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More Americans see middle class status slipping

By Associated Press

POSTED:
LAST UPDATED: 10:25 a.m. HST, Apr 02, 2014


WASHINGTON >>A sense of belonging to the middle class occupies a cherished place in America. It conjures images of self-sufficient people with stable jobs and pleasant homes working toward prosperity.

Yet nearly five years after the Great Recession ended, more people are coming to the painful realization that they're no longer part of it.

They are former professionals now stocking shelves at grocery stores, retirees struggling with rising costs and people working part-time jobs but desperate for full-time pay. Such setbacks have emerged in economic statistics for several years. Now they're affecting how Americans think of themselves.

Since 2008, the number of people who call themselves middle class has fallen by nearly a fifth, according to a survey in January by the Pew Research Center, from 53 percent to 44 percent. Forty percent now identify as either lower-middle or lower class compared with just 25 percent in February 2008.

According to Gallup, the percentage of Americans who say they're middle or upper-middle class fell 8 points between 2008 and 2012, to 55 percent.

And the most recent General Social Survey, conducted by NORC at the University of Chicago, found that the vast proportion of Americans who call themselves middle or working class, though still high at 88 percent, is the lowest in the survey's 40-year history. It's fallen 4 percentage points since the recession began in 2007.

The trend reflects a widening gap between the richest Americans and everyone else, one that's emerged gradually over decades and accelerated with the Great Recession. The difference between the income earned by the wealthiest 5 percent of Americans and by a median-income household has risen 24 percent in 30 years, according to the Census Bureau.

Whether or not people see themselves as middle class, there's no agreed-upon definition of the term. In part, it's a state of mind. Incomes or lifestyles that feel middle class in Kansas can feel far different in Connecticut. People with substantial incomes often identify as middle class if they live in urban centers with costly food, housing and transportation.

In any case, individuals and families who feel they've slipped from the middle class are likely to spend and borrow less. Such a pullback, in turn, squeezes the economy, which is fueled mainly by consumer spending.

"How they think is reflected in how they act," said Richard Morin, a senior editor at the Pew Research Center.

People are generally slow to acknowledge downward mobility. Many regard themselves as middle class even if their incomes fall well above or below the average. Experts say the rise in Americans who feel they've slipped below the middle class suggests something deeply rooted.

More people now think "it's harder to achieve" the American dream than thought so several decades ago, said Mark Rank, a sociology professor at Washington University in St. Louis.

Three years ago, Kristina Feldotte, 47, and her husband earned a combined $80,000. She considered herself solidly middle class. The couple and their four children regularly vacationed at a lake near their home in Saginaw, Michigan.

But in August 2012, Feldotte was laid off from her job as a special education teacher. She's since managed to find only part-time teaching work. Though her husband still works as a truck salesman, their income has sunk by more than half to $36,000.

"Now we're on the upper end of lower class," Feldotte said.

Americans' self-perception coincides with data documenting a shrinking middle class: The percentage of households with income within 50 percent of the median -- one way to define a broad middle class -- fell from 50 percent in 1970 to 42 percent in 2010.

The Pew survey didn't ask respondents to specify their income. Still, Pew has found in the past that people who call themselves middle class generally fit the broad definitions that economists use.

Roughly 8.4 percent of respondents to the General Social Survey, last conducted in 2012, said they consider themselves lower class. That's the survey's highest percentage ever, up from 5.4 percent in 2006. NORC is a social science research organization at the University of Chicago.

Tom Smith, director of the survey, said even slight shifts are significant. Class self-identification "is traditionally one of the most stable measures" in the survey, he said.

By contrast to the most recent recession, the severe 1981-82 downturn had little effect on class self-identification in Smith's survey.

Why do so many no longer regard themselves as middle class? A key reason is that the recession eliminated 8.7 million jobs. A disproportionate number were middle-income positions. Those losses left what economists describe as a "hollowed out" workforce, with more higher- and lower-paying and fewer middle-income jobs.

Rob McGahen, 30, hasn't yet found a job that paid as well as the purchasing agent position at Boeing's defense division that he left in 2011. Nervous about the sustainability of that job because of government defense cuts, McGahen quit after buying a bar near his St. Louis home.

The bar eventually went bankrupt and cost him his house. He and his wife moved to Pensacola, Fla., where he's had little luck finding work in defense contracting.

Now, he works in the produce section of a supermarket. His wife earns the bulk of their income as a speech pathologist. Their household income has been cut in half, from $110,000 to $55,000, and he and his wife have put off having children.

"It's definitely been a step back," McGahen said.

Now living in an apartment, he misses the couple's three-bedroom house on a quiet cul-de-sac in a St. Louis suburb.

Home ownership is among factors economists cite as markers of middle-class status. Others include being able to vacation, help children pay for college and save for a secure retirement.

Yet stagnant middle-class pay, combined with steep price increases for college, health care and homes, have made those expenses harder to afford. Median household income, adjusted for inflation, hasn't budged since 1996, according to the Census Bureau. Average college tuition has soared 174 percent in that time.

Many of the formerly middle class are still struggling with student debt. McGahen, who has an MBA, estimates he'll be making $600 payments on student loans each month for the next decade. Feldotte, with two master's degrees, says she has "lots and lots of debt."

And she isn't prepared to help her children pay for college.

"There's no money to help them," she said.

Some people feel they've fallen out of the middle class even as their incomes have remained stable, because their costs have risen. One is Richard Timmerman, 66, a retired postal employee in River Falls, Wis.

He's been living off his pension since retiring five years ago. His wife, a sales manager at a hotel and conference center, hasn't had a raise in that time. The recession hammered the hotel's business, though it's slowly recovering.

Yet his cost of living has risen in the past decade or so. Gas prices have surged over that time. So has food. And only this year did the value of Timmerman's retirement savings regain its level of six years ago.

"I see my position in the social structure having gone down a notch," Timmerman said. He considers himself lower-middle class, compared with middle class a few years ago.

A slowly improving U.S. economy could lift some people back into the middle class. Still, the recession and slow recovery have left permanent scars.

McGahen and his wife are trying to rebuild their savings. They no longer have credit cards. Timmerman travels much less than he thought he would in retirement.

"I have really beat myself up a lot over the last 2 1/2 years," McGahen said. "Until I get myself up and going again and in a good place ... it is tough."

___

AP Writer Melissa Nelson in Pensacola, Fla. contributed to this report.







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XML808 wrote:
This is perhaps one of the more important articles in today's edition but nary a comment. This does not bode well for the future. I wonder what it will take to spark a change that will improve the future for our kids?
on April 2,2014 | 10:41AM
hawaiikone wrote:
I don't know if it's true or not, but everytime I see it mentioned, there's no counterpoint from anyone, so I suspect it is factual. I'm referring to this state ranking number one for welfare "earnings", which is over $29 per hour. That alone is indicative of a real problem.
on April 2,2014 | 11:02AM
carolm wrote:
Yes, there is a problem. I've been in lines at the market where I'm behind a couple with food stamps. She's complaining that she doesn't have enough money left on her EBT card. Then the husband takes out a wad of $100 bills, pays for the remaining food plus beer and cigarettes. The worst was when a friend and I were behind a family at Foodland who was using the EBT card to pay for their food. We didn't have a problem with that. What we had a problem with was they had a brand new SUV (no license plates yet). As middle class citizens, we work hard at our jobs and we can barely get by with all the monthly expenses. If the guys on welfare can afford to buy a new SUV, they don't need to be on welfare.
on April 2,2014 | 12:21PM
1local wrote:
Democrat breeding program sucks the energy from the 'middle class' to inject into the so called poor. Just like the minimum wage - with all the credits and programs the minimum wage earner takes home and receives more spending income than most middle class...
on April 2,2014 | 01:37PM
RetiredWorking wrote:
carolm, don't envy them or believe all that you see. Sure, hubby has cash. Reason? Welfare families are not allowed to amass savings more than a few thousand dollars. Bundles of cash do not generate interest income, so they don't possess interest-bearing CD's, mutual funds, stocks, bonds, etc. They don't own their homes or income property. They cannot save at the bank for a rainy day, vacations, kids' college funds or retirement. Welfare clients cannot plunk down $50K to help their kids buy their home. There are no transformative assets like real estate and savings accounts to leave behind for their children. What welfare families like these DO leave behind to their kids are the skills of a con artist, the mindset to live on welfare and not much else. The most important thing they fail to instill in their brood is the sense of pride, success and accomplishments throughout their lives. Almost anyone can finance a car, so don't envy them. They may own that new car, but they also own the healthy monthly payments. Actually, I feel sorry for ALL welfare recipients. Life is deceiving; they're on the track to going nowhere, ESPECIALLY when the kids are gone and welfare payments are less. And remember, no work means no Social Security, no pensions or annuities, no 401K's and no IRA's. FWIW, I'm middle/middle class.
on April 2,2014 | 07:51PM
RetiredWorking wrote:
hawaii, sounds incredulous. Please cite, so I can read those reference articles.
on April 2,2014 | 07:15PM
pcman wrote:
The Obama community organizing plan is working to a tee. The more people out of work, the more people into HOPE an CHANGE. The more people on government freebies, the more votes for Democrats. Obama's policies for Defense, Labor, Health, Welfare, Taxes, etc, are anti-jobs. Obamacare is the worst job killer, because employers are not sure about costs for employees. If you, as Obama, do not understand this, jobs will get worse.
on April 2,2014 | 02:08PM
HD36 wrote:
The dollar has lost more than 95% of its purchasing power since 1913.
on April 2,2014 | 06:04PM
nalogirl wrote:
Just do what all the Obama supporters do, go on welfare and food stamps and sit around and do nothing.
on April 2,2014 | 10:53AM
what wrote:
Obama's administration has done a good job of prolonging the recession throughout his presidency. When Bush became President, he had post dot-com bubble recession to deal with. Bush recovered nicely from that and the economy boomed throughout most of his presidency. When Obama took over, the economy stagnated throughout his entire presidency.
on April 2,2014 | 11:21AM
kauai wrote:
True, but remember that Bush ended his presidency by sending us into the deepest recession since the Great Depression. Add to that, the fact that Bush used public money to bail out the Wall Street banks. Yes, Obama continued that bailout, but Bush started it. That Bush bailout flies in the face of the "free market" philosophy of the that political party, which then gave rise to the "Tea Partiers" who now want to slash and burn the budget, and heaven-be-darned who gets evicerated in the process (scorched earth comes to mind). There's certainly a lot of blame to go around, so get the story straight, unlike that so-called "fair and balanced" network.
on April 2,2014 | 12:54PM
what wrote:
You and I can both hate Bush for bailing out Wall Street banks, but that is not the reason for the current recession and shrinking middle class. I blame Obama for continuing the recession with his abysmal policies of money printing and zero interest rates in yet another attempt to inflate home prices to unnatural levels. Hasn't he learned that lesson?
on April 2,2014 | 01:06PM
kauai wrote:
I believe the Federal Reserve (the Fed) is responsible for the interest rate setting. The Fed is not controlled by the Federal Government (the Government) and I believe also controls the printing of money (or it may be the Treasury Dept.). The Fed was created, I believe, as a result of the Great Depression (which occurred due to free-wheeling, lack of regulation, "free marketers") and granted autonomy in order to prevent direct political interference from the Government. The slow dismantling of regulations and teardowns of financial walls (Glass-Segal) which started in the 1980's, all contributed to and precipitated the 2008 recession. Haven't we learned that lesson from history that businesses will not act in the best interests of society and therefore regulations were created to provide a check and balance?
on April 2,2014 | 01:23PM
what wrote:
You are correct, but Obama picked Yellen. Yellen was chosen by Obama and represents all that is wrong with monetary policy.
on April 2,2014 | 02:08PM
kauai wrote:
Not a Yellen nor Obama fan, but Yellen inherited the current monetary policy and situation from Bernanke. Just like Obama inherited the gosh-awful economic mess from Bush. Yellen hasn't been in the job long enough to establish a track record, so we'll see how she performs. And just for the record, I hated what Bernanke has done to interest rates during the latter years of his tenure. Rates on CD's and other safe (read FDIC/NCUA) instruments really suck, big time. Turning back to the bigger picture, those failing Wall Street banks should have been wound down in an orderly fashion rather than have been bailed out with our (the people's) money.
on April 2,2014 | 02:34PM
HD36 wrote:
The Federal Resereve is no more federal than Federal Express. Looki in the government pages and see if you find it. The commitee is made up of government appointed employees but ownership of the Federal Reserve has remained a closely guarded secret since in was founded in 1913. All we know is that it's owned by a powerful cartel of banks. Wether the banks are international or not we don't know because Ron Paul's efforts to audit the Fed fell on deaf ears.
on April 2,2014 | 05:56PM
HD36 wrote:
Bush was too stupid to make economic decisions, so he relied on Secretary of the Treasury Hank Paulson, the ex-CEO of Goldman Sachs, who after watching the stocks of major banks collapse, started a black berry panic proclaiming that the contagion would bring down the global financial system. Coincidently Ben Bernack happened to be the Fed Chairman, who did his thesis on the Great Depression, and concluded that it could have been avoided by injecting more liquidity into the market. The problem was not a matter of more liquidity however, but a need for the system to purge itself from the excesses of leverage. Had no bailout occured the contagion would have been confined to the canyons of Wall Street.
on April 2,2014 | 06:21PM
HD36 wrote:
The Federal Reserve has been lowering interest rates since Alan Greenspan took over from Paul Volker. Volker had to raise rates past 20% in order to save the dollar from collapsing after Nixon closed the gold window on August 15th 1971. Rates have been falling now for over 30 years fueling the internet bubble in 2000 and the housing and finance bubble in 2007. Now that short term rates are near zero and our central bank has a balance of over $4.3 trillion, the last, and biggest bubble in economic history could pop any day. The bond bubble/currency bubble is so big that it's outside the realm of economic history. It's global because the dollar is the world's reserve currency. The problem is structural, not a matter of liquidity. Thus, like an avalanche, nobody knows when that extra snowflake will cause the whole thing to come down.
on April 2,2014 | 06:13PM
RetiredWorking wrote:
nalogirl, I've never received welfare or food stamps, never sat around and did nothing in all my life.
on April 2,2014 | 07:55PM
nalogirl wrote:
Welfare, the new middle class.
on April 2,2014 | 10:54AM
peum wrote:
Reading this article, people make bad choices and/or live above their means. I think living within your means to include retirement savings is paramount but forgotten or even ignored in today's "keep up with the Joneses" mentality. Improvement is everyone's choice, not the government's responsibility. The choice to study hard in school, to pick the right majors to ensure a lucrative career. These people in the article struggling? It's their own faults for the decisions they CHOSE to make in life.
on April 2,2014 | 11:19AM
kauai wrote:
Certainly a lot of truth in your statement. But realize too, that sometimes stuff-hits-the-fan in life (like a layoff) and hopefully one has built up nice rainy-day-fund cushion to tide oneself over. It's unfortunate that some people game, abuse and take advantage of the safety net systems that are in place, and therefore makes it look bad for the folks who truly do need the assistance. The measure of a decent society should be one of having compassion for those less fortunate and lending assistance when needed.
on April 2,2014 | 01:06PM
anakemo wrote:
All that had been stated by you I totally agree. Bush and Cheney made their millions overseas starting and unheard of war and living like the RICH when OBAMA CAME IN he had to try his best and is doing fine the reason people VOTED for him; but having a bad time because of the SO CALLED REPUBLICAN BECAUSE HE IS BLACK BUT WILL NOT ADMIT IT . . . HE HAS DONE THE BETTER JOB THAN BUSHES OF CHENEY.
on April 2,2014 | 02:51PM
hawaiikone wrote:
Did you ever wonder how most other presidents were able to govern despite a lack of support from the opposing party? This isn't a unique situation. Obama simply isn't up to the task.
on April 2,2014 | 03:17PM
HD36 wrote:
Maybe but monetary policies have had the opposite effect. The rich have gotten richer and the poor, poorer. When you don't have a market price for money, but an artificial peg, it's creates deformations within the economy. The original mandate of the Central Bank, or Federal Reserve was to inject liquidity into banks should there be a run. Now, they say inflation isn't high enough. Well, if you have a shrinking middle class struggling to pay bills, why would you want to make things more expensive? Here's the secret. If, like the government, you have a $17.4 trillion dollar debt, creating inflation is the only way to pay it off other than default.
on April 2,2014 | 06:42PM
HD36 wrote:
Yes, but go back to 1947 when the US was still on a gold standard and it was normal for a guy with a blue collar job, to have a wife that didn't work, and have four or five kids. Not even a college degree. This was at a time when the government was much, much smaller, when the US had a trade surplus, and the government didn't borrow 40 cents on every dollar. My point is that the dollar has lost about 50% of it's purchasing power over the last 20 years, that the average person working for a set wage, will have it confiscated in two ways by the government: one is through payroll, social security, and other taxes; the other, and more insidious, is the inflation tax.
on April 2,2014 | 06:34PM
entrkn wrote:
This is the make or break issue for America.
on April 2,2014 | 11:25AM
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