7 reasons on why the middle class disappearing

Very good article and I find much of it to be true.

7 Stressors Sapping the Middle Class

Falling income. The pinch that many families feel comes from incomes that have fallen while other unavoidable costs have continued to go up. From 2000 to 2008, median household income after inflation was basically unchanged, the weakest performance since at least the end of World War II. And that was mostly before the recession. Economists estimate that once additional data are tallied, they will show that median real income fell by 5 to 7 percent during the recession. That's a huge drop that seems unlikely to reverse itself anytime soon, since a weak job market means that even those who have jobs are far less likely to get raises. And many people have absorbed pay cuts or taken new jobs that pay a lot less than they used to earn.

Reduced savings/net worth. When incomes fall faster than expenses, the first impulse is often to make up the difference by borrowing. But banks and credit-card issuers have clamped down on lending, leaving many Americans no choice but to raid their savings to pay the bills. This has happened at the same time that home values have plunged. Many homeowners now have little or no home equity, and a topsy-turvy stock market has stabilized more than 25 percent below its peak values from 2007. The result is a net loss of about $12 trillion in Americans' net worth over the past three years, according to the Federal Reserve--about $102,000 per U.S. household.

High healthcare costs. The sob stories trotted out by advocates of healthcare
reform ring true. Healthcare costs rose by 155 percent between 1990 and 2008, according to the White House's middle-class task force, while median household income rose by just 20 percent. That means medical costs take an increasing share of take-home pay for virtually every family. A separate study from 2009 found that 62 percent of all personal bankruptcies stemmed from medical problems that overwhelmed family finances. Even if Washington passes healthcare reform, rising medical costs seem likely to pressure the family budget for years, forcing many to simply spend less on other things.

Child-care/elder-care expenses. Many families have maintained their standard of living because both parents work. Between 1990 and 2008, for example, hours worked by both parents in a typical middle-income family increased 5 percent; in a middle-income single-parent family, hours worked spiked by 13.4 percent. That leaves less time for taking care of kids, aging parents, and anything else that needs attention--and the added costs of paying somebody else to do it. Data from the recession may show that child- and elder-care costs have eased as more people find themselves involuntarily stuck at home. And as Americans simplify their lives, some moms and dads may decide that it makes sense for one parent to spend more time at home instead of working to pay for a bunch of stuff the family doesn't really need.

College costs. A typical family with two kids should sock away about $4,200 per year to pay for college. That's a tall order. College costs have risen about 43 percent since 1990, nearly twice the rise in median income. And with state and federal education funds being axed, public universities are hiking tuition and fees. A budget crisis in California, for instance, has led to a 32 percent increase in tuition at marquee state schools like UCLA and Berkeley, with more increases likely. Private schools, meanwhile, are struggling with steep drops in their endowments thanks to the financial crisis and the housing bust, which trashed mortgage-based investments. The bottom line for many families is that they'll have to take out bigger college loans, with students working more to pay for their own education.

Housing costs. The cost of financing and maintaining a home soared by 56 percent between 1990 and 2008, thanks to the housing bubble that's now deflating. Many families that bought a home near the peak of the market--say, between 2005 and 2007--are stuck with property that's declining in value and in some cases worth less than the mortgage. That will continue to fuel foreclosures and the stress of making huge housing payments that the family income can barely cover. But the housing bust is helping bring prices back down to manageable levels for many families, one break for those who escape the recession with their household finances more or less intact.

False expectations. For the past 40 or 50 years, Americans have lived by a series of unofficial tenets: A good education guarantees a good job, hard work will bring prosperity, and 40 years of 40-hour-a-week work earns a comfortable retirement. Then, maybe; now, not so much. Workers who believe that somebody owes them a comfortable life just because they try hard are risking bitter disappointment in a Darwinian economy, where there are likely to be more losers and fewer winners than we're used to. The winners will be those who learn how to adapt, expect nobody to give them anything, and are prepared to work harder in the future than they did in the past. That's how it was in America before anybody ever heard of the middle class, and it may be that way for a while again. The real middle class--the true bedrock of the nation--will be able to handle it.

finance.yahoo.com...

There are many things I could add to this....the cost of our war being one...or two our tariffs being too low and resulting in outsourcing.

The middle class continues to sink. Soon it will be nonexistent if something doesn't change.

Here in the Netherlands the common experience is that the euro which has replaced the gulden is having the same value.

01-01-2001
euro 2.22- gulden 1,-

Funny thing is in only 9 years our houses cost in euros what it used to be in guldens. The prize is more the doubled. This also has happend to bread for example.

reply to post by David9176



If you're intrested about the disappearing middle class, then check out this great video with Elisabeth Warren - she explains it quite good in this video:

The Coming Collapse of the Middle Class



This is happening in a similar way here in Europe & in other parts of the world as well, and her numbers are similar to ours and could also explain the effects of the housing bubble with the rising house prices & the casino economy.

It's like this was planned all along and was implemented to create a two class society only - the masters and slaves! - back to medieval Feudalism.

The rising cost of housing is just crazy compared to the 1960-70-80's

Thankfully, here in Europe many people use less credit and usually save a lot before they buy their homes, and we don't have the sub prime spectacle as you guys have - and of course, people didn't take a second mortgage just to consume and buy stuff.

And some costs like health care, education etc, we pay for with our high taxes instead.

And of course, we had the €uro conversion which made a lot of things more expensive and almost doubled the prices for houses, food, consumer stuff etc.

So the €uro shift in many ways contributed to the housing bubble and the over-expanding house building sector here.

But the general effects on our old lower middle class are very similar through a higher cost of living and the lack of jobs for the old lower middle class.

The effects of leaving the Industrial society behind for the new era of the Information society perhaps?

The middle class in Europe belong to the engineers, hightech technicians & consultants, entrepreneurs, scientists, government management sector, doctors, lawyers, politicians, higher management etc - you'll need at least a newly specialised 4-5 years education from University to belong to the middle class these days - but even with higher specialised University education it's very tough on the job market right now.

This move into the Information & knowledge society era will unfortunately kick the older lower middle class a step down on the ladder to where the working class are now situated.

[edit on 21-3-2010 by Chevalerous]

Well that is a sobering OP. S& F for you

The british experience is also similar. The one good thing is that a time must come when the middle classes wake up en mass and smell the coffee. If we make common cause with the working class - face facts 99% of us work then the elites willhave to make concessions.

What I have also noticed is the way that new vacancies are paying less than the similar ones 3 to 4 years ago. Interim accountants are paid the same hourly rate or less than they were 8 years ago.

reply to post by Tiger5


please watch the vid on this Thread

Spread it. Make people aware of they are missing.
Who knows maybe it speeds up the proces.

reply to post by David9176


I recently posted a related thread in this forum. It doesn't compete with yours, just adds a few other insights into the shrinking middle class:

Social Immobility: Climbing the Economic Ladder is Harder in the U.S. Than In Many European Countries

The 4 components that caused the decline of the middle class were direct actions by the US government.

The Federal Reserve that prints money and charges the American Taxpayer interest that goes DIRECTLY to private individuals. $1 = 3 cents now.

The institution of the Income Tax to pay the Interest to the Federal Reserve.

Social Security and Medicare systems created as Ponzi schemes to milk more people of their Income and the funds created were STOLEN by the US government, to fund the EMPIRE that the NAZI's were unable to achieve.

Who funded the Nazi's? The same people that have stolen 97% of the value of that DOLLAR mentioned earlier.

You have seen evidence of this yourselves but keep blaming the wrong people or problems.

Everything leads right back to the Bankster Elite. Everything else are just symptoms to these four items.

Creating NOTHING (fiat money) than receiving the interest and the loss of the value of the fiat money, the Gangster Elite have the world scrambling for the scraps while these individuals take 90% of the wealth of the world, which we create.

Now, we have another system of theft being set up under YOUR watch.

Sorry, off the soapbox now.

[edit on 3/23/2010 by endisnighe]

The first thing we need to do is break the monopoly. Big Pharma, Health insurance companies, federal reserve, etc... They are a monopoly that the government allows to exist. If we start making them compete things will start to get better around here. And raise the corporate to what it use to be in the '60s and raise the income tax to what it use to be in the '60s.

It's the only way. If you look at history in the USA and UK we began to fall apart after 1980. Why? That is when the 'New Right' arose and crushed everything the left put in place. Then they allowed the corporations near limitless powers, and told us we would have better lives. Really? The last time I checked our lives are in the gutter and the economy is collapsing around us. They ruined both countries and now they are ruining the entire European continent, when you start liberalization with government getting all cozy with corporations you will see the rich getting richer and the poor getting poorer until there is no longer a middle class.

[edit on 3/23/10 by Misoir]

Originally posted by Misoir

They ruined both countries and now they are ruining the entire European continent, when you start liberalization with government getting all cozy with corporations you will see the rich getting richer and the poor getting poorer until there is no longer a middle class.

Whatever the case the fact it that a healthy middle class to include better paid working class is a very expensive thing to maintain. They cost to much the monied middle class. The middle is only as usefull as he can be tapped on.

Thats who was hurt the worst in this latest finanical blowout. They need to knock the stuffing out of the middle every now and then or the ponzi scheme doesnt run properly.