Here’s How Much the U.S. Middle Class Has Changed in 45 Years

10 Dec 2015 | Author: | No comments yet »

Here’s How Much the U.S. Middle Class Has Changed in 45 Years.

The nation’s middle class, long a pillar of the U.S. economy and foundation of the American dream, has shrunk to the point where it no longer constitutes the majority of the adult population, according to a new major study. In the age of rising income inequality, the task of preserving America’s middle class has been taken on by politicians across the ideological spectrum. The Pew Research Center report released Wednesday put in sharp relief the nation’s increasing income divide, which is certain to be a central issue in the 2016 presidential race. The trend is so firmly established that it may well continue; Americans have experienced “a demographic shift that could signal a tipping point,” Pew researchers concluded Wednesday. Middle-income households have been the bedrock of consumer spending, and many liberals in particular view the declining middle as part of a troubling trend of skewed income gains among the nation’s richest families.

And middle-income Americans not only have shrunk as a share of the population but have fallen further behind financially, with their median income down 4 percent compared with the year 2000, Pew said. Median-income voters, particularly non-college-educated men, are also at the core of billionaire Donald Trump’s surprising surge in the Republican presidential campaign. Meanwhile “a flurry of new research points to the potential of a larger middle class to provide the economic boost sought by many advanced economies.” Pew defines a middle-class household as one having income that is two-thirds to double that of the overall median household income. His supporters’ sense that their once-secure middle-class standing is in danger of slipping appears to be fueling much of the anger against the government and immigrant groups. The tipping point for the middle class occurred over the past couple of years of the recovery from the Great Recession as the economy continued to reward highly educated workers, well-to-do investors and those with technical skills.

Rapid growth of upper-income households, coupled with an increase in less-educated, low earners, has driven the decline of the middle-income population to a hair below 50 percent of the total this year, Pew found. Slightly more than half of Americans (about 50.1 percent) either live in a lower-class household (roughly 29 percent) or an upper-class household (about 21 percent). A Gallup survey this spring showed that just 51 percent of U.S. adults considered themselves middle or upper middle class, with 48 percent saying they are part of the lower or working class. One positive note is that blacks are the only major racial group to see a decline over that time frame in their share of adults who are low-income, which is down to 43 percent from 48 percent. The share of households earning more than three times the median income — $188,000 a year for a family of three in 2014 dollars–is now 9 percent, up from just 4 percent in 1971.

President Barack Obama has dubbed his programs “middle-class economics.” Patrick Egan, a politics professor at New York University, says the Pew findings and the Gallup surveys suggest that the public may be more open to policies of redistribution. “Americans are always kind of reluctant to embrace open-class warfare,” Egan said. For example, in August, Georgetown University’s Center on Education and the Workforce released a study showing that high-paying jobs are proliferating, but not middle-income jobs.

Despite that progress, African Americans and the elderly still remain more likely than other Americans to be lower income, and less likely to be higher-income. But the middle third jobs have not yet recovered from the recession — that category is still showing 900,000 fewer jobs, compared with pre-recession levels.

While the economic status of Americans with bachelor’s degrees changed little from 1971 to 2015, those who did not graduate from college fell down the income ladder. That shift was magnified by evolving social trends, which saw marriage in decline overall, but especially for those with fewer educational credentials.

The Downey, Calif., couple, who have two children, ages 4 and 6, gross about $110,000 between them, not counting benefits, such as health care insurance. At the same time, the increase of women in the workforce since the early 1970s has tended to boost household incomes, as has higher college education enrollment.

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