My friend David Denholm has passed along an interesting post on unions, the economy, and the purported vanishing middle class. I wanted to pass it along to al of you here. David’s blog can be found at David’s VRWC

What vanishing middle class?
-By David Denholm

There is a constant refrain from union officials and their allies in the media, academia and politics about the need to strengthen unions to restore the vanishing middle class.

Being unencumbered by too much formal education, such complaints seem very strange to me.

In our relatively classless society, terms like “middle class” are usually defined by household income and household income is analyzed by quintiles. The third quintile is considered to be the middle class, the second as lower middle class and the fourth as upper middle class, the first being the poor and the fifth the wealthy.

It is impossible for quintiles to disappear, vanish or even to shrink. After all, a fifth is a fifth. (This analysis does not, of course, involve fifths of good whiskey. They have been known to vanish, sometimes rapidly. I have witnessed this myself.)

Perhaps, then, those who complain about a vanishing middle class believe that the purchasing power of the middle quintiles is diminishing. That, for example, the average household income of the third quintile is falling.

The U.S. Census Bureau has information about this on their web site covering the period of 1967 to 2007.

This information is expressed in both current and constant dollars. There’s good news for those who fear a shrinking middle class. In constant 2007 dollars, average household income is up in every quintile. The growth isn’t steady and it isn’t uniform from quintile to quintile, but it is up across the board.

The alarmist can do some cherry picking to get the numbers they want. For example, if one were to compare the average household income for the middle quintile for 2000 and 2004 it would show a decline, but if you were to compare 1997 to 2007 it would show an increase. Over the long haul the movement is upwards in all quintiles.

There are, of course, other dimensions to this issue. I’ll discuss them in a future blog.

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