Despite a slowly recovering economy, the proportion of Americans who identify themselves as middle class has dropped sharply in recent years. Today, about as many Americans identify themselves as lower or lower-middle class (40%) as say they are in the middle class (44%), according to a recent Pew Research Center/USA TODAY survey.
The findings from the latest survey suggest a significant part of the change in the size of the middle class and lower classes has happened in just the past two years. In a July 2012 Pew Research survey, about half (49%) of the public identified themselves as middle class, five percentage points more than do so today.
Roughly 8.4 percent of respondents to the National Opinion Research Center’s 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 NORC, 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.
This recession seems to have more long term job loss and millions have had to go to a far lower level of job.
Top 0.1% Have Gained Because of Investments and Assets and not Salaries
The Top 0.5% did better than the bottom half percent of the top 1%.
The top 0.1% did even better. They are the richest one-thousandth.
The richest one-thousandth of U.S. households, with a minimum net worth today above $20 million, have more than doubled their share of U.S. wealth, from around 10 percent to more than 20 percent.
Turning income into wealth takes saving and investment. And over the years, wealth compounds. That’s why wealth inequality is always more severe than the income gap: The rich can save relatively more to start, and then their advantage builds on itself. It may also explain why the super-rich are sprinting ahead while the ordinary affluent are more or less standing in place.
Economists Emmanuel Saez, of the University of California–Berkeley, and Gabriel Zucman, of the London School of Economics, have a new study of American wealth inequality. Wealth, for reference, is the value of what you own—assets like housing, stocks, and bonds, minus your debts.
The Poor and Lower Middle Class Have to Assume no Added Help Will Come and Figure out how to Plan, Budget, Save and Invest
Given the political system in the US. The logical assumption is that no great redistribution is coming and there be no new help and better system. Also, taxes overall will increase to eventually pay down the increasing debt.
Buying a car may seem affordable if monthly payment (say $300/month) can be made but the foregone savings and investment opportunity is higher. There is also the other costs of gas, maintenance and licensing ($100-300/month) versus public transit and the new Zipcar and other services. There is likely $300-500/month that could be applied to paying down debt or increasing savings.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.