Study: Middle-class families no longer in the majority

[WOT?*]

www.msn.com/en-us/news/us/study-middle-class-families-pillar-of-the-american-dream-are-no-longer-in-the-majority/ar-AAgdyYA?ocid=spartandhp

Study: Middle-class families, pillar of the American Dream, are no longer in the majority


WASHINGTON — 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.




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. It also highlights how various economic and demographic forces have eroded long-held ideals about maintaining a strong, majority middle class.



Many analysts and policymakers regard the shift as worrisome for economic and social stability. 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.



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. 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. In 1971, the middle class accounted for 61 percent of the population, and it has been declining steadily since.



The Pew research found that the shares of upper-income and lower-income households grew in recent years as the middle shrank — with the higher-income tier growing more. In that sense, the nonpartisan group said, “the shift represents economic progress.”



Pew defined middle class as households earning between two-thirds and twice the overall median income, after adjusting for household size. A family of three, for example, would be considered middle income if its total annual income ranged from about $42,000 to $126,000. Pew analyzed data from the Census Bureau and the Labor Department, as well as the Federal Reserve.



Most Americans have traditionally identified themselves as middle class, even those at the top and bottom, reflecting a kind of cultural heritage tied to the American dream of self-reliance. But the Great Recession and subsequent slow recovery have shaken that image.



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. As recently as 2008, 63 percent of those polled by Gallup said they were middle class.



This change in self-identification — and the reality of the shift documented by Pew — carries political ramifications as the state of the middle class continues to be a major focus of the economic debate in the presidential campaigns, with candidates, in time-honored fashion, invoking the middle class in their speeches and policy statements. 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. But “if more Americans are under the idea of placing themselves at the bottom, you’ll see politicians follow,” he said.



Although the median incomes of upper, lower and middle tiers have all lost ground since 2000, primarily because of the Great Recession in late 2007 to mid-2009, upper-income households saw the smallest decline through 2014, the Pew study found.




Seen over a longer period, from 1971 to 2014, the median income of all upper-income households increased 47 percent to $174,625. The median income for the middle tier rose 34 percent to $73,392, and for the lower income group, it was up 28 percent to $24,074. The median marks the halfway point.



Pew’s findings add to strong evidence that the middle class has been thinned partly by a decline in manufacturing due to competition from imports as well as a broader polarization of jobs that has favored the most educated and technically skilled workers.



Elizbeth Espinoza and her husband, Carlos Arceo, both 38, fall squarely in the middle class, according to Pew. 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. By Pew’s definition, a household of four is in the middle tier if total income is between $48,347 and $145,041.




But Espinoza, who works as a student programming coordinator at the University of California-Los Angeles Labor Center, sees her family as barely straddling the middle class. The reason: high living costs, including $850 a month for child care and hefty student loan payments.



“I’m on the border of middle class and I feel this way because I feel like being part of the middle class means being comfortable financially, and I think we struggle with that,” Espinoza said. “When you look at that expense-to-income ratio, it’s just a lot more difficult to have that comfortableness.”



Espinoza said that she and her husband were hopeful about their future incomes rising, but she doubts that they can move up to the upper-income tier. “I feel like upward mobility keeps getting harder and harder,” she said.



The Pew study did not address economic mobility — an issue that many economists believe is more important than the change in income distribution. But research on income mobility across generations has found the U.S. as a whole lags other Western countries.




The declining middle also reflects demographic shifts, such as the arrival of more low-skilled immigrants, which can be seen in the overall slippage of Latinos in the income ladder since 1971. By race, black adults made the biggest strides in income status from 1971 to 2015, although they are significantly less likely to be middle income compared with adults overall.



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. And of course, strong gains from stocks and high-tech ventures have fueled incomes for some.



As of this year, 9 percent of Americans are in what Pew called the highest-income category — up from 4 percent in 1971 and 5 percent in 1991. A household with three people had to have an income of more than $188,000 last year to be in this highest bracket.



In contrast, the share of American adults in the very lowest income category — a three-person household making less than $31,000 — rose to 20 percent of the U.S. adult population this year, from 16 percent in 1971.



“The distribution of adults by income is thinning in the middle and bulking up at the edges,” Pew said.



Whether this trend continues will depend in large part on how household structures evolve. Soaring numbers of single-parent households since the early 1970s, for example, have increased those at the bottom of the income spectrum.




Also, trends in marriage rates, immigration, college education and the labor force participation of lower-skilled men in particular will all have a bearing on the future of the middle class in America, said Harry Holzer, an economist and public policy professor at Georgetown University.



The Pew findings, however, are not comforting, he said. “It does suggest, even when you adjust for demographics, it’s a little troubling,” Holzer said. “We always expect things to be getting better.”

[elleblue]

Well we knew it was only a matter of time. *sigh*

[fumbalina]

While I am not surprised by this finding, the lady in the article seems to be delusional. Her household income is near the middle of the range given. Of course, I find a lot of people delusional about how much more they make than average.

[msmerymac]

I'm stuck on how she only pays $850/month for childcare in the LA metro area. Family member?

[pinkdutchtulips]

Dec 10, 2015 15:52:11 GMT -5 msmerymac said:

I'm stuck on how she only pays $850/month for childcare in the LA metro area. Family member?

I've never paid more than $800/month in HCOL SF/Bay Area ... I lucked out and found good, licensed in-home facilities. It's doable.

[WanderingWinoZ]

i came to post this similar story from 538

fivethirtyeight.com/features/most-americans-arent-middle-class-anymore/

Presidential hopefuls from both parties have been saying throughout the primary campaign that the American middle class is in trouble. Bernie Sanders says it is in the midst of “a 40-year decline.” Jeb Bush says it is “shrinking.” Ted Cruz says it is “headed in the wrong direction.” And Hillary Clinton says the “basic bargain” that hard work could move families into the middle class “has eroded.”

A new report from the Pew Research Center says the candidates may be right. For the first time since at least the 1960s, the majority of Americans aren’t in the middle class.


The Pew report looks at middle-income households, which it defines as those earning between two-thirds and double the median household income. In 2014, that meant a three-person household would have to earn between $42,000 and $126,000 to be considered middle-income.1 (Pew prefers the term “middle income” to “middle class” because class implies social standing as well as income.)

In 2015, just under 50 percent of American adults lived in middle-income households. (The chart above rounds the number to 50 percent.) That’s down from 54 percent in 2001 and 61 percent in 1971, the earliest year Pew looked at. Meanwhile, the share of income going to middle-income households has also fallen, from 62 percent in 1971 to 43 percent last year.

So the middle class really is shrinking. But it’s less clear how concerned we should be about that decline.

First of all, it’s important to note that the middle class is shrinking not just because more people are poor but also because more people are rich. The share of Americans that are in high-earning households, those with more than double the median income, has grown by seven percentage points since 1971. The share of low earners, those earning less than two-thirds the median, has grown just four percentage points. In fact, what Pew calls the “hollowing of the American middle class” is even starker than that: Most of the growth has come at the extreme bottom and top of the income spectrum. In other words, the shrinking of the middle class is less about decline than polarization.

Moreover, as I wrote last year, it’s important to remember that typical American household has changed dramatically over the past three decades. The U.S. population has grown older, on average, which makes a big difference to median income because retirees often have little income and live off savings. And it has become more diverse; in particular, the rapid rise in the number of immigrants in the late 20th century pushed down median incomes because immigrants, on average, make less money. Notably, according to Pew, black, white and Asian households have all seen a net increase in their income status since 1971, while Hispanics, who make up a large share of new immigrants, have seen a net decrease.

All these trends — an aging workforce, income polarization, immigration and racial disparities — are important issues with major economic and social implications. So is the decade-and-a-half-long stagnation of middle-class incomes. But the full picture is more nuanced than the “death of the middle class” narrative so often heard on the campaign trail.

[Deleted]

I know DH and I are solidly in the middle class and for that I am endlessly thankful. But, I can identify with the woman in the article. Middle class has been (at least colloquially) defined as where you get to be financially stable, maybe even a little wiggle room. Depending on where you live the amount of money that puts you in to the middle class might not feel as good as somewhere else.

[Deleted]

Dec 11, 2015 10:49:30 GMT -5 @silver said:

I know DH and I are solidly in the middle class and for that I am endlessly thankful. But, I can identify with the woman in the article. Middle class has been (at least colloquially) defined as where you get to be financially stable, maybe even a little wiggle room. Depending on where you live the amount of money that puts you in to the middle class might not feel as good as somewhere else.

And the circumstances that we're in - expensive childcare and student loans that linger to middle age - are relatively new phenomenons that didn't really factor in a generation ago. Plus the part where one income used to get you to the middle, and now it takes two. 

[penguingrrl]

I feel like in addition to a shrinking middle class, the original hallmarks of middle class life are harder to access at median income. Health care and student loan debt are eating more of people's salaries early in life, when they traditionally were able to build a down payment and a savings, and housing costs have continued rising despite flat wages. I know I've beaten this drum on here before, but it still chaps my ass that in a year when our HHI was under $40K we had to spend $17K on insurance premiums for a lousy plan and copays when I had an unexpected short hospitalization. And in my experience the ACA hasn't done much to alleviate that, which I think means that for many people their otherwise comfortable income disappears quicker.

So even within the metric of now fewer than 50% of Americans qualifying as middle income, I feel like we have a double whammy of fewer in the median and increased wealth inequality and lower quality of living for those who are truly middle income.

[msmerymac]

Dec 11, 2015 10:55:59 GMT -5 @tokenhoser said:

Dec 11, 2015 10:49:30 GMT -5 @silver said:

I know DH and I are solidly in the middle class and for that I am endlessly thankful. But, I can identify with the woman in the article. Middle class has been (at least colloquially) defined as where you get to be financially stable, maybe even a little wiggle room. Depending on where you live the amount of money that puts you in to the middle class might not feel as good as somewhere else.

And the circumstances that we're in - expensive childcare and student loans that linger to middle age - are relatively new phenomenons that didn't really factor in a generation ago. Plus the part where one income used to get you to the middle, and now it takes two. 

Plus astronomical health care costs. And the additional bills of cell phones and internet, which can run several hundred dollars per month. That's quite a bit for what are considered necessities now.

[LadySusan]

That's an great chart WanderingWinoZ.

So I have a burning question.  What specifically does Clinton plan to do about economic disparities, other than raise the minimum wage?  I know that Sanders wants to raise the minimum wage and make college and healthcare free.  I support it but I know it has about a 0% chance of happening because the GOP controls the legislature.

[msmerymac]

Dec 11, 2015 13:33:51 GMT -5 LadySusan said:

That's an great chart WanderingWinoZ .

So I have a burning question.  What specifically does Clinton plan to do about economic disparities, other than raise the minimum wage?  I know that Sanders wants to raise the minimum wage and make college and healthcare free.  I support it but I know it has about a 0% chance of happening because the GOP controls the legislature.

She also has a college plan that will decease expenses at public schools (and maybe free community college?), but it's no where near as comprehensive as Sanders. It will also cost a lot less.