Middle-class Debt vs. Private Sector Wages
Post#1240
The prior report in this series is here.
If dividing two things that are not commensurable (do not fit together), then you have to be careful not to put too much confidence in what you find. Below, the total debt of the Middle Class — i.e., the 50th-to-90th Wealth Percentiles — gets divided by all wages earned in the private sector, wages that only “mostly” went to the Middle Class.
Back in 1995, the entire debt of the Middle Class was 70% as high as the sum total of all private sector wages paid out — indicating a good economic position for the Middle Class. However, prior to the Great Recession, total Middle Class debt even surpassed the sum total of all private sector wages paid out (a ratio of 1.073 in 2005 and 2006).
In 2022, total Middle Class debt was equivalent to 85% of all private wages, still worse than what had been found back in 1995 — when the Middle Class was doing better. Even though the ratio isn’t perfectly legitimate (“some” of the total wages paid out are not paid out to people in the Middle Class), as a rough measure, it tells the story.
The Middle Class has been suffering under “anti-economic” (progressive) policies adopted by politicians and bureaucrats for at least the last 30 years, and that means we have to “undo” at least 30 years of progressive policies in order to get back to a scenario where the Middle Class can once again realize the American Dream.
The public policies that have been introduced in the 21st Century in America have not been good for the Middle Class of America, indicating that we need to return, at least, to the economic policies of the 20th Century — and in some cases, even the economic policies of the late 19th Century.
Reference
Board of Governors of the Federal Reserve System (US), Total Liabilities Held by the 50th to 90th Wealth Percentiles [WFRBLN40073], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/WFRBLN40073
U.S. Bureau of Economic Analysis, Wage and salary accruals: Domestic private industries [A4103C0A144NBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A4103C0A144NBEA