Since the 1970s, the middle class has been shrinking as more people move into the lower-income and upper-income brackets. Despite most Americans being in the middle, many surprising facts about middle-class income in America often go unnoticed.
1. Different Perspectives on Financial Success
For some, being part of the middle class is a stepping stone to achieving the American Dream and striving for upward mobility. Others view it as a comfortable and stable lifestyle without aspirations for significant wealth or status.
Regardless of the motivation or underlying beliefs, the middle class remains integral to America’s social and economic fabric. However, as we continue to see changes in income levels and societal norms, it will be crucial to monitor the state of the middle class and address any challenges they face.
2. Faces Unique Challenges
Middle-class Americans often face unique challenges, such as affording medical care, balancing work and family life, paying for their children’s education, and caring for aging parents. These challenges can put a strain on their financial stability.
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3. Struggling With Debt
Despite having a moderate income level, many middle-class Americans struggle with debt. According to Experian, the average American had about $90,460 in debt (excluding mortgages) in 2021. Of that amount, $14,750 was credit card debt.
What’s the cause of this debt? It could be due to student loans, unrestrained consumerism, medical expenses, living above one’s means, and a high cost of living. Unfortunately, these debts are unlikely to decrease with current inflation rates, an impending recession, and soaring daily living costs.
4. Vital for Economic Growth
The middle class is essential for sustaining economic growth in America. As consumers, they drive demand for many goods and services, which creates job opportunities and boosts the economy.
5. Not Guaranteed Financial Stability
While not specific to the middle class, a shocking 28% of Americans have no retirement savings, as The Motley Fool Ascent reported. While being part of the middle class may provide a certain level of financial stability, it is not guaranteed. With the rising cost of living and stagnant wages, many middle-class families struggle to save for retirement and unexpected emergencies.
6. Highly Educated
Education plays a significant role in determining an individual’s potential for upward mobility in the middle class and beyond (upper class). Households with heads that have college educations (a bachelor’s degree or higher) are significantly more likely to be in the middle class (or above) than their counterparts with high school diplomas (or less).
7. It’s Shrinking
The middle class in America has been gradually shrinking since the 1970s. Theories for this change include rising income inequality, stagnant wages for middle-class workers, and an increase in low-paying service jobs. Current inflation rates will also affect the middle class, bumping more people into lower income over time.
8. Diverse
Contrary to popular belief, the middle class is not a homogenous demographic. It includes American adults from diverse backgrounds and occupations, such as teachers, engineers, nurses, and small business owners. In the past several decades, people of different socioeconomic backgrounds, races, and genders have increasingly joined the middle class.
9. Healthcare Costs
Out-of-pocket healthcare costs have been rising, and for many middle-class families, these expenses can consume a significant portion of their income, leaving less money for savings and other necessities.
10. Erosion of Benefits
Employer-provided benefits, such as pensions and healthcare, have been steadily eroding, placing more financial pressure on middle-class families to save for retirement and cover medical expenses on their own.
11. Stagnant Wage Growth
Despite the rising cost of living, wage growth for the middle class has remained relatively stagnant over the past few decades, making it harder for families to maintain their standard of living.
12. Underemployment
A substantial number of middle-class workers are underemployed, meaning they are working in jobs that do not fully utilize their skills or offer adequate pay, which can limit their earning potential and career growth.
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