New research is underscoring what American middle class families have known for years, which is their income status is slipping away, to the point many are questioning whether it will disappear all together.
A new study by the Pew Research Center , The American Middle Class Is Losing Ground, shows after nearly 40 years of serving as the nation’s economic majority, the middle class is shrinking.
According to the research gathered by pew, "about half of American adults – 120.8 million out of 242.1 million – live in middle-income households as of early 2015. In percentage terms, 50% of adults now live in middle-income households, 29% in lower-income households, and 21% in upper-income households."
Boston College Associate Professor of Social Work, Tiziana Dearing, tells WGBH Morning Edition host Bob Seay, figures in the report show the middle class is worse off than it was back in 1970.
Defining Middle Class
According to Dearing, “wages and earnings, which is what is meant when we say middle income, have stagnated and growth in jobs have occurred in lower income jobs, such as in the service center or high income areas such as the knowledge economy, which requires investment into higher level of education.”
She says jobs are moving up into upper income investment levels and jobs are moving down into lower service wage jobs and the middle income jobs, typically high school diploma and manufacturing jobs, are thinning out and wages are remaining stagnant.
There are two different ways of measuring where people fall when it comes to which category or group they fall into: income and wealth. Income is what you earn, and wealth is calculated by what you have such as your savings, house, and other assets.
Middle Income Earnings
The report looks at median income in America, which is what a typical middle family of three in America earns.
Dearing says, “people who are middle income make above two thirds the median income, or 42k on the bottom end, and up to two times the median income on the top end or above 126k, and if your family falls into that range, you’re considered a middle income family in America.
Pew Research Center, which studies social and demographic trends, has an income calculator where individuals can determine where you are in the distribution of Americans by income tier.
Boston Cost of Living
Dearing tells Seay living in Boston is a financial challenge for most families, and that the expense is a stretch for middle income families. Dearing points to another report by the CrittentonWomen’s Union, that shows the level of sustainable annual income a family of three has to have to live comfortably in the city is $62k, which is twenty-thousand dollars higher than the $42k the Pew Report shows as middle income.
History of Middle Income
Two factors involved when analyzing income levels is mobility and equality. According to Dearing mobility is the ability to move up and down the income, while equality tells us how many people are clustered on a particularly income ladder rung.
She says the American middle class emerged in the 20th century and was partially manufactured by fiscal policies and as a result of World War II. “The war, she says, took America out of the great depression, and the GI Bill, educational incentives and social security, is how the nation built the middle income bracket.”
Dearing says whatever we did to build it years ago, it’s no longer working now. She says new fiscal policies, changes in tax codes, and investments are issues that need to be addressed in order to rejuvenate the shrinking middle class.
To listen to the entire interview with Boston College Professor Tiziana Dearing and Bob Seay click on the audio file above.
