Share of middle class income shrinking : Stltoday

Share of middle class income shrinking : Stltoday

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"The job market is changing, our living standards are falling in the middle, and middle-income parents are now afraid that their children will be worse off than they are," says Timothy Smeeding, a University of Wisconsin-Madison economics professor who specializes in income inequality.

He said that many middle-income families took a big hit in the past decade as health care costs increase, mid-wage jobs disappear because of automation and outsourcing and college tuition mounts for those seeking to build credentials to get better work. Meanwhile, more-affluent families have fared better in net worth because they are less dependent than lower-income groups on home property values, which remain shriveled after the housing bust. Wealthier Americans are more likely to be invested in the stock market, which as a whole has been quicker to recover from the downturn.

"These are the disaffected middle class who work hard and play by the rules of society, but increasingly see their situation declining by forces beyond their control," Smeeding said in an interview. "No matter who is president, the climb back up for the middle class and the recovery will be slow and often painful."
The Pew study is just the latest indicator of a long-term trend of widening U.S. income inequality. The Census Bureau reported last year that income fell for the wealthiest — down 1.2 percent to $180,810 for the top 5 percent of households. But the bottom fifth of households — those making $20,000 or less — saw incomes decline 4 percent.

The new study reviewed 2010 data from the Census Bureau and Federal Reserve, defining "middle class" as the tier of adults whose household income falls between two-thirds and double the national median income, or $39,418 to $118,255 in 2010 for a family of three. By this definition, "middle class" makes up about 51 percent of U.S. adults, down from 61 percent in 1971.