The middle class was once a symbol of the American dream, but the American middle class
today paints quite a different picture.
Being a middle class, I feel like you really just in between a rock and a hard place.
You know you're in a spot where everyone's like, Hey, you're doing better than, you know, low class.
You're doing great. You should be fine and you're underneath the people who are actually doing fine.
It was at least a secure category.
Your kids would go to a school that you felt at least OK about.
You probably own a car or two and own your own home, and you could pay for your kid's college educations.
So there are certain kinds of assumptions around being a middle class person that have sort of
shattered.
A survey in 2018 found that a third of middle-income adults don't have $400 to cover
an unexpected expense
In polls, when people are asked about being middle class, they frequently are less likely to say so, and
more people now urge the pollsters to suggest that they're working class.
So I think that many people who maybe in prior years would have thought of themselves as middle class now
no longer think of themselves that way.
So when we think about economic status, we think about it as some static, you know, state of the world
that you are either poor or not poor; your middle class or you're not.
But in fact, the reality is that many middle class families will experience one or a few years in
poverty. In fact, most American families will have years where they'll be poor or near
poor. That precarity, that uncertainty that is now a feature of the middle class experience for most
U.S. families.
So, what exactly happened to the American middle class?
A study by the Pew Research Center discovered that the middle class, which was once comprised of the
majority of Americans, has steadily shrunk since the 1970s.
About 61% of American adults were considered middle class in 1971, compared to
just 51% percent in 2019.
However, the issue still remains widely debated
When people think about the state of the middle class and whether or not it's shrinking.
It really is a difficult question, and I think the reason why is that, as a nation, we've not actually
established a formal definition of middle class.
I was in a seminar recently where somebody literally said there is no middle class anymore.
The middle class is gone.
And I thought, Oh dear, you know, that's political rhetoric.
And I understand that it's a sort of a standard for saying that folks in the middle are hurting, but it's
just really not accurate.
We looked at the size of the middle class in these 16 rich countries in 1985 and again in 2016.
And one of the things that surprised me was the size of the middle class in the United States did not
change. It was about 59% percent in 1985 and it was 59% percent in 2016
.
Experts instead prefer the term "squeezed" to describe what's happening to the middle class today,
Even if the middle class hasn't statistically shrunk.
I do think that the middle class faces more in the way of pressures to maintain or even build upon their
position.
What it takes to actually live a middle class life to have quality of life in many
American cities is not what it once was.
They're not necessarily able to pay their rent easily.
They can't own a property.
If they're in their thirties, they may not feel comfortable having kids because they'll realize that
having a child would be too expensive.
And, you know, forget about medical care if you have one thing happens to you physically.
Often people don't have good enough medical care, they don't have any insurance.
This all goes into making somebody part of the squeezed middle class.
As the middle class lifestyle grows more expensive and uncertain, it's also moving farther beyond the
reach of younger generations.
In 2019, just 60% of millennials were part of middle income households in their 20s, compared
with almost 70% of baby boomers.
Meet Chantal Jacob.
Chantal lives in suburban Texas with her husband and one child.
And while a household income of just over $100,000 should put her family in the middle income tier.
She says that her family is still struggling toward financial stability.
Sounds great. Six figures.
But once we got married, the taxes that come out of my check before I even get any money, before all of
my benefits, $500 come out of my check automatically.
And then you add an insurance, life insurance for my spouse, myself, and my son.
And I also have money going aside for my son's college fund.
It's not a lot because I can't do that much, but I want to have something for him.
My check that starts off at about $3000 goes down to
$2200 before I even get to touch it.
Our rent's about $1700.
Electricity is about $150.
Phone bills, about $280.
internet $60.
We both have vehicles.
Those are about $800.
Insurance on those vehicles is about $400.
On food, $400-$500 a month, but that's increasing.
We budget down to the dollar, and sometimes it's very disheartening to work all week and have people
tell you like, "Oh, you're so lucky you have a great job" and you're like, I don't know about that.
There are several reasons why the middle class is feeling squeezed.
The first reason is stagnated income.
Between 1970 and 2018, the middle class share of aggregate income fell by
19% in the U.S..
In comparison, the share of aggregate income for upper income households saw a rise of 19%
. Another study by the Brookings Institute found that income in the middle class has grown
half as fast compared to both the bottom 20% and the top 20% of income tiers,
once taxes and transfers were taken into account,
I stay at a company for a while.
My income becomes stagnant, you know, it increases by a couple thousand.
I generally have to job hop to have increases in my income, which in itself
is not security.
Middle class workers over the last 40 years have not been able to adequately benefit from the productivity
growth, the expansion of the pie in the economy.
We've measured this and found that the typical worker has fallen 43 percentage points behind the
growth of productivity.
What that means is that the middle class worker could have earned 1 percentage point more
per year in compensation growth, over the last 40 years.
And they didn't get it because there was an erosion of labor share of overall income and
because of rising inequality such that the top 10%, but particularly the top 1% and even more so
the top 0.1%, took in much of the gains from the growth of the economy.
While incomes stagnate, the cost of living has risen dramatically over the years.
To put it into perspective, the average household income in the U.S.
saw just a 16% increase over the last 50 years.
In comparison, housing costs increased by 190% and college tuition shot up by
nearly 264% in the same time period.
I first moved in over here in these apartments I live in five years ago.
My income, my rent was like $1100.
It's now $1700.
That's $600 increase happened.
I did not have a $600 increase.
My income did not increase at the same rate.
Rising expenditures, rising prices in health, housing and education are very real, and they've
put a tremendous amount of pressure on income on households in the middle whose income simply doesn't
go as far as it used to.
The situation is even worse in cities where the cost of living is already higher.
An analysis in 2018 found that raising a family and a middle class lifestyle in expensive
coastal cities like San Francisco or New York needs an income of at least $300,000 a year.
For reference, just 10% of all households made $200,000 or over in 2020.
I recently saw an apartment next to the building I work in Plano, and I was like, "It'd be great to walk
across the street to work".
And it was like $2,400 for an efficiency.
And I'm like, "That's insane".
And then it's like, for what I have, they call a townhome three bed, two bath, $5,500.
I'm like, "Well, absolutely not".
Like, I'm going to pay $5,500 dollars and I don't own it?
It's not mine? It's just getting worse.
And everyone is like, I feel like native people are being pushed out into the suburbs and then people
from out of state can come in and enjoy the beautiful fruits of Dallas and have fun and be close
to the restaurants.
And you know, I have to live out here and you know, it's not bad, but it's not Dallas.
I'm from Dallas. I grew up there.
That's where I want to be. But how it is now, you know, it's just not affordable.
Policy making might be both the fault and the solution of the middle class squeeze.
There is no help whatsoever.
There is no policy in place to assist people, and I feel like as soon as you get a job or as soon as
you're working, they're just like, Oh, that's all you need is a job.
You got it, you know, go forth and have at it.
The stagnation of wages and paychecks for people started in the 70s, when productivity started
growing more slowly, but really accelerated after 1970, 1980 when there was a huge growth of inequality
when the top 1% took off, when the stock market grew, but people's paychecks didn't.
And that has to do with issues of deregulation and excessive unemployment, the weakening of unions, the
failure to raise the minimum wage.
Globalization with low wage countries that really put the kibosh on blue collar job
opportunities in many places.
The point is that it's not that the economy got worse.
It was that there were policy decisions made so that the economic growth did not filter
down to the vast majority.
In response, the Biden administration came into office in 2021 with a promise to
revitalize the middle class.
The one trillion dollar bipartisan infrastructure bill from November 2021 and the upcoming Build Back
Better Act both include provisions aimed at financially supporting middle income families.
But as Congress continues to find itself in stalemate.
Only time will tell whether these bills would really have an impact on the survival of middle income
households.
I don't see any change affects my friends that were struggling or are still struggling.
You know, I'm still budgeting down to every dollar trying to get things done.
So I just feel like if the changes are happening, they're not trickling down fast enough for us to see
the effects of it.
I think that overall, the team with the Biden administration has done quite well.
At the same time, they're up against really strong headwinds.
We're talking about a global pandemic that persists.
We're talking about historic levels of inflation and labor shortages that are leading to these sorts of
supply chain gaps worldwide.
So I think that both things are true.
They've done a good job, but they also have a lot of work to do.
The fate of the middle class could determine the future of the American dream.
I just think we do need to be concerned because this has an effect on how people perceive the American
experiment working for them, and there are expectations that there should be this upward growth
in mobility. But I think we do have an increasingly precarious labor market for many
Americans, and so it's important to note that this is also a feature of inequality.
It's a shame that we have as much or more poverty now than we did 40 years ago, that the middle class is
earning somewhat higher wages, but not in proportion to what they've increased their productivity
over that time.
And what this does is it adds to division.
It hurts our democracy.
It hurts our the upward mobility of the children of these families.
That whole middle class of people is like teetering on the brink of ruin.
One emergency, one catastrophe.
And you can see even COVID shows you how quickly people who were doing good can just fall off and have
nothing that should have been a wake up call that we need to change some things.