Gary Hoover made the oft repeated, but false, claim that "the middle class is ... being destroyed."
The middle class may be shrinking but that is because they are moving up and out of the middle class. That's right, the upper class is getting bigger because more people are moving into it. Bruce Bartlett lays this out in the Washington Times at http://www.washingtontimes.com/commentary/20040831-101020-1546r.htm or http://www.townhall.com/columnists/brucebartlett/bb20040831.shtml.
Much of the misunderstanding regarding the changing size of the middle class stems from how the Census Bureau reports income distribution. Robert Rector and Rea Hederman, Jr. layout in "Two Americas: One Rich, One Poor? Understanding Income Inequality in the United States" (http://www.heritage.org/Research/Taxes/bg1791.cfm) the problems with the Census Bureau's data. Further, they go on to correct the data for such issues as:
1. Conventional Census income figures are incomplete and omit many types of cash and non-cash income.
2. The conventional Census figures do not take into account the equalizing effects of taxation.
3. The Census quintiles actually contain unequal number of persons, a fact that greatly magnifies the apparent level of economic inequality.
4. Differences in income are substantially affected by large differences in the amount of work performed within each quintile, yet these differences in work effort are rarely acknowledged.
Related to the issue of poverty is the fact that most of those who are poor are recent immigrants. This stands to reason because many immigrants left their country because of poor economic conditions.
A point frequently made is that the median household income has dropped for some time period. This is more an indicator of the changing nature of households. At one time, the "typical" household consisted of mom, dad, and two kids. Nowadays, there are more singles, childless couples and retirees. Smaller households tend to have lower incomes. So do poor immigrant households. These all drag down the median (which is just the midpoint of incomes, not the average or mean of incomes.) Robert Samuelson presents these arguments in the Washington Post at http://www.washingtonpost.com/wp-dyn/articles/A28394-2004Oct12.html or http://www.wpni.com/wp-dyn/articles/A28394-2004Oct12.html.
I think we need to reframe the question: how can the citizens and political and civic leadership of Minneapolis respond meaningfully to this trend of extreme economic polarization?
How can the political leadership of Minneapolis help the poor?
It can reduce spending and, thus, taxes. Taxes take from those who are striving to move up the economic ladder. Property taxes are particularly onerous because they are levied regardless of income. In the case of rental property, which is taxed at a rate higher than homesteads, the taxes are passed onto the renters, many of which are poorer than homeowners. Sure, some of these renters qualify for property tax rebates, but, until that rebate check arrives, we have deprived them of their income. Better to reduce taxes and never have to give rebates than to take too much and then give it back later.
It can also look at what regulatory and legal hurdles exist that raise the cost of housing and inhibit business creation and expansion.
Scott McGerik South St Paul (formerly Hawthorne) http://scott.mcgerik.com/
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