Tags: middle | class | suffer | housing

Middle Class Continues to Suffer

By Barry Elias   |   Friday, 26 Oct 2012 07:58 AM

As outlined in my previous column, the share of wealth controlled by the top 1 percent of households rose from 20.5 percent in 1979 to 35.4 percent in 2010 — a 50 percent increase. During this time (31 years), real median household income (adjusted for inflation) rose only 7 percent to $50,831, according to the U.S. Census Bureau. This represents an annual rise of less than 1/5 of 1 percent.

A recent report from the Center for Housing Policy indicates the combined housing and transportation costs for moderate-income households in the 25 largest metropolitan areas rose 75 percent more than income did from 2000 to 2010. This parameter is important, since it describes the entire cost of residency.

These combined expenditures increased 44 percent during this decade — 52 percent for housing and 33 percent for transportation — while income only rose 25 percent. This report defines moderate income as between 50 and 100 percent of median income in each area. Even more striking, these costs represent 59 percent of income on average for each area. The Miami area was hit hardest at 72 percent, followed by the Riverside-San Bernardino, Calif., area at 69 percent and the Tampa, Fla., area at 66 percent. In some neighborhoods surrounding the Philadelphia area, these costs exceeded 90 percent of income.

Housing costs for renters include rent and utilities and those for homeowners include mortgage payments, property taxes, home insurance, utilities, home equity loans, condominium fees and mobile-home expenditures. Transportation costs include expenditures related to all daily routine travel, such as commuting to work. These expenditures also include the total cost of ownership, such as purchase price, loan payments, insurance, maintenance and fuel, as well as user fees for other transit modalities, such as bus, subway and railroad fares.

Fiscal and monetary policy over the past three decades has enabled this economic and financial bifurcation by promoting excessive income deductions, overly preferential treatment of unearned income and imprudent lending standards by financial intermediaries.

Should this diverging economic stratification continue over the next several decades, the upper class will also suffer.

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Elias
Fiscal and monetary policy over the past three decades has enabled an economic and financial bifurcation by promoting excessive income deductions, overly preferential treatment of unearned income and imprudent lending standards by financial intermediaries.
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2012-58-26
 

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