The American Middle Class: Challenges and Changes

Introduction

• The American middle class was once a symbol of the American dream but now faces significant challenges.
• Middle class individuals feel caught between lower and upper classes.
• Traditional indicators of middle-class status (e.g., home ownership, college education for children) have become less attainable.
• A 2018 survey indicated that a third of middle-income adults couldn't cover a $400 unexpected expense.

Changes in Middle-Class Perception

• Many who previously identified as middle class now consider themselves working class.
• Economic status is not static; middle-class families often experience periods of poverty.
• Precarity and uncertainty are now common experiences for many in the middle class.

Shrinking Middle Class

• Pew Research Center study shows a decline in the middle class from 61% in 1971 to 51% in 2019.
• No formal definition of "middle class" in the U.S. contributes to the debate.
• In 16 rich countries, including the U.S., the size of the middle class remained stable from 1985 to 2016.
• "Squeezed" middle class faces more pressure to maintain their position.

Financial Pressures

• Middle class faces challenges in affording rent, property, and raising children.
• Rising costs and stagnant incomes make middle-class life more expensive and uncertain.
• Millennials face more difficulty achieving middle-class status compared to baby boomers.

Testimony: Chantal Jacob

• Chantal Jacob's family, despite a $100,000 income, struggles financially.
• High taxes, insurance, and cost of living lead to budgeting down to the dollar.

Stagnation of Income

• Middle-class income share fell by 19% between 1970 and 2018.
• Brookings Institute study shows middle-class income growth lagging behind both lower and upper income tiers.
• Productive growth has not benefited the middle class adequately due to income inequality.

Rising Costs

• Cost of living, including housing and education, has risen dramatically compared to income.
• Example: Rent increases significantly without corresponding income hikes.
• Cities with higher living costs require much higher incomes to maintain a middle-class lifestyle.

Policy and the Middle Class

• Lack of effective policy support for the middle class.
• Wage stagnation linked to deregulation, unemployment, weakened unions, globalization.
• Policy choices have contributed to economic inequality.

Current Policy Efforts

• Biden administration's infrastructure bill and Build Back Better Act aim to support the middle class.
• Challenges remain due to pandemic, inflation, and global supply chain issues.

Conclusion

• The fate of the middle class affects the future of the American dream.
• Economic inequality contributes to divisions and impacts democracy and mobility.
• Urgent need for change to prevent further deterioration of middle-class stability and opportunities.