Wednesday, August 22, 2012
Obama's America: The middle class is struggling to survive and shrinking before our eyes
America's middle class has endured its worst decade in modern history. It has shrunk in size, fallen backward in income and wealth, and shed some of its characteristic faith in the future. In a survey, 85% of those who identify themselves as middle class say that it is more difficult now than it was a decade ago to maintain their standard of living. The middle class is also a much smaller part of the population than it used to be, while the poor and rich extremes of society are expanding. The biggest issue facing the middle class is that their wealth is deteriorating. The housing crisis eroded much of the middle class' net worth, creating a "lost decade" in terms of economic well-being for this group. For middle-income households, a lot of wealth was in their home, so the housing bust really impacted their nest eggs. Middle-income families are the only ones whose nest eggs have plummeted. The mean net worth (assets, such as a home or retirement account, minus debt) of middle-class families plunged 28% to $93,150 in 2010 from $129,582 in 2001. The middle class also took a big hit on the pay front. While incomes across all class levels declined for the first time since World War II, the middle class saw the biggest decline, with a median income for a four person household declining to roughly $70,000 in 2010 from about $73,000 in 2001. The median income for the lower class is $23,000 and about $113,000 for the upper class. Just more than half - 51% - of the population was middle class in 2011 compared to 61% in 1971. At the same time, the segments of the population who consider themselves lower or upper class have grown. Even though the middle class has shrunk, it has grown more diverse over the past 40 years. Whites are less dominant, comprising 70% of the middle class in 2011, compared to 80% in 1971. Hispanics have made significant gains in joining the middle class in that time, climbing to 13% of the group, up from 8%. Blacks, too, have made gains, albeit smaller. They now comprise 11% of the middle class, compared to 9% in 1971. Asians and Pacific Islanders made up 5% of the middle class in 2011, compared to 3% in 1971. The "other" category rose from 1% to 2%. Going forward, less than one-fourth (23%) of the middle-class are very confident that they would have enough money to get through retirement. Some 43% believe that their children's standard of living would be better than their own, compared to 51% in a 2008 survey. Some 26% believe that their children's standard of living would be worse than their own, compared to 19% in a 2008 survey.