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The Shrinking Middle Class
Transcript of The Shrinking Middle Class
International competition--wages have decreased significantly as jobs have been shifted overseas
Globalization has helped millions of people out of poverty in developing nations but has hurt the middle class
Labor is cheaper in other countries, which has caused factory workers to lose their jobs as they are shipped overseas The decline of unions and other labor protections over the past 30 years explains why middle class workers have do not have wages that stay up with inflation
Incomes of the middle class have been stagnant
In 1988, the income of the average American taxpayer was $33,400. In 2008, it was only $33,000
Corporations are skipping out on taxes and burdening middle class families
In 2004, the tax rate for corporations was around 2.3% Wealthiest people have been capitalizing on different factors, which drives an even bigger wedge between themselves and the rest of America
New markets around the world have created even greater demand for their new products (globalization)
The wealthy are capturing a larger and unfair share of the nation's wealth
S&P 500 has gained more than 1,300% over the past forty years, and although this has helped the economy to grow, it has been disproportionately reaped by the wealthy A barbell economy is a situation in which the very rich and the very poor are clustered at the ends of the socio-economic spectrum and a diminishing middle class exists between the two ends Midsize firms teeter in the middle Giant corporations are situated on one end while tiny businesses are balancing on the other end Many industries are becoming more "barbell-like" rather than "bell-shaped." Giant corporations exist on one side of the barbell, a small number of midsize firms lie in the middle, and several tiny businesses balance out on the other end Big corporations turn to partnerships with small businesses for new and innovative ideas Bell-Shaped Economy: Economy in which extremely large values and extremely small values are rare and occur at the ends. The most frequent values are clustered around the middle. Corporations go after local customers through small firms that have developed an intimate connection with customers Offers opportunities for the businesses outside of large corporations Mass production becomes less important as consumers crave more customization Artisans gain a more important role in the economy Median Income: $50,054 Upper Class Makes up approximately 1-5% of the American population Top 5%: Earn above $150,000 per year
Top 1%: Earn above $250,000 per year The upper class can be divided into two different categories: those with old money or those with new money
Those who have had wealth in their family for the past few generations have not necessarily worked for their income
Those who have had wealth in their family for a short period of time or have inherited their riches have had to work for their wealth Middle Class The middle class not only makes up a vast majority of the American population but is also divided into four different sub-categories because of its size. Upper: Upper class members are usually well educated and have high-paying white-collar jobs.
Male dominated class with an income of $100,000 annually
Middle: Comprised of people who have a college education but lack the degrees necessary to take advantage of higher-earning positions.
Contains lower-level white collar workers with an income between $32,500 and $60,000 Lower Class Lower: The lower class can further be split into two categories--the satisfied middle and the struggling middle.
Satisfied middle: People who can still find joy and satisfaction in their lives despite their small income; composed of a disproportionate amount of young and old Struggling middle: Households that earn a lower median income than those who have put themselves farther down on the social ladder; composed of a disproportionate amount of women and minorities
Working Class: The very bottom of the middle class; also referred to as the blue-collar class
This class is made up of the most dissatisfied and downbeat people
Many have gone to college for technical and vocational training
Average salaries lie between $23,050 -- $32,500 Anyone below the working class falls into the poverty level. This includes any household under the poverty line, which means that they are unable to meet the basic essentials of life (i.e. food, clothing, shelter) because they do not earn enough money. Current poverty level: Any household of a family of four earning anywhere between $18,000 and $23,050 per year The Census Bureau has estimated that approximately 15% of the population--42 million people--live below the poverty line Since the 1980, income inequality has drastically increased. The gap between the three classes has been widening at an alarming rate, which causes problems for social mobility and important programs Upper Class: Since the 1980s, the top 0.01% earned 333% more in 2010 than in 1980 with an average income of $23.8 million.
Despite issues with Reaganomics and the 2008 economic collapse during the Bush Administration, the upper class has continuously increased its expanse of wealth
Lower Class: On the opposite end, the bottom 90% have seen little variation in their income
In 2010, income for the lower class was 5% below what it was in 1980 Looking at the graph, overall growth has continued since the 1980s, yet all of the benefits of this growth was going straight to the top 1%. The bottom 90% saw no growth in income, and some people even saw their incomes decline. It is clear that the absolute richest has benefited over the past 30 years while the rest of the country has suffered.