" the next 15%, "working class" the next 60% (household incomes between $20-60,000), and "poor" the bottom 20%.<BR/><BR/>«I know that elsewhere in the article Krugman gives figures that show otherwise.»<BR/><BR/>Sure, but look at bit more closely and you see that he is not far off the $100,000 mark:<BR/><BR/>«In 1969, General Motors [ ... ] average paycheck for production workers in the auto industry was almost $8,000 -- more than $45,000 today. GM workers, who also received excellent health and retirement benefits, were considered solidly in the middle class.»<BR/><BR/>That is $45,000 plus benefits, let's say at least $60,000 ''package'' value, per worker. In the 2003 USA tax stats, $60,000 per taxpayer is roughly in the top 25% of incomes. A two-income family with one GM worker in it would have had a good chance of earning at least the equivalent of today's $100,000 indeed; and note that a significant proportion of GM employees in 1969 would earn more than the average $8,000/$45,000 base salary.<BR/><BR/>In another posting you mention Prescott:<BR/><BR/>«Prescott said then, "It's easy to get over $200,000 in income with two wage earners in a household."»<BR/><BR/>Sure he is right and this is indeed what easily happens to the top 5-10% of the population, the ''politically active'' or ''professional'' middle class. Which is what most (white, educated, native citizen) people understand as *the* middle class.<BR/><BR/>Which middle class of course always moan about their struggle to remain middle class and maintain their $100,000 and higher train of life.<BR/><BR/>The rest of the population simply don't matter. Why worry about the losers? :-)Anonymousnoreply@blogger.com