Fewer, Poorer, Gloomier: The Lost Decade Of The American Middle Class

Filed under: Features |

It’s been a tough decade for America’s middle class, those middle-income workers who shoulder most of the burden for keeping the economy humming by reliably earning and consuming.

These stark assessments are based on findings from an August 2012 Pew Research Center survey that included 1,287 adults who describe themselves as middle class.

A steady job is important to middle class workers. Census Bureau photo

A steady job is important to middle class workers. (Census Bureau photo)

Similar shares of whites (51%), 48% of African-Americans and 47% of Hispanics said they are middle class. However, government data shows that whites have higher median income and much more wealth than blacks or Hispanics.

Older American adults ages 65 and older (63%) are more inclined than all other age groups to call themselves middle class. They are the least inclined to say they are lower class at 20%.

These finding were supplemented by the Center’s analysis of U.S. Census Bureau and Federal Reserve Board of Governors data.

Fully 85% of self-described middle class adults said it is more difficult now than it was a decade ago for middle class people to maintain their standard of living.

Who’s responsible for this mess?

Of those who feel this way, 62% said “a lot” of the blame lies with Congress, while 54% blame banks and financial institutions, 47% blame corporations. Another 44% blame the Bush administration, 39% blamed foreign competition and 34% blamed the Obama administration.

Just 8% blame the middle class itself “a lot.”

Ten percent of the middle class has disappeared, pushed either up or down in income.

This middle-income tier included 51% of all adults in 2011. In 1971, using the same income boundaries, it had included 61%.

The downbeat take on the economic situation comes at the end of a decade during which, for the first time since 1945, mean family incomes declined for Americans at all income levels.

The middle-income is defined in the Pew Research report as all adults whose annual household income is two-thirds to double the national median. Only the ranks of middle-income group shrank in size, an overall trend during the past 40 years.

Gender, Race And The American Middle Class
Perceptions of being middle class in America have noteworthy differences by race, age and gender.Conversely, younger adults ages 18 to 29 are more likely to say they are lower or lower-middle class.
A full 39% said this in the most recent survey, compared with 25% who said so in 2008.Men, 46%, are somewhat less likely than women, 53%, to consider themselves middle class.
A somewhat larger share of men, 51%, and 54% of women said they were middle class in 2008.

The hollowing of the middle has been accompanied by a dispersion of the population into the economic tiers both above and below.

The upper-income tier rose to 20% of adults in 2011, up from 14% in 1971 and the lower-income tier rose to 29%, up from 25%.

However, in the same period, only the upper-income tier increased its share in the nation’s household income pie.

It is now takes in 46% of household income, up from 29% four decades ago.

The middle-income group now takes in 45%, down from 62% four decades ago.

And the poor did get poorer. The lower income group takes in 9% of household income, down from 10% four decades ago.

For the middle-income group, the “lost decade” of the 2000s has been even worse for wealth loss than for income loss.

The median income of the middle-income group fell 5%.

However, median wealth (assets minus debt) plummeted 28%, to $93,150 from $129,582.

The median wealth of upper-income Americans was essentially unchanged during this period, rising 1% to $574,788 from $569,905.

The bottom was hit the hardest. Lower-income Americans’ wealth plunged 45%, to $10,151 from $18,421.

Who Is Middle Class In America?

Who is middle class in America?

In addition to looking at a “statistical middle” derived from government data, the Pew Research Center report looked at those who self-identify as middle class, based on a national survey of 2,508 adults.

In the survey, 49% of adults describe themselves as middle class. In a similar survey in early 2008 53% said they were middle class, just as the Great Recession was beginning.

That recession, according to the National Bureau of Economic Research, began in December 2007 and ended in June 2009.

The 2012 survey finds an increase in those who self-identify as being in the lower or lower-middle class.

Thirty-two percent said they were lower or lower-middle class, up from 25% in 2008. And 17% now said they are in the upper or upper-middle class, down from 21% in 2008.

Falling Behind, Moving Ahead

When middle class Americans size up their personal economies, they see themselves as both moving ahead and falling behind. It all depends on the time frame. During the short term, their evaluations tilt negative.

During the span of the past decade, they’re mixed. And in the full arc of their lives, they remain positive—although less so now than in the past.

Most middle class Americans are still feel pinched even though The Great Recession officially ended nearly five years ago.

About six-in-ten (62%) said they had to reduce spending in the past year because money was tight. That compares with 53% who said so in 2008.

The downbeat short-term perspective is not surprising in light of the heavy economic blows delivered by the Great what-does-Middle-Class-01-09Recession of 2007-2009 and the sluggish recovery since.

About four-in-ten, 42%, of middle class adults said their household’s financial situation is worse now than it was before the recession. Meanwhile, 32% said they are in better shape. An additional 23% said their finances are unchanged.

Of those who said they’re in worse shape, 51% said it would take at least five years to recover. A full 8% predicted they would never recover.

When asked to compare their financial situation now with 10 years ago, middle class American was more evenly divided.

Some 44% said they are more financially secure than they had been. Another 42% said less. An additional 12% said it’s about the same.

In the longer term, the outlook grew more positive.

Six-in-ten (60%) said their standard of living is better than that of their parents at the same age. Nearly a quarter, 24%, said it’s the same and just 13% said it’s worse.

These evaluations were far rosier in 2008. Then 67% said they were doing better than their parents at the same age. 

The Cost Of An American Middle Class Life

The survey also asked how much annual income a family of four would need to lead a middle class lifestyle.

The median response among those who consider themselves middle class is $70,000, meaning that half of middle class adults said it would take more than $70,000 annually and half said it would take less than that amount.

Public estimates of how much money it takes for a family of four to live a middle class lifestyle is quite close to the Pew Research Center’s analysis based on U.S. Census Bureau data. The median income for a four-person household is $68,274.

As expected from the varying cost of living across the country, the annual family income seen as necessary for a middle class lifestyle is a median of $85,000 in the East and $60,000 in the Midwest. The median middle class income is $70,000 in both the South and the West.

Similarly, the median among middle class adults living in rural areas is $55,000. Among suburban and urban dwellers, it is $75,000 and $70,000, respectively.

Please click the page numbers below to continue reading

1 2

List your business in the premium web directory for free This website is listed under Human Resources Directory