45 Reasons why the American middle class is an endangered species.

Posted by:

In 1964, President Lyndon Johnson declared a War on Poverty in his famous state of the union address, as he looked to strengthen and expand the prosperous middle class, a benchmark of the American dream. Programs like job training, social security, Medicare, and investments in education worked well. But in the last few decades, deregulation, corporate empowerment, and new economic policies resulted in a stagnation of middle class growth. However, even the most gloom-and-doom economists anticipated what’s happened to the group of middle income Americans through the recent recession and economic recovery; the middle class has dissolved to the point of being an endangered species.

While politicians may argue over the solutions to this problem, the root causes are clear; the middle class is largely sinking into a new lower class, based on decreased wages, underemployment and the kind of jobs that are available, and the increased cost of living – particularly healthcare, housing, and education. But it’s not that we are poorer as a nation. In fact, a very small number of people have accumulated more wealth than ever – an obscene amount through the latest economic recovery – causing the biggest disparity in wealth in American history, and a fledgling middle class.

The end result is that over a hundred million Americans are now drowning financially, no longer able to grasp the American dream. Here is some data, statistics, and patterns to illuminate the problem:

Defining the middle class.

Definitions shift over time, but prominent economist Robert Reich currently suggested defining middle class as those with income levels 50 percent above and below the median income. By that definition, the middle class would include people in the income range of $25,500 – $76,500.

The decline of middle class wealth.

1. Median household income fell from $55,627 in 2007 to $51,017 in 2012 (the most recent Census data available.)

2. The median household net worth in 1983, adjusted for real dollars, was $73,000. In 2010, it was only $57,000.

3. A typical American household made $51,017 in 2012…

4. That number is below what it was in 1989, adjusted in real dollars, when it was $51,681.

5. The highpoint was in 1999, when inflation-adjusted median household income peaked at $56,080.

Where is the middle class going?

6. The poverty line for a family of four is $23,492, $18,498 for a family of three, or $11,720 for an individual…

7. 46.5 million Americans now live below that line.

8. Around 100 million Americans are now considered low-income, which would mean about $45,000 or less for a family of four.

9. 50% of Americans are considered “economically distressed” based on their wage levels.

10. Four out of five U.S. adults will struggle with joblessness, near-poverty or reliance on welfare some time in their life.

11. 8.4% of Americans now consider themselves to be lower class, which is the highest percentage ever.

12. Between 2007 and 2010, poverty rates rose in 46 states in the country.

13. More specifically, the shift happened quickly; the median net worth of a family in 2007 was $126,400. In 2010, it was only $77,300.

14. The approximate poverty rate between 2009 and 2012 was 15%, or, 1 in 6.7 Americans.

15. 1965 was the last time it remained at or above 15 percent for three years consecutively.

Decrease in wages.

16. Since 2006, the average real income per family has dropped 8.3%.

17. From 1979 to 2012, the median worker saw his or her salary grow only 5%.

18. Between 1979 and 2012, U.S productivity increased 75%…

19. If worker wages grew at the same rate, the median middle-class income would now be $77,131, well above the cost of living, instead of the present level at $51,017.

20. U.S. workers put in an average of 1,790 work hours per year, almost 20% more than many prosperous, industrialized European nations.

Increased cost of living.

21. Healthcare costs have skyrocketed, accounting for the largest increase in typical middle class spending. Since 1982, average household out-of-pocket medical costs are up about 250%, in today’s dollars (adjusted for inflation.)

22. Since 2002, health insurance premiums have increased 97%, or three times as fast as wages.

23. The Average out-of-pocket healthcare expense was $2,035 per household in 2005. In 2011, it was $3,280…

24. In 2014 it’s estimated to be $4,734, a 230% increase in only 9 years.

25. What does it cost for a typical family to live? A two-parent, two-child home in St. Louis needs to make $63,673 for an adequate living standard, while in New York City the same family needs $94,676. (Remember that the median income is about $51,000.)

26. 85% of the self-described middle-class adults say it’s more difficult now than a decade ago for middle-class people to maintain their standard of living.

27. 75% of Americans do not have enough money saved to pay their bills for six months in case of an emergency or job loss.

28. Since 1990, housing prices have risen 56%.

29. The typical price tag for college has exploded by about 450% in inflation-adjusted real dollars since 1982.

30. As of 2012-2013, the average amount needed to send a child to an in-state college was $22,261, and $43,289 for a private college.

Jobs, unemployment, and underemployment.

31. Employment in middle-skill jobs increased only 46% between 1980 and 2009.

32. However, during that same time, low-skill jobs increased by 110% for low-skill jobs.

33. 14% of Americans are unemployed or underemployed.

34. Mid-wage occupations accounted for 60% of the job losses during the recession.

35. Those same jobs accounted for only 22% of the gains during the recovery, while low-wage jobs rose by 58%.

36. Only 19% of those polled believe that job, career and employment opportunities will be better for the next generation.

37. The number of people who are underemployed – working part time because they can’t find full time work, has risen from 4.8 million in 2008 to more than 8 million now.

Wealth inequality.

38. Between 2009 and 2012, the first three years of the economic recovery, 95% of U.S. income gains were captured by the top wealthy 1%.

39. The richest 400 Americans hold 50% of our wealth.

40. Since 1967, the top 5% of earners saw their incomes grow by 88%.

41. The top 20% have seen a 70% increase in wealth…

42. During that same time, middle-income households only saw a 20% increase in wages.

43. The gap between the rich and poor is the widest it’s been in over a century.

44. Since 1964, the share of income that goes to the top wealthiest 1 percent has increased by more than 50%.

45. Between 1993 and 2011, the lower 99% of U.S. earners saw a wage increase of 6%. During that same period, the top 1% wealthiest Americans saw their incomes rise by 58%.

Sources and research:

Kaiser Family Foundation
Health Research & Educational Trust.
Pew Research Center
Mother Jones
USA Today.
US Census bureau
Indiana University’s Heldrich Center for Workforce Development
National Employment Law Project analysis of Labor Department data
Economist Emmanuel Saez
Economic analyst Robert Reich
New York Federal Reserve Bank


About the Author:

  Related Posts

You must be logged in to post a comment.