The Recent Shocking Changed US Income Levels & Distribution

This week's Wall Street Journal very disturbing articles concerning US income levels and distribution.

The first, on Monday was a front-page piece detailing Proctor & Gamble's product development efforts in reaction to what it terms a 'barbell' US income distribution. The longtime leader in household products has officially and pragmatically acknowledged that its middle-class customer base has shrunk, with most of it moving downmarket, and some of the remainder upmarket.

A P&G manager is quoted as noting the Gini coefficient, a measure of income disparity, for the US is now roughly equal to those of the Philippines and Mexico.

Then, on Wednesday, the Journal ran an article containing recent federal government data on US incomes. The big news is that the median income fell 7.1% from its 1999 peak, and is now equivalent to its value in 1996- 15 years ago.

It should be noted that the figure does not include transfer payments, which have grown much more ubiquitous with each decade. Still, a median household income of $49,445 isn't something to cheer about.

P&G's reactions tell you that, from a business perspective, the betting is on stagnant or falling US incomes, not rising ones across the population.

That seems to me to be a significant departure from prior economic assumptions. A change heralding very troubling implications for attempts to reduce US federal debt, while also trying to spur spending.

Common sense would suggest that the median income figure is the result of recent decades' effects on the nature of jobs in America. A bifurcation of fewer high-paying, high-value-adding positions, and more lower-paying jobs, while the middle-management, middle-class types of employment Americans have come to expect since the late 1940s was, in reality, a passing phenomenon that is now over.