Study: The American Middle Class Is Shrinking!

By | December 11, 2015

In 1971 61% of Americans were living in middle class households while only 4% were in the category termed the wealthiest!

In a significant shit, today middle class households in the United States account for  50% of the total while the wealthiest households have grown from 4% to 9%.

At the same time those households in the income category labeled lowest have risen from 16% to 20%.

Is this slowly disappearing middle class a concern for the longevity and stability of our society? Will it impact our ability to transact business the way that we have known it or will owners and entrepreneurs need to adjust their strategic planning?

I suppose that the answer to that question is that it depends on a variety of factors including the direction that these middle class families are moving.

In other words is the middle class shrinking due to a migration up or due to a movement down the income and overall wealth spectrum?

After reading the results from a study done by Pew Research there is one certainty…In this presidential election year candidates on both sides of the political aisle will base much of their platform and campaign energy pandering to the plight of middle class Americans.

lifestyle,middle class,politics

The American Middle Class Is Losing Ground

No longer the majority and falling behind financially

After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data.1

In at least one sense, the shift represents economic progress: While the share of U.S. adults living in both upper- and lower-income households rose alongside the declining share in the middle from 1971 to 2015, the share in the upper-income tier grew more.

Over the same period, however, the nation’s aggregate household income has substantially shifted from middle-income to upper-income households, driven by the growing size of the upper-income tier and more rapid gains in income at the top. Fully 49% of U.S. aggregate income went to upper-income households in 2014, up from 29% in 1970. The share accruing to middle-income households was 43% in 2014, down substantially from 62% in 1970.2

And middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.

Meanwhile, the far edges of the income spectrum have shown the most growth. In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971. On the opposite side, 9% are in the highest-income tier, more than double the 4% share in 1971. At the same time, the shares of adults in the lower-middle or upper-middle income tiers were nearly unchanged... (Read the rest of the article at Pew Research here)

Michael Haltman is President of Hallmark Abstract Service in New York. He can be reached at mhaltman@hallmarkabstractllc.com.

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