Distribution of Household Income since 1968, top 20% increased 37%, middle went down -19%
The second highest fifth increased their share by 20%, while as said above, the middle fifth's share of income went down 19%.
This makes it pretty hard to achieve a strong, growing economy. When most of the people have less money to spend, then companies will find it harder and harder to grow sales and make money ...resulting in depressed jobs growth and stubbornly high unemployment.
The economy doesn't grow based upon business investment. Businesses invest when they have growing sales and profits. Businesses hire more workers when they have growing sales. IT all starts with the aggregate buying power of the greatest portion of your population. IF people aren't getting a share of the productivity growth it's inevitable that businesses will gradually find it more difficult to grow sales, make more profits.
Wages for the first three fifths (from the bottom) of the income scale have stagnated since about 1970 (in real terms - i.e. taking into account inflation) while the profits of corporations and the incomes of the two top fifths of the county (in terms of income) have shown strong growth.
check out chart in this CRS report:
The U.S. Income Distribution and Mobility: Trends and International Comparisons
Businesses are like sailing ships at sea. No matter what the skippper of the boat thinks, Consumer spending is what fills their sails and enables them to go anywhere. Without that wind -- consumer demand --- business won't go anywhere - and there will be no need for sailors to operate those ships.
