Where has the middle class gone?

Posted on September 25, 2011 by

The Wall Street Journal is reporting that more and more consumer-goods manufacturers and retailers are giving up on the middle class. They are increasingly designing and marketing products for the lower class and upper class, as that is where the market growth is. This is partially due to consumers becoming more willing to shop high-and-low, but also because of the decline of the middle class.

Pew has recently shown that our generation is much more downwardly-mobile than our parents’ was.

The Pew study looked at Americans who were between the ages of 14 and 17 in 1979, and living at home with their parents that year. For teenagers who were part of the middle class in 1979 — defined as the 30th through 70th percentile of income — about 28 percent of them had fallen out of it, meaning below the 30th percentile of income, by 2006.

This kind of decline in fortunes did not affect all races and genders uniformly. Middle-class blacks, for example, stood a 37 percent chance of falling out of the middle class, compared with just a 25 percent chance for whites. And white women had a 30 percent chance of falling below the 30th-percentile line, whereas white men had only a 21 percent chance.

The researchers observed a few correlations between downward mobility and certain kids of behavior. The study notes that people who did not pursue their education past high school, who had used heroin or cocaine, who had performed poorly on standardized tests, or who had gotten divorced or never been married had a higher likelihood of falling out of the middle class.

So the decline of education and marriage are both impoverishing us, and inflation and debt is eating away at the little income we have left over. We are creating a country with a Wealthy Elderly and a Lost Generation of youth, hence the decline of the middle class.

More depressing economic news:

And the final word on middle class incomes goes to Zero Hedge: