While sometimes perception and reality are the same, perception and reality are very different when it comes to the lifestyle expectations of ordinary Americans. Ever since World War II there has been the expectation of upward mobility for future generations. That is how we see ourselves. Realistically that is not true anymore. The rich are getting richer and the poor are getting poorer and the middle class ? previously perceived as a launching pad to riches ? continues to shrink.
A recent study from the Pew Research Center reveals little improvement for the middle class since the end of the Great Recession. 62% report that money is tight, 29% are still having trouble paying bills and 85% find it tougher to maintain a middle class lifestyle than experienced 10 years ago. These results hit the front page of USA Today Money Section in an article by Tim Mullaney. The first decade of the New Millennium became the “lost decade” for the middle class.
Over the last 11 years, the median income for the middle class has dropped by $3,500. If you consider a three person household, the median household income was only $69,487 and net worth decreased by 28% to $93,150. Meanwhile the top 20% of the population saw a rise in their net income.
Another way to look at the shrinkage in the middle class, for perspective, is to compare it to the early 1970s when 61% of the nation was considered middle class. In 2011 only 51% of the nation qualifies as middle class. Of this 10% shrinkage, the Pew Report estimated that approximately half of the households moved up into the top 20% while approximately 40% moved below the middle class cutoff line.
The Pew Report numbers are consistent with data recorded by the Federal Reserve and other agencies.
It is undeniable that life in America has changed over the last decade. In the past the great “worker bees” of the middle class have fired the engines of the economy and found a comfortable living. Today it is a strain to remain in the middle class.