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Job seekers read pamphlets as they wait in line to have their resumes reviewed during the HIREvent job fair.
The American middle class was a hurting bunch before the “great recession” of 2008 struck—for decades the gap between the rich and poor in this country has been growing at a fairly steady pace and middle class incomes had been largely stagnant. An analysis from Citigroup back in 2005 found that all of the movement and spending in the American economy was among the top reaches of wealth: the richest 1 percent of households possessed as much wealth as the bottom 90 percent and with each passing year a greater share of the nation’s assets were flowing into their pockets. It’s not surprising that as the financial crisis spread out over the past three years the situation has become exacerbated: according to figures from Gallup, from May 2009 to May 2011 daily consumer spending rose by 16 percent among Americans earning more than $90,000 a year; among all other Americans, spending was completely flat. As politicians wrestle with job creation there is a real possibility that the slow erosion of the American middle class, once the strength of this country, will become a permanent trend that is now evidenced by persistent high unemployment among those middle income workers. The troubling trend is not just seen in the U.S. but in other developed countries as well. New research from the University of Oxford found that in the week of several recent financial crises the rich have usually strengthened their economic position while the middle class suffered depressed income for a long time after a crisis. We look at a growing body of research that paints a bleak picture for the middle class and what could be an economy that is forever changed.
Timothy Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin, Madison & a professor of public affairs & economics