The Real Source of the Middle Class' Money Woes

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Middle-class woesBy Kimberly Palmer

There are many reasons middle-class Americans feel squeezed right now: The high unemployment rate (8.1 percent), rising cost of college tuition, or the fact that close to one-third of homeowners are underwater. But it's a combination of three other factors that led the Pew Research Center to label the 2000s a "lost decade" for the middle class: declining household income, shrinking net worth, and a smaller middle class.

"Income peaked in 1999 and it has not yet returned to that peak," says Paul Taylor, coauthor of the report and executive vice president of the Pew Research Center. "It's the first decade in modern U.S. history where that's the case," he adds.

While income tends to be more volatile as people lose and gain jobs, Taylor says net worth is also a valuable measure of financial security, because it indicates whether people are able to afford an unexpected medical bill or other unplanned expenses. "It's enormously important to people's sense of economic well-being," says Taylor.

Pew measured the size of the middle class by defining it as those earning between two-thirds and double the national median income. Around 51 percent of Americans fell into that category in 2011, compared to 61 percent in 1971. Taken together, these numbers show that "the middle has gotten poorer and smaller," says Taylor.

Survey respondents' perceptions of the economy and their own well-being also reflect those negative numbers. Among middle-class adults, 85 percent said it was more difficult now than it was 10 years ago to maintain their standard of living, and most respondents also agreed that "It is more difficult to get ahead today than it was 10 years ago." Meanwhile, the majority of middle-class respondents said they "had to reduce household spending in the past year because money was tight."

Respondents also estimated that it takes a household income of $70,000 a year for a family of four to live a middle-class life. (Pew estimates that the median income for a four-person household is just under that figure.)

Young people had a particularly rough decade. Their income declined and a greater share are unemployed now than 10 years ago. In addition to the challenging job market, Taylor points out that the housing market was rough on young people as well. Many of them bought their first homes at bubble prices, and then watched as those homes lost value, and in many cases became worth less than the money owed on them.

"That's affected people of all ages, but older adults tend to have purchased their houses longer ago, already paid of their mortgages, and purchased at pre-bubble prices," explains Taylor.

Young adults, in fact, were the only age group where the percentage of people who describe themselves as "middle class" declined between 2012 and 2008. In 2012, 4 in 10 young adults labeled themselves "lower class," compared to just 1 in 4 in 2008.

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Adults age 65 and older fared best over the last decade; their income grew the most-10 percent-between 2001 and 2011. Taylor attributes that to the fact that many sources of income for older Americans, such as Social Security and proceeds from retirement accounts, are fixed, so they are relatively immune to economic swings.

Still, Americans have managed to retain their optimism, especially over the long term. Most respondents said their own standard of living beats that of their parents at the same age. Given the growth in income over four decades, that statement rings true: Since 1970, median household is up 32 percent. "Over the long haul, in the long arc of their lives, Americans are doing better, but they had a very bad decade," says Taylor.

Respondents also drew a distinction between their own personal finances and those of the country, and they tended to be more optimistic about the former. More Americans believe their children's standard of living will be better than their own than believe it will be worse (43 percent versus 26 percent).

"It's a phenomenon in survey research: 'The world is going to hell, but I'm doing okay,'" says Taylor, adding, "It's hard to beat the optimism out of the American public."

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chris1011

No, government "goons" did not create this financial crisis. Good old fashioned greed did it. I know of college students who left their studies to become mortgage brokers, corralling anyone walking by on the sidewalk in front of their rental office. Telling them how they could buy now, no money down and flip their property for double the price in 2 years. They were working for Countrywide Mortgage, made a huge bundle, all the while knowing that the end would have to come sooner or later, but by that time they were set for life and safely out of town. That is how this crisis was made - pure simple opportunity to get rich and let someone else hold the bag.

September 14 2012 at 1:16 PM Report abuse rate up rate down Reply
ilm9p

As an aside, is it just me or is anybody else as impressed as I am with the package of that broad in the picture? Holy Mother of God look at them legs, y'all..............

September 14 2012 at 10:41 AM Report abuse -1 rate up rate down Reply
Monster Girl

YEAH. YOU REALLY WANT TO KNOW WHAT THE PROBLEM IS AND WHY THINGS WILL ONLY CONTINUE TO GET WORSE AND WORSE AND WORSE AND WORSE, ETC., ETC., ETC., UNTIL VOTERS FINALLY UNDERSTAND WHAT THE REAL SOURCE OF AMERICA'S PROBLEM IS???

I'LL TELL YOU EXACTLY WHAT THE ENTIRE PROBLEM IS, PLAIN AND SIMPLE. IT'S ALL THE STUPID, INEPT, INCOMPETENT, VILE, UNFIT, UNQUALIFIED, DESPICABLE, DISGRACEFUL, SHAMEFUL, APPALLING, UNETHICAL, IMMORAL, UNSCRUPULOUS, AND CORRUPT LIBERAL IDIOT DILDOCRATS, WHO ARE NOTHING BUT SCUM, VERMIN, TRASH, AND PARASITES, JUST LIKE THEIR FRAUDULENT, PHONY, AND ILLEGAL, INELIGIBLE, DRUG USING, HOMOSEXUAL MESSIAH OBAMA, WHO, WITH THE HELP OF A.C.O.R.N., THE UNIONS, ILLEGAL ALIENS, AND OTHER REALLY SUPER STUPID PEOPLE, CHEATED HIS WAY INTO THE WHITE HOUSE!!!

LIBERAL IDIOTS, AND THEIR EQUALLY REPREHENSIBLE REPUBLICAN COUNTERPARTS, ARE RUINING, DAMAGING, OBLITERATING, CONTAMINATING, POLLUTING, WEAKENING, AND DESTROYING THIS COUNTRY DAY BY DAY, WEEK BY WEEK, MONTH BY MONTH, YEAR BY YEAR!!!!!!!!

IF EVERYONE WOULD GET RID OF ALL THESE USELESS, WORTHLESS, DEFUNCT, DO-NOTHING LIBERALS, AND THEIR EQUALLY CORRUPT REPUBLICAN COUNTERPARTS, THIS COUNTRY WOULD TURN AROUND IN A HEARTBEAT!!!!!! AND THAT IS A FACT!!! BUT THEY WON'T BECAUSE MOST VOTERS ARE JUST TOO STUBBORN, CLOSE-MINDED, ABSTRACT, STUPID, ADDLED, OBSTINENT, APATHETIC, AND BLIND TO SEE THINGS THEY WAY THEY REALLY ARE ........ SO THINGS WILL ONLY CONTINUE TO GET WORSE AND WORSE AND WORSE AND WORSE, ETC., ETC., ETC...........

September 14 2012 at 7:07 AM Report abuse -4 rate up rate down Reply
1 reply to Monster Girl's comment
teapartyisnuts

You're a monster.

September 14 2012 at 9:57 AM Report abuse +2 rate up rate down Reply
ha6ai

Its simple: The reason the middle class is struggling, and its on track to get much worse: the Obama economy.

And with Obamacare, Obama's raising taxes, Obama's waste of trillions, Obama's blocking energy projects, and Obama's over-regulations of businesses, things won't get better until it is all reversed.

September 14 2012 at 6:26 AM Report abuse -2 rate up rate down Reply
o2monthsocrapleft

THE MUSLIM CLOWN RAMMED HIS UNCONSTITUTIONAL WELFARE "HELL" CARE DOWN ALL AMERICANS THROATS WHEN 80% OF AMERICANS DID,NT NEED IT OR WANT IT , WELL THE SAME 80% WILL BE BACK IN NOV~2012 TO SHOVE IT BACK UP HIS ARSE ~~PAY BACKS GOING TO BE A BIOTCH . !~ HAVE YOU HAD ENOUGH OF "HOPE N CHANGE" YET OR DO YOU WANT MORE ~~ROMNEY / RYAN~2012 GETTING AMERICA OUT OF THIS MUSLIM CLOWNS "GREAT RECESSION" N RECORD UNEMPLOYMENT WE ARE IN TODAY . ! !

September 14 2012 at 4:52 AM Report abuse -3 rate up rate down Reply
Gumby

Had Americans not bought too many gas guzzlers since 1999, we would be paying far less for gasoline like $2.50 or so.. We are paying an extra trillon dollars on gasoline every year now thanks to $4 a gallon because we wasted so much gasoline by guzzling ... Big Oil couldnt keep up with our wasteful habits and it is finally catching up with shale oil or oil sands developments that is so enivormentally destructive from so many Caterpillars digging up the shale or sands up in the North. We dont see them because the media is not interested in showing it to us... They are silent on this enviormental diaster now ongoing.. We ought to move to clean energy now but we are told that it is not competitive enough .. Fine, keep the Caterpillars roaring on!

September 14 2012 at 1:24 AM Report abuse +2 rate up rate down Reply
1 reply to Gumby's comment
o2monthsocrapleft

THE MUSLIM CLOWNS GAS IS $8 A GAL IN PA.~NJ~NY~N COMING TO A TOWN NEAR YOU~HAVE YOU HAD ENOUGH OF "HOPE N CHANGE" YET OR DO YOU WANT MORE . ? ? ? ?

September 14 2012 at 4:44 AM Report abuse -4 rate up rate down Reply
ejladkins

Hi folks, I usually don't respond but reading today's comments reveals a severe lack of understanding of the real issues in our country. The mob mentality and bashing President Obama is a convenient way to express your frustrations but voting the greedy, unethical, irresponsible people who, created this financial crisis, back into power will certainly make things a lot worse for working Americans. President Obama took drastic measures to prevent total economic collapse in our country, then, without much help or co-operation from Congress, has led us back on the slow, painful path to recovery. Rhetoric, lies and slander may affect the election, but they will not change the facts or the truth. Open your eyes, learn the facts, re-examine your hatred, then respond. God bless America.

September 13 2012 at 11:15 PM Report abuse +3 rate up rate down Reply
1 reply to ejladkins's comment
ohmyboehnertwo

Nice, I like that comment!

September 13 2012 at 11:30 PM Report abuse +2 rate up rate down Reply
2 replies to ohmyboehnertwo's comment
icemanbill23

Of course, you "like that comment".
It's the same old talking points used by every delusional liberal O-bot.

September 14 2012 at 1:57 AM Report abuse -1 rate up rate down
teapartyisnuts

icemanbill23
Go play with your golf balls you 1% repuke snob.

September 14 2012 at 9:59 AM Report abuse +2 rate up rate down
teapartyisnuts

Chris Stevens, the US Ambassador to Libya, has been killed in an attack on the US consulate in Benghazi.

The US suffered attacks on its embassies in both Libya and Egypt yesterday amid protests over a film that was deemed offensive to Islam. The news was first broken by Al-Arabiya.

Reuters is reporting three 3 other deaths as well.

By all accounts, Ambassador spent his career as a devoted US foreign service officer, and was the US envoy to Libya's liberation movement during the conflict with Qaddafi.


Here's his full profile from the US Department of State:

Ambassador J. Christopher Stevens is a career member of the Senior Foreign Service. He arrived in Tripoli in May 2012 as U.S. Ambassador to Libya. Ambassador Stevens served twice previously in Libya. He served as Special Representative to the Libyan Transitional National Council from March 2011 to November 2011 during the Libyan revolution and as the Deputy Chief of Mission from 2007 to 2009.

Other overseas assignments include: Deputy Principal officer and Political Section Chief in Jerusalem; political officer in Damascus; consular/political officer in Cairo; and consular/economic officer in Riyadh. In Washington, Ambassador Stevens served as Director of the Office of Multilateral Nuclear and Security Affairs; Pearson Fellow with the Senate Foreign Relations Committee; special assistant to the Under Secretary for Political Affairs; Iran desk officer; and staff assistant in the Bureau of Near Eastern Affairs.

Prior to joining the Foreign Service in 1991, Ambassador Stevens was an international trade lawyer in Washington, DC. From 1983 to 1985 he taught English as a Peace Corps volunteer in Morocco.

He was born and raised in northern California. He earned his undergraduate degree at the University of California at Berkeley in 1982, a J.D. from the University of California’s Hastings College of Law in 1989, and an M.S. from the National War College in 2010. He speaks Arabic and French.

The political ramifications of this attack are going to be significant, and the news is already injecting itself in the Presidential race.

Mitt Romney has hit the White House for "mixed signals" on the attacks, and in particular tweets and messages from the Egyptian embassy that seemed to criticize the filmmaker that provoked the attack.

A video from RT shows what is apparently the consulate on fire after the rocket attack.



The film that sparked the protests is a mocking, anti-Islam film called The Innocence Of Islam that was bankrolled by an Israel real estate developer, according to WSJ. It has been promoted by infamous Quran-burner Terry Jones.



Read more: http://www.businessinsider.com/reports-us-ambassador-to-libya-has-been-killed-in-consulate-attack-2012-9#ixzz26PHwUKW0

September 13 2012 at 10:25 PM Report abuse +2 rate up rate down Reply
1 reply to teapartyisnuts's comment
o2monthsocrapleft

THE MUSLIM CLOWNS "MUSLIM" BROTHERS IN YEMEN~EGYPT~LIBYA ARE ATTACKING N BOMBING OUR AMERICAN EMBASSY N KILLING AMERICANS HERE ~9-11 ~ N ABROAD N ALL THE "MUSLIM" CLOWN SAYS IS ~~S O R R Y . ! HAD ENOUGH OF THIS 'HOPE N CHANGE" YET OR DO YOU WANT MORE. ? ? ? ? ?

September 14 2012 at 4:57 AM Report abuse -2 rate up rate down Reply
Gene

Jeanie
Your facts are wrong. Because the unemployment rate is 8.1 % does not mean 92% are employedThe real unemployment is about 20% and that is only of the workforce not the whole country. Of the workforce We are at the lowest level since the end of the second world war. That is about 62 %nt here

September 13 2012 at 10:01 PM Report abuse +2 rate up rate down Reply
o2monthsocrapleft

THANK YOU PRESIDENT BUSH FOR CAPTURING N KILLING SADAMM N BIN LADEN N KEEPING AMERICA SAFE IN "ALL" YOU 8 YEARS AS PRESIDENT . !

September 13 2012 at 9:56 PM Report abuse -2 rate up rate down Reply
1 reply to o2monthsocrapleft's comment
teapartyisnuts

WHAT PLANET DO YOU COME FROM?

September 13 2012 at 10:16 PM Report abuse +1 rate up rate down Reply