Thoughts

Where did the middle class go?

I think is a question many ask the the first common thought is, income hasn’t risen with the rate of inflation.

This is true, but what is left out and I think the bigger issue even beyond that is, the middle class got nickled and dimed to death.

Think about it, scroll back 30 years, and cell phones weren’t a thing. Cars, trucks cost a lot less. Computers? Yeah, very few people had them. Internet, that was for colleges. Taxes were a lot lower in many areas. Food, Gas, you name it was significantly lower than it is now.

Consumerism has run rampant in the last decade or so, especially when it comes to cell phones. For a minute there, it was like everyone had to have the latest and greatest phone. If you think about that for a second, the median household income was $56,516 (quick google search) and a phone up front costs about on average $700 for a “flagship” phone. Now lets assume they pay taxes and assume the average of 30% is realistic.

$56,516 X .30 = $16,954.80 paid in taxes

Sub taxes

$56,516 – 16,954.80 = 39,561.20 After taxes paid

Assuming they buy a “flagship” every year, that’s 1.8 percent of their income. That doesn’t include the cost of the mobile plan either. Think about that 2% of their year was spent paying for a phone. That’s roughly a week. Think, 40 hour days for 1 week to pay for a phone?

True now a days phones are bought on payment plans. But it’s still income lost. Imagine taking that $700 per year and rolling it into a index fund every year for 10 years. It would be a nice little savings.

My point is, like capitalism itself, consumerism in doses isn’t the worst. But unchecked, and I would say it mostly is among most Americans, classes of people will disappear. The middle class not only took a hit from the front end by not getting an income that followed inflation, they got it on the back end as spending desires increased.

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