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Eroding middle class falls to 51%, survey finds

The core American belief that a large sector of the public enjoys economic and social mobility is not necessarily true anymore, a Pew study says.

August 23, 2012|By Rebecca Trounson, Los Angeles Times

The idea of a large, stable middle class is central to America's sense of itself. But the U.S. middle class has been steadily shrinking, dropping from 61% of all adults 40 years ago to a bare majority now, a new study finds.

This middle tier of American society also has slipped downward in terms of its income and wealth in the last decade, according to the report released Wednesday by the Pew Research Center. And it has lost a share of its traditional faith in the future.

"The notion that we are a society with a large middle class, with lots of economic and social mobility and a belief that each generation does better than the next — these are among the core tenets of what it means to be an American," said Paul Taylor, the Pew Research Center's executive vice president.

"But that's not necessarily the case anymore."

The new study combines an analysis of recent government data with a public opinion survey to paint a picture of the nation's middle class, defined as those with annual household incomes in 2010 between $39,000 and $118,000 for a family of three.

By this definition, Pew found that at the beginning of the decade, the middle class included 51% of all adults, down from 61% in 1971.

The well-being of the middle class is a central theme of the presidential election, with President Obama and Mitt Romney each making repeated visits to battleground states claiming to have the superior approach.

The president is campaigning on a pledge to allow the George W. Bush-era tax rates on the wealthiest Americans to expire at the end of the year as scheduled. Romney wants to extend the lower rates across the board. Romney has also proposed additional cuts.

The Pew study found that some of the shrinkage in the middle class came from people moving into the upper-income tier, which represented 20% of the nation's adults in 2011, up from 14% in 1971. The lower-income group rose to 29% of all adults, up from 25%.

But the money only went in one direction, Taylor said. Over the same period, only the upper-income group increased its share of the nation's overall household income and now accounts for 46% of that total, up from 29% in 1971. The middle class garnered 45% of the total, down from 62% four decades ago. The lower-income group took in 9%, down from 10%.

Since 2000, the median income for America's middle class has fallen from $72,956 to $69,487, the researchers found. But net worth plummeted over that period, with the median declining by 28%, erasing two decades of gains.

Overall, the middle class is now smaller, poorer and more pessimistic than previously, the researchers found.

Although the recession ended, at least technically, in 2009, its effects linger. The report found that middle-class Americans said they continue to struggle, with most reporting that they have had to cut spending in the last year. Fewer than a decade ago said they expected hard work to bring them success.

And 85% of middle-class Americans said it was harder now than a decade ago to maintain their middle-class lifestyles.

Of those who felt that way, 62% said "a lot" of the blame lay with Congress. About 54% blamed banks and financial institutions, 47% said the same about large corporations. More people placed blame with the previous Bush administration (44%) than did with the administration of President Obama (34%).

Only 8% said "a lot" of the blame for the tough times of the middle class lay with the middle class itself.

The study found that while some minority groups, including blacks and Latinos, have had a tougher time overall during the recent recession, people in those groups tended to have more upbeat economic assessments than whites and older adults — groups that generally fared better in the tough economy.

For example, while 75% of white members of the middle class said it was harder today than 10 years ago to get ahead, roughly 6 in 10 middle-class Latinos and blacks said the same. Pew noted that views on advancement are often correlated with political partisanship and that blacks and Latinos are more likely than whites to be Democrats and supporters of Obama.

The Pew survey found that neither presidential candidate has closed the deal with the middle class, but more lean to Obama than to Romney. About half of the adults who identified themselves as middle class said they believed Obama's election to a second term would help the middle class, compared to 42% who said that Romney's election would do so.

The survey is based on an analysis of data from the Census Bureau and the Federal Reserve, along with a Pew survey in July of about 2,500 adults, including 1,287 who identified themselves as middle class.

rebecca.trounson@latimes.com

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