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Sunday, April 12, 2015

Middle-Class Anxiety

Patricia Cohen writes at The New York Times:
Middle-class anxiety has been driven by several factors: increasing instability in incomes, a sense among many Americans that they are failing to keep up with the gains of previous generations, and an increasing gap between themselves and the very rich.
A recent report from economists at the Federal Reserve Bank of St. Louis concluded that “families that are neither rich nor poor may be under more downward economic and financial pressure than common but simplistic rank-based measures of income or wealth would suggest.”
 The study, conducted by William R. Emmons and Bryan J. Noeth, found that one reason many Americans viewed themselves as struggling was that their real incomes had not advanced significantly beyond their parents’ even when they reached higher educational levels, while those who matched their parents’ achievements were actually worse off.
There isn’t one middle class, but many middle classes. Still, what all of them ultimately require, experts say, is a sense of economic security.
“If there’s no security, there’s no middle class,” said Thomas Hirschl, a sociologist at Cornell and an author of “Chasing the American Dream.”
Median per capita income has basically been flat since 2000, adjusted for inflation. The typical American family makes slightly less than a typical family did 15 years ago. And while many goods have become cheaper or better, the price of three of the biggest middle-class expenditures — housing, college and health care — have gone up much faster than the rate of inflation.
Equally important, Mr. Hirschl found a high degree of income volatility among most Americans in the four decades between 1969 and 2011.....nearly 80 percent at least temporarily plunged into a red zone, where their income dropped near or below the poverty line, or they were compelled to gain access to a social safety net program like food stamps or collect unemployment insurance. More than half of Americans ages 25 to 60 will experience at least one year hovering around the poverty line.
A review of the latest studies on the middle class by the Congressional Research Service concluded that “when those at the upper end of the distribution fare much better than they do, the level of middle-class satisfaction is generally lessened.”
Yet in the last 15 years, nearly all of the gains in income have streamed toward the upper end of the spectrum.