In 2000s, middle class saw declines in income, net worth
The first decade of the 2000s was hard on the middle class, according to a new study from the Pew Research Center. During those 10 years, both median income and median net worth fell for middle class households, and the middle class itself shrunk. The reasons for these declines are the common culprits behind so many of the lasting negative effects of the economic recession: unemployment, underemployment, the loss of home equity and underwater mortgages.
Specifically, median household income dropped by $3,500 for middle class households, and median net worth dropped by a staggering 28 percent. This is largely due to falling incomes as well as losses attributed to the economic recession that took place during the latter part of the decade.
The number of Americans who can be classified as middle class, with a household income between $39,000 and $118,000 for a three-member household, has dropped as well. In 2011, 51 percent of Americans were defined as middle class, a 10 percent from the early 1970s. About half of this number is made up of people who moved to incomes above the Pew’s middle class cutoff, with the other half represented by those who fell below it.
These financial losses seem to have caused rampant pessimism among members of the middle class. The number of people who think their children will be better off than they are has dropped by 8 percent, and 85 percent say that it was more difficult to maintain a middle class lifestyle in the 2000s than in years before.
Source: USA Today, “Study: Middle class poorer, earned less in 2000s,” Tim Mullaney, Aug. 22, 2012
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