Now we are engaged in a great tug-of-war over a few points in the top tax rate in Washington. But even if the White House pulls hardest, it won't amount to much of a victory for the long-suffering middle class. The sources of their income stagnation are too deep, too varied, and too long-term for Clinton-era tax rates to cure them.
"There is a huge amount of focus on progressive taxes in our policy world but progressive taxes are not much of a solution to this," said Lawrence Mishel, president of the left-leaning Economic Policy Institute. "We need to get unemployment down rapidly. We need to greatly change our labor standards. We need to raise the minimum wage."
He's right: The middle class crisis -- and its resulting income inequality -- is the most important economic story of our time. There are a million ways to tell it, and here's another: an annotated slide show, culled from the amazing 2012 edition of the State of Working America from EPI.
Here we go:
ANNOTATED CHART-GUIDE TO THE MIDDLE CLASS CRISIS
The income of a typical working-age family grew considerably in the late 1990s. Around 2000, it stopped growing. In 2007, it started falling.
Adding to the mystery is the remarkable de-coupling of productivity from real hourly compensation for all workers, including college graduates. The break seems to have occurred in the 1970s and accelerated very recently. Productivity grew steadily in the 2000s. Compensation didn't. It even hit a wall for college graduates.