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Smart Talk is a daily, live, interactive program featuring conversations with newsmakers and experts in a variety of fields and exploring a wide range of issues and ideas, including the economy, politics, health care, education, culture, and the environment.  Smart Talk airs live every week day at 9 a.m. on WITF’s 89.5 and 93.3.

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Host: Scott LaMar

Smart Talk: Middle class shrinking in PA?

Written by Scott LaMar, Smart Talk Host/Executive Producer | Sep 23, 2014 3:13 PM
graph trending down 600 x 340.jpg

What to look for on Smart Talk Wednesday, September 24, 2014:

The Occupy Wall Street movement and other similar demonstrations across the country three years ago made the "top one percent" household words when referring to the wealthiest Americans.

Income inequality was certainly an issue before then but ever since, it has been identified as one of the biggest challenges the economy faces.

A report released last week by the left-leaning Keystone Research Center provides numbers that indicate the income gap is having a detrimental impact across the state.

The report found that the middle class got smaller by percentage in all 67 Pennsylvania counties since the late 1970s and that the percentage of income derived by the top earners increased.

On Wednesday's Smart Talk, we'll examine the factors that led to the disparities.  They include the loss of manufacturing jobs, flat consumer spending, and large increases in top earners' incomes as part of the problem.

Dr. Mark Price, an economist with Keystone Research Center and co-author of the report appears on the program.

Dr. Price also points to a stagnant minimum wage, fewer union jobs, and government policies as contributors.

Dr. Mark Price 600x340.jpg

Dr. Mark Price

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  • Aggie img 2014-09-24 08:26

    what about inequitable taxation? how is that affecting the middle class?

    thank you.

    • Mark Price img 2014-09-24 10:32

      Hi Aggie, sometimes a picture is more effective than words. This picture shows the change top tax rates and the change in the share of income flowing to the top 1%. http://milescorak.files.wordpress.com/2013/05/changes-in-mtr-and-top-shares.png This is suggestive that part of the rise income inequality is driven by deep cuts in the tax rates facing the highest income households.

  • stellalark img 2014-09-24 08:43

    Without a central economic planning in US why attempt to make a comparison to Germany? Remember folks do not want a social democracy. The only centralized planning we have is Federal Reserve on monetary policy and nothing else. They have influence but no national policy to advance the society. Stella

    • Mark Price img 2014-09-24 10:27

      Hi Stella, actually the German economy is a market based economy not fundamentally different from our own. What is different is the German economy today has greater unionization and labor market rules which help restrain the growth in inequality. In many ways the German economy looks like the U.S. economy from 1947 to 1979 when the U.S. economy was producing income growth for low, middle and high income households and when the middle class was bigger in Pennsylvania.

  • James Spangler img 2014-09-24 08:59

    Hiya, Scott, I appreciate your taking my call today. One of the items I noted when you spoke with Dr. Price: he did not change the subject or deflect a question when asked. He addressed the question directly. I may not have liked the answer, yet he directly addressed the issue. Wouldn't it be great if our politicians could do the same? Thanks again for having a speaker on your show who (in my opinion) demonstrated integrity. Please pass this on to Dr Price.

    Jim Spangler, York, PA

  • Radio Smart Talk img 2014-09-24 09:09

    Thomas from Lancaster emails:

    I heard the promo for todays' show, is the reason that the wages in lancaster county and hanover is due to the fact that good paying factory and manufacturing jobs are all gone and being replaced by service jobs, that do not pay well. In lancaster county it seems that the only new jobs being created are at fast food places, reading in the news all I read are new fast food chains opening here. Not real jobs or family sustaining jobs.

    • Mark Price img 2014-09-24 10:32

      Thanks for your comments Thomas.

  • Radio Smart Talk img 2014-09-24 09:10

    Marty emails:

    Of the numbers of people who are leaving the middle class, what percent are moving up and what percent are moving down?

    • Mark Price img 2014-09-24 10:22

      Hi Marty, sorry to fumble that on the air. Follow this link to download the tables you would like to see. The tables are Table A3 and Table A4 which respectively tell you the share of households with less than a middle class income and the share with higher than a middle class income. For the state as a whole the share of households with less than a middle class income grew from 27.4% in 1979 to 31.5% today. The share of households with more than a middle class income grew from 10.3% in 1979 to 15.6% today. See the document at this link for the county by county numbers. http://keystoneresearch.org/sites/default/files/OnlineAppendix.pdf

  • Radio Smart Talk img 2014-09-24 09:10

    Jim emails:

    Whatever happened to the Buy American campaign? More and more people shop at Walmart that imports directly from China. Can we not encourage American made to support the middle class and factory jobs?

  • joe g. img 2014-09-24 09:57

    I was listening to this segment in my car and couldn't believe what I was hearing. While I don't think many would argue that we are slowly moving towards a two class system, I find it disturbing to hear the prevailing ideas on how to fix the trend. The fact is that you simply cannot legislate people into making better decisions. Self entitlement and debt are at the core of this problem...which has infected our whole society from the bottom to the top. I'm not an economist and I don't have a bunch of initials behind my name but it would seem as if a reset of our entire society is needed. At this point, the problem is so big that I wonder if it is able to be fixed at all. I worry for the future of our country as a whole and I find it very disappointing to hear professionals come on the air and tell us that the answer is forced higher wages for entry level work and higher taxes for those who have figured out what the rest haven't. If you want to earn $50,000+ a year...the answer is to find something you are good at that you can make money doing and go work your tail off doing it. It is unrealistic to expect to succeed as an adult doing entry level work that a child can do.

    • Mark Price img 2014-09-24 10:40

      Hi Joe, thanks for your comments. Obviously we differ in our assessment of what's behind these trends. Debate and disagreement are a healthy and important part of our democracy.

      I would only add that even after you take into account the impact of the recession more people in our society work today than in the past, more people at all income levels also work more hours with the lowest income workers seeing the largest increase in work hours. And most importantly labor productivity is up much more than wages. These trends make it very clear to me that the problem isn't a society in which people are not working hard and or not producing new wealth and value. It's just that wages for working families have not kept pace with the growth in productivity. That's I think a serious problem.

      • joe g. img 2014-09-24 13:01

        It is no secret that staple items such as groceries and gasoline have risen in price perhaps more sharply than household earnings. What doesn't get sufficient coverage is that many people make poor decisions with what they do have. Many people aspire to a lifestyle they believe they should have before they're in a position to have the things they want. Rather than waiting, they are told by advertisers and creditors that they can have what they desire before they can afford it...and the consumers do it because they feel entitled to have what they want. This feeling of entitlement goes all the way up to the top of our government. How can we teach people to live within their means and make good financial decisions if our leaders can't be an example? I, too, believe that these conversations are important to have. One of the most important rules of business, and life, is to be honest with ourselves. We need to be honest as individuals and as a nation. You would give a homeless person a sandwich versus giving him $10. Why? Because it is likely that he will make a decision with that money that wouldn't benefit him. You wouldn't give your son the answers to every test so he is guaranteed an "A". Why? Because he has to work hard and earn it. Yet people see a $2,000 tv they want but cannot afford and they charge it to a credit card. You want a home but don't have a nickel to put down? No problem, we'll loan you 110% of the homes value so you don't even have to pay closing. This way of thinking is all around us. Anyway, thanks for the reply and taking the time to discuss these issues.

        • Mark Price img 2014-09-24 15:13

          Hi Joe, thanks to you for taking the time to add your thoughts on these issues.

  • Scott LaMar img 2014-09-25 07:41

    Ashley says...
    I work for the Chamber of Commerce in Hanover and would have to disagree with the loss of manufacturing jobs, at least when it comes to the Hanover community. In fact, employers are crying out for skilled workers!! They have MANY opportunities available and cannot fill those positions! Their problem is there are few applicants not having the right skill sets OR the soft skills, showing up on time, etc... We've even created a workforce development program to create awareness at the high school level of the job opportunities in their backyard. This was due to the concerns raised by our members.... Manufacturers having the greatest need!! It's not dead everywhere!! Hanover needs you!!