Random ruminations from your resident curmudgeon...
Over the past decade, the American middle class has been decimated. The number of people out of work is over 97 million; median wages have fallen over the past 5 years; the rate of home ownership has fallen for 8 straight years; and the average household wealth has fallen precipitously.
Even if you have not lost your job, the cost of living is going up while wages decline, putting greater pressure on many families.
There is no doubt the middle class is struggling. Here are some troubling facts:
- According to a recent New York Times study, the average American household is now worth 36% less than a decade ago.
- One out of every seven Americans now relies on food banks to feed their family.
- One out three Americans now has a debt that is in collections.
- According to CBS Marketwatch, 52% of American homeowners cannot afford the house in which they are currently living.
- One out six American men between the age of 25-54 do not have a job.
- More than 50% of all working Americans make less than $30,000 per year.
- One out of every five children in the U.S. lives below the poverty line.
- One million public school children are homeless, according to a study by the Washington Post.
- The federal government paid more than $2 TRILLION in public assistance last year.
At one time, the U.S. had the most prosperous middle class in the world. Now, the average wealth of an adult American has fallen to 19th in the world.
Why is a healthy middle class important?
Middle class spending powers the U.S. economy. With families being crunched financially, spending by the middle class has fallen significantly, which means that our economy is struggling to grow and add quality jobs. Without quality jobs, middle class consumers are loath to spend. The resulting downward spiral is one that is difficult to break.
A healthy and thriving middle class provides economic mobility, especially for those that are not in the middle class and are striving to move upward economically. With a dearth of quality jobs and a contraction in the middle class, it becomes more difficult for upward mobility. Limited job opportunities for upward mobility constrains those that have the desire and drive to move up.
Job creation in this country comes from small business, which are typically owned by entrepreneurs in the middle class. 85% of all jobs created in this country are in companies that employ 50 people or less. With growing financial headwinds, job creation from this sector has stagnated and declined. The result is an economy that is not growing by adding quality jobs.
As you can see, a healthy middle class is essential to a healthy economy in this country. Right now, the middle class is under tremendous pressure financially, possibly as great as it has faced since the great depression.
Reversing these negative trends is going to take time and political will. Rather than serving narrow interests, our elected leaders are going to have to change course and create an environment where the middle class can thrive. this means cutting government spending and taxes; making it easier for businesses to add new jobs by rolling back onerous regulations and laws, including Obamacare; and removing incentives to be dependent on the government.
If we do not change course, our economy is going to continue to decline.
Along with the middle class.
And that, my friends, is my view.