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The Pew Research Center's Social & Demographic Trends project studies behaviors and attitudes of Americans in key realms of their lives, including family, community, health, finance, work and leisure. The project explores these topics by combining original public opinion survey research with social, economic and demographic data analysis. It is one of eight projects that make up the Pew Research Center, a nonpartisan "fact tank" that provides information on the issues, attitudes and trends shaping America and the world. It does not take positions on policy issues.Most Americans feel stuck in their tracks. A majority of adults in this country say that in the past five years they either haven't moved ahead in life or have fallen backwards. This is the most downbeat assessment of personal progress in nearly a half century of polling by the Pew Research Center and the Gallup Organization.
People feel this way for a reason. Median annual household income in the United States -- arguably the best single measure of a middle class standard of living -- is below the peak it reached in 1999, after adjusting for inflation. This has been one of the longest slumps for this key indicator in modern U.S. history. And the pain has not been spread evenly. Those in the upper income tier have done better than those in the middle and lower tiers -- not just during this decade's downturn, but through good times and bad stretching back to the early 1970s.
These two trends -- a recent decline in standard of living, coming on top of a long-term rise in income inequality -- have conspired to produce the economic malaise characterized by candidates and commentators alike during this presidential campaign season as "the middle class squeeze."
There's no denying that the phrase strikes a chord with the American public. According to a new Pew Research Center survey, about eight-in-10 (79%) adults say it is more difficult now than it was five years ago for middle class people to maintain their standard of living. Two decades ago, just 65% felt this way, according to a 1986 NBC/Wall Street Journal poll.
Nonetheless, these downbeat appraisals -- both of personal progress and of middle class well-being in general -- are not the public's only perspectives on this matter. Despite their short-term sense of stagnation, most Americans see in the sweep of their lives a long arc of progress. Nearly two-thirds (65%) say they have already exceeded the standard of living that their parents had at the age they are now. Most expect to face some belt-tightening -- or worse -- in the coming year, but a majority is confident that their quality of life in five years will be significantly better than it is now. And, gazing into a more distant future, most expect their children's standard of living to be better than their own.
In short, the public is beleaguered but unbowed. And its positive long-term perspective, like its negative short-term assessment, is in line with underlying economic realities. Despite the downturn of the current decade, median household income increased by 41% from 1970 to 2006 (the last year for which such data are available), after adjusting for inflation and changes in household size. To be sure, the rising tide favored some boats over others. The income gains over this period were greater for upper income adults than for middle or low income adults, and the wealth gains were much greater in the top income tiers than in the middle or at the bottom. So for those in the middle peering upward, absolute progress has gone hand in hand with relative decline.
All of these economic trends -- stagnation in the short term, rising prosperity and rising inequality in the long term -- provide a context for the nuances of public opinion on the subject of the "squeeze." When survey respondents say they haven't moved forward in recent years, the economic data say they're right. When respondents say they're doing better than their parents, the economic data say they're right. When respondents say it has become more difficult to maintain a middle class standard of living, the data once again say they're right -- if what they mean is that it has become harder for people in the middle to keep pace with those above them.
Other highlights from the report include:
About Half Think They Are Middle Class
• Some 53% of adults in America say they are middle class. On key measures of well-being -- income, wealth, health, optimism about the future -- they tend to fall between those who identify with classes above and below them. But within this self-defined middle class, there are notable economic and demographic differences. For example, four-in-10 Americans with incomes below $20,000 say they are middle class, as do a third of those with incomes above $150,000. And about the same percentages of blacks (50%), Hispanics (54%) and whites (53%) self-identify as middle class, even though members of minority groups who say they are middle class have far less income and wealth than do whites who say they are middle class.
Spending More, Borrowing More -- And Housing is Why
• A new single family house is about 50% larger and existing houses are nearly 60% more expensive (in inflation adjusted dollars) now than in the mid 1980s. Goods and services that didn't exist a few decades ago -- such as high definition television, high-speed internet, and cable or satellite subscriptions -- have become commonplace consumer items. And the costs of many of the anchors of a middle class lifestyle -- not just housing, but medical care and college education -- have risen more sharply than inflation.
• As expenses have risen, middle income Americans have taken on more debt, often borrowing against homes that, at least until recently, had been rising rapidly in value.
Sustaining Lifestyle Is Getting Harder
• Nearly eight-in-10 (79%) respondents in the Pew Research Center survey say it is more difficult now than five years ago for people in the middle class to maintain their standard of living. Back in 1986, just 65% of the public felt this way.
• The current economic slowdown and uptick in prices are taking a bite out of the family budget. Slightly more than half of middle class respondents say they've had to tighten their belts in the past year. Roughly the same proportion expect to make more cutbacks in the year ahead, and a quarter say they expect to have trouble paying their bills. About a quarter of those who are employed worry they could lose their job.
• Nonetheless, the American middle class is optimistic about the future. Most are confident that their quality of life in five years will be better than it is now. And, gazing farther ahead, most expect their children to do better in life than they themselves have done.
This summary was adapted from a longer report. To read the entire article, click here.
POSTED BY: JD (April 22, 2008 11:28 AM)
This slowdown is the best thing that ever happened to these people. They've been expecting to "maintain their standard of living" which included a NEGATIVE savings rate. Now they're forced to learn fiscal prudence, which will serve them for the rest of their lives. Heaven forbid we have to cut down on our lattes!
I say this as a middle class person who's not struggling at all, because I live below my income.
POSTED BY: s2kreno (April 22, 2008 04:16 PM)
I agree that our lifestyle has emphasized consumption way too much and that we think too highly of those who flaunt their income (or maybe just their credit card limits?). However, for those who are barely hanging on and trying to live as well as their parents did (keep the house painted and the car running and the kids fed) it's hard to fault them for getting into debt to keep some semblance of a normal lifestyle. Very few of us know how or ever expected to live below the standard that our parents set for us. It's sad that the economic changes that rewarded those in certain professions or socioeconomic groups did so much damage to others. I'm one of the lucky ones (and I don't buy lattes)but i can't help feeling sympathy for those in the pinch.
POSTED BY: blkgld978 (April 23, 2008 01:28 AM)
This reflection on American Middle Class lifestyle has left out a key word: responsibility. When we take on excessive debt (like credit cards), or beggar our retirement plans and home equity all for the sake of instant gratification and needless "stuff".....it's no wonder people feel financial pain. Maybe, in perspective, this is all a good thing. It will remind everyone that personal discipline and responsibility is the key to having a well-rounded, enjoyable lifestyle.
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