Upper Class Median Income 2.4 Times the Middle Class

Pew Research is my favourite mainstream firm, and it has just come out with results about the status of the upper, middle, and lower class in America. As you would guess, the upper class has gained ground since 1971 while the middle and lower have lost…but not as much as the top 1% and 0.1%, who have nearly doubled their share of the income.

EXPOSED: The truth behind Australia’s ‘miracle’ economy

The upper class at 19% currently has 2.4 times the median income of the middle class in 2016 versus 2.2 times in 1970. The percent of the upper income has steadily risen since 1971 from 14% to 20% in 2011, as the chart shows. That class dropped back to 19% in 2016.


US Upper, Middle and Lower Class Household Income

Source: Pew Research

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The middle class has fallen from 61% in 1971 to 52%, and the lower class has risen from 25% to 29%.

The median income statistics are the most telling. The upper class is at $187,872, a bit higher than I would have thought for median. Average incomes skewed by the exponentially richer 1% would be even higher. The middle class is $78,442. The middle class is pretty much unchanged since 2000, but has done a bit better since 2010, growing 6%. The upper income still grew higher at 9%.

The lower class has actually fallen a bit behind from $26,923 in 2000 to $25,624 in 2016. The upper class is now 7.3 times their income versus. 6.3 times in 1970, so more of a divergence than the middle class.

The highest upper-class concentrations are in the New York area and California, while the middle class is higher in the Midwest and larger parts of the Northeast.

Where do you stand? The minimum income to qualify for the upper class in a one-person household is $78,281; for two people, $110,706; three, $135,586; four, $150,561; and five people, $175,041.

Australian Household Income Data:

There’s some interesting data out of the OECD regarding Australia as well.

For starters, the middle class is 3% smaller than the OECD average, coming in at 58%, with low income and the poor making up 22% put together and 10% falling into the upper class range.

This confirms what we know about Australia compared to the US, a more even spread than the US, but fewer genuinely rich people.

Digging deeper into Australian data, I’ve got two charts for you that really struck my fancy:


Australian Household Income Chart

Source: ABS

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The red line is what we are interested in — disposable income.

It’s flat lined!

And the culprit…

You guessed it, housing!


Australian Household Spending

Source: ABS

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While the latest data only goes to 2016, I have a suspicion that the last three years have not been kind to renters and those with mortgages — particularly the lower class.

The percent of money going into housing could be anywhere from 25–35% now.

And when that housing bubble pops…

A definition of what constitutes ‘middle class’ in Australia is hard to pin down, but a figure of $40,000–$90,000 may fit the bill.

With the Aussie dollar being hammered, this lines up pretty well with numbers out of the US.

Over there, the minimum for the middle class by household size ranges from $26,093 to $58,347.

But of course, in the US, the greatest divergence comes between the top 1%, who have benefited the most from the financial asset bubble, and the middle class. From the Piketty study in 2014 using average income, the top 1% was $1,391,000, 33 times the middle-class average. The top 0.1% is 30 million, a whopping 719 times.

Hence, the top 1% has run away with almost all of the gains, far more than the top 19% upper class!

And lest we not forget, the top 1% can afford the fancy accountants needed to protect this gap in wealth. Meanwhile, the rest of the top 19% have to fork out heaps!

Regards,


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Harry Dent,
For The Rum Rebellion

 

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Harry Dent is an economic realist. His market predictions and strategies, as well as his general views of the economic and political state of the world, are based solely on his own knowledge. And, as a Harvard University MBA graduate and Fortune 100 consultant, it’s not as though he’s lacking in this resource. But if experience isn’t enough to convince you, perhaps his accuracy is. In 2017, Harry Dent was making calls about the Australian property market that are coming into play as we speak. And yet, the media portrayed him as ‘crazy’. At The Rum Rebellion, this sort of biased, inaccurate media that isn’t accepted. Dent and his fellow editors aim to give you the information you should know, rather than what the media wants you to know. Dent believes in facts and facts alone when forming an opinion, and such is The Rum Rebellion mission.


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