28 Signs That The Middle Class Is Heading Toward Extinction

The Economic Collapse

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28 Signs That The Middle Class Is Heading Toward Extinction

By Michael Snyder, on February 5th, 2014 

The death of the middle class in America has become so painfully obvious that now even the New York Times is doing stories about it.  Millions of middle class jobs have disappeared, incomes are steadily decreasing, the rate of homeownership has declined for eight years in a row and U.S. consumers have accumulated record-setting levels of debt.  Being independent is at the heart of what it means to be “middle class”, and unfortunately the percentage of Americans that are able to take care of themselves without government assistance continues to decline.  In fact, the percentage of Americans that are receiving government assistance is now at an all-time record high.  This is not a good thing.  Sadly, the number of people on food stamps has increased by nearly 50 percent while Barack Obama has been in the White House, and at this point nearly half the entire country gets money from the government each month.  Anyone that tries to tell you that the middle class is going to be “okay” simply has no idea what they are talking about.  The following are 28 signs that the middle class is heading toward extinction…


#1 You don’t have to ask major U.S. corporations if the middle class is dying.  This fact is showing up plain as day in their sales numbers.  The following is from a recent New York Times article entitled “The Middle Class Is Steadily Eroding. Just Ask the Business World“…

In Manhattan, the upscale clothing retailer Barneys will replace the bankrupt discounter Loehmann’s, whose Chelsea store closes in a few weeks. Across the country, Olive Garden and Red Lobster restaurants are struggling, while fine-dining chains like Capital Grille are thriving. And at General Electric, the increase in demand for high-end dishwashers and refrigerators dwarfs sales growth of mass-market models.

As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.

#2 Some of the largest retailers in the United States that once thrived by serving the middle class are now steadily dying.  Sears and J.C. Penney are both on the verge of bankruptcy, and now we have learned that Radio Shack may be shutting down another 500 stores this year.
#3 Real disposable income in the United States just experienced the largest year over year drop that we have seen since 1974.
#4 Median household income in the United States has fallen for five years in a row.
#5 The rate of homeownership in the United States has fallen for eight years in a row.
#6 In 2008, 53 percent of all Americans considered themselves to be “middle class”.  In 2014, only 44 percent of all Americans consider themselves to be “middle class”.
#7 In 2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered themselves to be “lower class”.  In 2014, an astounding 49 percent of them do.
#8 Incredibly, 56 percent of all Americans now have “subprime credit”.
#9 Total consumer credit has risen by a whopping 22 percent over the past three years.
#10 The average credit card debt in the United States is $15,279.
#11 The average student loan debt in the United States is $32,250.
#12 The average mortgage debt in the United States is $149,925.
#13 Overall, U.S. consumers are $11,360,000,000,000 in debt.
#14 The U.S. national debt is currently sitting at $17,263,040,455,036.20, and it is being reported that is has grown by $6.666 trillion during the Obama years so far.  Most of the burden of servicing that debt is going to fall on the middle class (if the middle class is able to survive that long).
#15 According to the Congressional Budget Office, interest payments on the national debt will nearly quadruple over the next ten years.
#16 Back in 1999, 64.1 percent of all Americans were covered by employment-based health insurance.  Today, only 54.9 percent of all Americans are covered by employment-based health insurance.
#17 More Americans than ever find themselves forced to turn to the government for help with health care.  At this point, 82.4 million Americans live in a home where at least one person is enrolled in the Medicaid program.
#18 There are 46.5 million Americans that are living in poverty, and the poverty rate in America has been at 15 percent or above for 3 consecutive years.  That is the first time that has happened since 1965.
#19 While Barack Obama has been in the White House, the number of Americans on food stamps has gone from 32 million to 47 million.
#20 While Barack Obama has been in the White House, the percentage of working age Americans that are actually working has declined from 60.6 percent to 58.6 percent.
#21 While Barack Obama has been in the White House, the average duration of unemployment in the United States has risen from 19.8 weeks to 37.1 weeks.
#22 Middle-wage jobs accounted for 60 percent of the jobs lost during the last recession, but they have accounted for only 22 percent of the jobs created since then.
#23 It is hard to believe, but an astounding 53 percent of all American workers make less than $30,000 a year in wages.
#24 Approximately one out of every four part-time workers in America is living below the poverty line.
#25 According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.
#26 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.
#27 Only 35 percent of all Americans say that they are better off financially than they were a year ago.
#28 Only 19 percent of all Americans believe that the job market is better than it was a year ago.
As if the middle class didn’t have enough to deal with, now here comes Obamacare.
As I have written about previously, Obamacare is going to mean higher taxes and much higher health insurance premiums for middle class Americans.
Not only that, but millions of hard working Americans are going to end up losing their jobs or having their hours cut back thanks to Obamacare.  For example, a fry cook named Darnell Summers recently told Barack Obama directly that he and his fellow workers “were broken down to part time to avoid paying health insurance“…




And the Congressional Budget Office now says that Obamacare could result in the loss of 2.3 million full-time jobs by 2021.

Several million people will reduce their hours on the job or leave the workforce entirely because of incentives built into President Barack Obama’s health care overhaul, the Congressional Budget Office said Tuesday.

That would mean job losses equal to 2.3 million full-time jobs by 2021, in large part because people would opt to keep their income low to stay eligible for federal health care subsidies or Medicaid, the agency said. It had estimated previously that the law would lead to 800,000 fewer jobs by that year.

But even if we got rid of Obamacare tomorrow that would not solve the problems of the middle class.

The middle class has been shrinking for a very long time, and something dramatic desperately needs to be done.

The numbers that I shared above simply cannot convey the level of suffering that is going on out there on the streets of America today.  That is why I also like to share personal stories when I can.  Below, I have posted an excerpt from an open letter to Barack Obama that a woman with a Master’s degree and 30 years of work experience recently submitted to the Huffington Post.  What this formerly middle class lady is having to endure because of this horrible economy is absolutely tragic…

Dear Mr. President,

I write to you today because I have nowhere else to turn. I lost my full time job in September 2012. I have only been able to find part-time employment — 16 hours each week at $12 per hour — but I don’t work that every week. For the month of December, my net pay was $365. My husband and I now live in an RV at a campground because of my job loss. Our monthly rent is $455 and that doesn’t include utilities. We were given this 27-ft. 1983 RV when I lost my job.

This is America today. We have no running water; we use a hose to fill jugs. We have no shower but the campground does. We have a toilet but it only works when the sewer line doesn’t freeze — if it freezes, we use the campground’s restrooms. At night, in my bed, when it’s cold out, my blanket can freeze to the wall of the RV. We don’t have a stove or an oven, just a microwave, so regular-food cooking is out. Recently we found a small toaster oven on sale so we can bake a little now because eating only microwaved food just wasn’t working for us. We don’t have a refrigerator, just an icebox (a block of ice cost about $1.89). It keeps things relatively cold. If it’s freezing outside, we just put things on the picnic table.

You can read the rest of her incredibly heartbreaking letter right here.

This is not the America that I remember.

What in the world is happening to us?

5 Signs the American Economy May Be on Shakier Ground Than You Think

Economy

5 Signs the American Economy May Be on Shakier Ground Than You Think

It's not quite time to pop the champagne. 

 

 

By Lynn Stuart Parramore / AlterNet

January 11, 2015

Photo Credit: Shutterstock.com

Lots of people are cheering that the U.S. economy has shown signs of strengthening. The stock market looks to be doing better than anyone expected, and unemployment is under 6 percent. But are things really as good as they seem? We are a bit skeptical. Let’s take a look at some signs that things are not altogether well in the American economy.

1. The middle class is still shrinking.

It’s no secret: The American middle class is in rough shape and is no longer the world’s beacon of economic opportunity. The latest jobs report data shows not stagnant, but falling wages, the bulk of it happening with nonsupervisory workers. That is very bad news.

Then there’s the fact that the share of the nation’s economic gains going to the middle class has fallen to near-record lows. As the costs of childcare, higher education and housing keep going up, more folks feel the squeeze. Obamacare has done a number on people in the middle, who are mostly not entitled to subsidies and must therefore pay an outsized portion of their income for insurance.

The shift from a pension system to the 401(k) has been a disaster for the middle class, and Republicans will try their best to tear away at Social Security and other programs that help people stay out of poverty. The decimated middle-class has been blamed for store closings and a host of other economic ills, and unfortunately, the trend of policy tilted to favor corporations and America’s financial elite means that relief will be hard to find.

2. Inequality hurts economic growth.

As America’s middle class has shrunk, income inequality has steadily grown in the U.S. Steven M. Fazzari and Barry Z. Cynamon, in reports for the Institute for New Economic Thinking’s project on the Political Economy of Distribution, find that growing inequality is directly linked to America’s slow recovery in the wake of the Great Recession.

The researchers discuss the fact that if the bottom 95 percent does not have money to spend, this in turn impacts things like job creation. Before the financial crash, the bottom 95 percent was borrowing to keep up, but now credit is not as widely available and so there hasn’t been enough spending to boost the economy. America’s production has therefore started to become geared toward high-end consumers. As they put it, “we are moving more and more to a society in which the work of the middle class….goes to serve the consumption of the affluent [which] may ultimately lead to social tension and a growing sense of injustice in our economy.”

Bottom line: inequality keeps the economy from prospering.

3. State of the unions.

Unions ensure that American workers have the purchasing power they need to drive the economy. Their weakening crushes consumer demand and acts as a driving force in destabilizing economic inequality. Unfortunately, federal government labor statistics show a decade of declining union membership across the country.

Recent trends are not promising: a 2014 U.S. Supreme Court ruling which excludes certain government workers from being compelled to pay union dues was a blow to collective bargaining. The midterms saw re-elections for anti-union governors Scott Walker of Wisconsin and Rick Snyder of Michigan, both states with a long history of strong labor movements.

In the next two years, expect Republicans, who now completely control 24 states, to go to any lengths to weaken unions, especially at the state level. They’ll be churning out "right-to-work" bills and proposing measures designed to decrease the share of income that goes to working people. On the positive side, the AFL-CIO recently held a “Raising Wages” summit keynoted by Sen. Elizabeth Warren, which proposed a new way forward for the Democratic Party to focus things like higher minimum wages, but that’s not nearly enough. Higher minimum wages don’t help enough when you're insecure or part-time, you don’t know what your work schedule is from day to day, or if you don’t have a job at all.

4. The world economy is in trouble.

Just as the U.S. seems to be improving, the global economy is not looking so good, with the possibility of a prolonged downturn in Europe most worrisome. Europe appears to be sliding into deflation on a continent-wide basis, a problem that carries with it the prospect of a much steeper fall. There are serious financial worries in the air because some banks could go down if Greece or other countries restructure debt. The bank situation could hit the U.S. through credit default swap purchased by American financial companies. Remember AIG in 2008? If you do, you will not have to guess who will be on the hook if these companies fail. You, the taxpayer, that’s who!

A slowdown in China seems clear, which pulls down almost all the rest of the developing world — countries like Brazil and Russia — in terms of stable exports. Experts are concerned that many third-world countries have borrowed in dollars — and the dollar is rising, close to a 10-year high (Europe has also increased the demand for dollars). This can cause a number of serious problem. For foreigners, it becomes much more expensive to pay back borrowed dollars. On the U.S. side, American exports fall as the dollar rises. All of which causes economic instability.

Which brings us to the next topic: the chance of another catastrophic blowup.

5. Another financial crisis?

When a lot of economists talk about the next financial crisis, they aren’t talking about if. They’re talking about when.

Let’s face it, too-big-to-fail banks are still a giant threat, and they are still too big to regulate. The Republicans — with many Democrats — are rolling back significant pieces of the Dodd-Frank legislation meant to curb Wall Street excess. Just two weeks ago, the banks got their way in the congressional budget, which gave them permission to move risky derivatives into the insured portions of the bank. Crank up the casino! Again, guess who will be asked to pay to clean up the mess when speculation fever takes over? You, the taxpayer.

There’s also the matter of a nasty mess known as the shadow banking system, which involves stuff like hedge funds, trust companies and financial firms other than banks. It played a huge role in the last financial crisis, and it’s growing again. Nobody really has a handle on it, but what is known is that shadow banking increases the chance that systemic risk will be set off from the gaps that exist between it and traditional banking.

The global financial system is fragile, and the fact that developing countries will have trouble paying back dollar loans given the strong dollar is a formula for disaster. It means companies are more likely to go bust, which leads to defaults, which means that whoever made the loans is out the money. The world is deeply interconnected financially, and it only takes one piece of the web to fray for the rest to start unraveling.

Lynn Parramore is contributing editor at AlterNet. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU, and she serves on the editorial board of Lapham's Quarterly. Follow her on Twitter @LynnParramore.

12 Signs You Might Not Be Middle Class

SIGNS YOU ARE NOT (OR NEVER WERE) MIDDLE CLASS

A Bear Market Economics Feature Article

A Bear Market Economics Feature Article

 

Unfortunately, fewer people now consider themselves middle class, studies show. Only 44 percent of Americans described themselves as middle class last year, down from 53 percent in 2008. And that's not because a chunk of the country is suddenly more wealthy. More people were describing themselves as lower-middle class or poor.

If most of the following signs occur for you, you are probably not middle class

1. You “Earn” Less Than $40,000 a year

Median household income was $54,510 in February, according to the latest estimates from Sentier Research. That's up from just above the $51,000 mark in 2012.

Pew Research defines a middle-class household income as two-thirds to double the national median, or between about $36,000 and $109,000 a year.

Of course, a middle-class income can vary depending on where you live. In San Jose, California, it ranges between $51,000 and $182,000 a year, according to a recent analysis by NPR. But in Milwaukee, Wisconsin, the range drops to between $18,000 and $67,000 a year.

2. You Do Not Have a Secure Job or Career

Americans may be changing their views on what it means to be middle class. In 1991, some 70 percent of people said that homeownership was essential to being in the middle class, according to Pew Research. Only a third said that having a "white-collar job" was key.

Fast-forward to 2012, when nearly nine out of 10 Americans said a secure job is essential to being in the middle class. Only 45 percent said owning a home was important.

3. You Do Not Have a College Education

To be sure, many households are able to reach middle-class income levels without a college education. But generally, when Americans think of middle-class families, surveys show they think of parents who went to college and are saving for a college education for their children.

Americans used to think that a college education was more essential for the middle-class label. In 1991, nearly half of those surveyed said a college education was important to the middle class. That number dropped to 37 percent in 2012, according to Pew.

4. You Do Not Own a Home or Probably Never Will (or You Will Never Pay Off Your Mortgage)

Homeownership has long been a hallmark of the middle class. In a 2013 speech, President Obama called it "the most tangible cornerstone that lies at the heart of the American Dream, at the heart of middle-class life."

But owning a home became much harder after the financial crisis walloped the housing market. The homeownership rate fell to 64 percent in 2014, according to the U.S. Census Bureau, down from 69 percent a decade earlier.

"Perhaps the main new reality is that homeownership isn't as easy to attain as it has been during most of the decades after World War II," trade publication Commercial Property Executive reports. "For a lot of people, the money isn't there, because the American economy simply doesn't offer as many well-paying jobs as it used to."

5. You Do Not Take Vacations

A vacation is an extra expense that many middle-earners cannot afford without sacrificing something else. A Statista survey found that this year 54% of people gave up purchasing big ticket items like TVs or electronics so they can go on a vacation. Others made sacrifices like reducing or eliminating their trips to the movies (47%), reducing or eliminating trips out to restaurants (43%), or avoiding purchasing small ticket items like new clothing (43%).

The family vacation "is a middle-class staple," writes James McWhinney at Investopedia. "Vacations demonstrate that a family has disposable income and has been successful enough to take time away from work to focus on leisure."

You'll need plenty of disposable income for some family vacations. The average American family spent nearly $4,600 on a summer vacation in 2013, according to American Express. As the economy has improved, consumers have begun planning more vacations and spending more on them as well.

6. You Do Not Own or Purchase A New Vehicle

Very few people who earn the median income can afford to buy a new car or truck. Interest.com recently analyzed the prices of new cars and trucks, as well as the median incomes across more than two dozen major cities, and found that new cars and trucks were simply not affordable to most middle-earners.

"Median-income families in only one major city [Washington DC] can afford the average price Americans are paying for new cars and trucks nowadays." As of 2013, new cars are priced at $32,086, according to the study. Mike Sante, Interest.com's managing editor reminds us, "just because you can manage the monthly payment doesn't mean you should let a $30,000 or $40,000 ride gobble up all such a huge share of your paycheck."

7. Your Debt Exceeds Your Net Worth

"More than 160 million Americans have credit cards.""The average credit card holder has at least three cards.""On average, each household with a credit card carries more than $15,000 in credit card debt."

Not only do we have large amounts of credit card debt, we also have student loans, mortgages, cars, and medical debts. Our debt is growing faster than our income, and many middle class workers have trouble staying afloat. Money-Zine evaluated debt growth and income growth over the past few decades and found that "back in 1980, the consumer credit per person was $1,540, which was 7.3% of the average household income of $21,100. In 2013, consumer debt was $9,800 per person, which was 13.4% of the average household income of $72,600. This means debt increased 70% faster than income from 1980 through 2013."

These debt statistics come from Debt.org.

8. You Have No Significant Emergency Savings

To provide ourselves with a degree of financial security, we are supposed to have emergency savings to protect ourselves in the event of job loss, illness, or some other catastrophe. Most members of the middle class don't have at least six months of emergency savings, however, and some working people have no such savings.

A Bankrate survey found that only around one out of four households have six months of emergency money saved, and many of them are in the higher income groups. Another one-fourth have no emergency savings at all, and the remaining household have a small to moderate amount of savings, but not enough to cover six months of expenses.

9. You Have No Significant Retirement Savings


Investing for the golden years is important to America's middle class, but that doesn't mean they do a very good job of it.

It has become more difficult for most Americans, including the middle class, to set enough money aside for the retirement years. Researchers with the Employee Benefit Research Institute ran some scenarios last year that looked at what would happen for Americans who spent a maximum 35 years in retirement.

Would people in the second- and third-income quartile -- the middle income quartiles -- run out of money? In the second-income quartile, 47 percent would fall short. In the third-income quartile, 28 percent would run out.

If you reach the retirement age with little or no money saved, Social Security is probably not going to be enough to cover your basic needs. Even if you want to work for your entire life, you have no way of knowing whether or not you will be physically capable of doing so.

Although having a lack of a retirement savings is a risky move, so many people bet on double zero, just hoping that things will work out in their favor. While some members of the middle class neglect this aspect of financial planning because they are procrastinating, there are also some workers who cannot afford to set this money aside. Nearly half of those who don't save for retirement say it's because they simply don't have the money.

As of late, around 20% of people near 65 have not saved anything for retirement at all, and the majority of people — 59% — worry that they don't have enough money saved for retirement, according to a Gallup Poll.

10. You Cannot Meet A Medical Emergency Requiring Out of Pocket Cost Over $400

Medical care is a basic necessity and something we'd think would be affordable for someone earning a middle income. A Forbes article published data indicating that workers in large companies — many of whom are members of the middle class — "face nearly $5,000 in premiums, co-payments, deductibles and other forms of co-insurance."

During the past few years, these costs have had a large impact on working Americans. A report by Feeding America found that a shocking 66% of households say they've had to choose between paying for food and paying for medical care — 31% say they have to make that choice each and every month.

This was another hot topic in Pew's survey of middle-class characteristics. Two-thirds of adults said health insurance was necessary to be considered middle class.

Many Americans get health insurance through their work, so it goes hand-in-hand with a secure job that comes with the middle-class lifestyle.

The Affordable Care Act is making health coverage available to more lower-income Americans who previously couldn't afford it. As health insurance becomes more pervasive, it may become less of a signifier of middle-class culture.
       

11. You Need But Cannot Afford Dental Work

According to the U.S. Department of Health and Human Services, "the U.S. spends about $64 billion each year on oral health care — just 4% is paid by Government programs." About 108 million people in the U.S. have no dental coverage and even those who are covered may have trouble getting the care they need, the department reports.

Oftentimes, people will purchase medical coverage and forgo dental because it's so expensive. Plus, dental insurance may cover only 50% of the more expensive procedures, like crowns and bridges. This leaves those who have insurance with large co-payments.

In many cases, middle-earners will delay or even forego some of these procedures in efforts to save on costs. According to the CDC, nearly one in four adults between the ages of 20 and 64 have untreated dental caries (like cavities or infections).

12. You Do Not Think of Yourself as Middle Class


This may be the most important distinction of all: For many, being middle class is simply a state of mind.

It implies a commonality with the rest of the country, an implicit understanding that you're pursuing the American dream by working hard, saving money, being responsible and providing for your children.

It's also an acknowledgement that you're being rewarded for your efforts. You aren't filthy rich, but you're comfortable enough. "It's a feeling, a touchstone. It defies numbers," Xavier University political scientist Gene Beaupre told The Cincinnati Enquirer in 2013. "It's a mindset that says, 'I'm part of the working fabric of American culture.'"