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Lost decade for the middle class

By Judy Martel · Bankrate.com
Wednesday, August 29, 2012
Posted: 6 am ET

Does it feel like you've been financially standing still for a decade, or worse, have you lost ground? If it's any comfort, you've got lots of company. The Pew Research Center has identified the past 10 years as a lost decade for the middle class.

In a survey, 85 percent of the middle class say it is more difficult now to maintain a standard of living than it was a decade ago. Since 2000, adults in this group have lost earning power and wealth, as well as faith in the future, perhaps the saddest aspect of the Pew study.

The middle class is defined as adults with annual household incomes two-thirds to double the national median – a range of $39,418 to $118,255 for a family of three. Mean family incomes have declined overall for the first time since the end of World War II. Since 2000, the median income for America's middle class has fallen from $72,956 to $69,487. But net worth plunged during that time, with the median declining by 28 percent, erasing two decades of gains.

The middle class has also been shrinking in number for the past four decades. In 2011, 51 percent of adults made up the middle class, down from 61 percent in 1971. The good news is that as the middle class gets smaller, slightly more are moving into the upper class than into the lower. Those who moved up found themselves in a tier that increased its share of the nation's total income, from 29 percent in 1970 to 46 percent in 2010. The lower tier dropped from 10 percent to 9 percent of the nation's income, and the middle class from 62 percent to 45 percent.

President Barack Obama and presidential Republican candidate Mitt Romney are making the erosion of the middle class a central campaign theme. Look for health care costs, taxes, job growth, Social Security and recovering housing values to be hotly debated over the next two months.

Would you define yourself as middle class and do you feel as though, financially, you've lost a decade?

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August 31, 2012 at 5:27 pm

Curious, does this mean $120K and above is "Upper Class"?
I've heard $250K. I've also heard top 1% (about $380K) is the income level for Upper. Either way, I don't see consensus on what the number is.

August 30, 2012 at 4:17 pm

I have to say we've been feeling it since 911, but in a big way the past 4 years. Part of that is college but things would not be soooo difficult if our taxes weren't so high and being raised every year. Taxes, gas and electric, food, car repairs, school supplies, college, everything is so expensive what was within reach is now out of reach for us and most middle class families. I feel at this age my husband and I should be feeling a little relief but no it's as difficult now as when we first started, struggling to put food on the table, pay the bills, utilities and our mortgage. It's really sad, our 401k's and IRA never fully recovered after 911 and the bank debacle . We can't refinance at a good rate because we're not behind on our mortgage. I know several people who refinanced under the Obama programs, the bank told them to deliberately stop paying their mortgage for 3 months and then they could refinance under those programs. Disgusting on the banks part. My son graduated college and can't find job. How on earth will he be able to move out get his life started and out of our pocket? Yea we are feeling it. We should be on easy street about now. My husband has not gotten a raise in years. I am self employed but work per diem as my local school district to make ends meet. What's the answer? I don't know O'Bama's plans are not working. More debt, unrest to much of a celebrity for my taste. Thinking I'll throw the dice and give Rommey a shot. As I tell my kids if something is not working you have to try something else.