Tags: middle class | wealthy | income | recovery

MSN Money: Is There Any Wonder Why the Middle Class Is Vanishing?

By    |   Friday, 21 June 2013 07:56 AM

Despite an economic recovery, a stable job market and growing business profits, middle-class Americans are still feeling the pressure from all sides, according to an analysis by MSN Money.

Evidence of a shrinking middle-class abounds. Only about 51 percent of U.S. adults lived in middle-income households in the United States in 2010, down from 61 percent in 1970, according to the International Labor Organization and the International Institute for Labor Studies. During that time, middle-class workers saw their median income shrink by 5 percent.

Like most other Americans, middle-class paychecks took a hit in January when the Social Security payroll tax cut expired, and most U.S. households are now seeing their highest tax burdens since 2008, according to The Wall Street Journal.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

MSN Money listed a variety of examples in which the middle class is getting squeezed:

The portion of middle-class budgets going to food is growing, as increased global demand takes causes prices to rise, MSN Money reported.

Further, the income gap between the wealthy and the middle class is getting wider. Income inequality in America jumped between 2007 and 2011, according to the U.N. Organization for Economic Co-operation and Development — the most, in fact, of all 25 countries surveyed.

Jobs in the United States are becoming increasingly polarized into low-skill and high-skill categories, according to MSN Money, which leaves less room for the middle-class. While unemployment has declined to 7.6 percent, of the 5 million new jobs created since 2009, at least half of them pay low wages.

Also, the foreclosure crisis did not slam only those with subprime loans. "People with foreclosures on their record are finding themselves largely shut out of home loans now, cutting deeply into a fundamental feature of middle-class living: home ownership," MSN Money said.

The middle class does not have much money in the stock market — especially since the financial crisis hit — and so it has largely missed out on the bull market gains since 2009. Of American households earning between $35,000 and $75,000 annually, only 50 percent are invested in stocks.

Meanwhile, the cost to attend a four-year public university has soared 250 percent since 1982, according to the Center for American Progress, making the dream of college less affordable and more out of reach for middle-class families.

Also, the average price for a gallon of gas in the United States has risen from $1.61 in 2008 to about $3.61 in June, according to GasBuddy.com. "The increase has particularly impacted middle-class families who can't absorb everyday price hikes as well as wealthy Americans can," MSN Money concluded.

The nation’s median household income has actually declined by more than $4,000 since 2000, and the “typical trappings of middle-class life are slipping out of financial reach for many families,” CNNMoney reported.

Economists attribute the blame to two factors: jobs and wages.

According to the National Employment Law Project, mid-wage work, such as that for office managers and truck drivers, added up to 60 percent of the job losses during the recession, but only 22 percent of the gains during the recovery.

Meanwhile, low-wage jobs have soared 58 percent.

The mortgage crisis “hollowed out” the middle class, Tamara Draut, vice president of policy and research at Demos, a public policy research group, told CNNMoney. Home prices are still 29 percent below their mid-2006 high.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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Economy
Despite an economic recovery, a stable job market and growing business profits, middle-class Americans are still feeling the pressure from all sides, according to an analysis by MSN Money.
middle class,wealthy,income,recovery
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2013-56-21
Friday, 21 June 2013 07:56 AM
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