Tags: Cohen | middle class | economic | income

NYT: Middle Class Frets Amid Languishing Economic Prospects

By    |   Tuesday, 14 April 2015 07:20 AM

The middle class is growing increasingly concerned as its economic opportunities dim.

"Families that are neither rich nor poor may be under more downward economic and financial pressure than common but simplistic rank-based measures of income or wealth would suggest," according to a recent report from the St. Louis Federal Reserve Bank.

The study indicates that the real income of middle class Americans hasn't much exceeded that of their parents, even when the younger generation had more education. And when education is equal, the younger generation is worse off.

"Middle-class anxiety has been driven by several factors: increasing instability in incomes, a sense among many Americans that they are failing to keep up with the gains of previous generations and an increasing gap between themselves and the very rich," writes New York Times reporter Patricia Cohen.

"Middle income is not necessarily the same thing as middle class," said Rakesh Kochhar, a senior research associate at Pew.

Economic security is a problem. "If there's no security, there's no middle class," Thomas Hirschl, a sociologist at Cornell University, told Cohen.

Meanwhile, the wealthiest 400 Americans saw their income rebound from 2008, the year of the financial crisis through 2012, the latest year included in new IRS data.

But their income still hadn't reached its 2007 record high. The Great Recession ran from December 2007 to June 2009.

Note that the wealthiest 400 are being measured by income, not by net worth as the Forbes 400 is measured. And the income figures are adjusted gross income, which include some deductions, such as retirement plans, rather than gross income.

In any case, average income for the top 400 increased 24 percent to $335.7 million in 2012 from $270.5 million in 2008. That compares with $344.8 million in 2007.

If you take inflation into account, the improvement from 2008 is lower in percentage terms, and the 2012 total stands further behind the 2007 total in percentage terms.

Much of the improvement since 2008 likely stems from stock market gains. The S&P 500 index averaged an annual return of 14.9 percent for 2009-12.

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The middle class is growing increasingly concerned as its economic opportunities dim.
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Tuesday, 14 April 2015 07:20 AM
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