Middle-class paychecks, share of national income wane

Hundred dollar bill

The American middle class is making less money than it did a decade ago and taking home a far smaller share of the nation’s income, according to a new study by the Pew Research Center in Washington, D.C.

For the purposes of its report, Pew considered a middle-class family to be a three-person household earning $39,418 to $118,255 annually.

It studied data from the U.S. Census Bureau, the Federal Reserve Board of Governors and a survey of 1,287 self-described middle-class adults.

An overwhelming 85% of those interviewed said it was more difficult to maintain their standard of living today than 10 years ago.

And no wonder.

From 2000 to 2010, the median household income for middle-class families fell from $72,956 to $69,487.

They also earn a smaller percentage of the nation’s total household income.

In 1970, middle-class families received 62% of total income, while upper income households earned 29%.

But by 2010, middle-class families had seen their share fall to 45%, while upper income families were claiming 46%.

Just as astounding is how their median net worth fell during the recession, from a peak of $152,950 before the crash to $93,150 in 2010.

While their property values, Individual Retirement Accounts and 401(k) plans have almost certainly rebounded over the past couple of years, it’s clear that the American middle class is still digging out from that crisis.

By every measure Pew considered, the report says the early 2000s was a “lost decade” for the middle class.

"Wherever we looked, it was worse off now than 10 years ago, and by some measures, this period is setting historic records for not only gloominess but economic impact," Rich Morin, a senior editor at the Pew Research Center, told U.S. News & World Report.

Paul Taylor, the Pew Research Center's executive vice president, says that has shaken its traditional faith in the future.

"The notion that we are a society with a large middle class, with lots of economic and social mobility and a belief that each generation does better than the next — these are among the core tenets of what it means to be an American," Taylor says in the Los Angeles Times.

"But that's not necessarily the case anymore."

You can read the Pew Center’s summary of its report here:
http://www.pewsocialtrends.org/2012/08/22/the-lost-decade-of-the-middle-class/1/#fn-14586-1