The Middle Class Is Worse Off Than You Think By Mark Whitehouse

If you worry about the declining fortunes of the U.S. middle class, take heed: It might be worse than you realized.

Tracking the middle class can be difficult, because the group is hard to define. Typically, researchers look at households with incomes or net worth in the middle of the entire population. This approach, though, might provide a falsely rosy picture. It doesn’t, for example, capture the fates of families that start out in the middle and — due to a job loss or other setback — end up in the bottom.

Two economists at the Federal Reserve Bank of St. Louis — William Emmons and Bryan Noeth — sought to address this shortcoming by focusing on households’ demographic characteristics, rather than income or wealth. Specifically, they looked at families whose breadwinner was at least 40 years old and had achieved a level of education that would typically allow a middle-class standard of living. Whites and Asians needed exactly a high-school diploma to qualify. For blacks and Hispanics, it took a two-year or four-year college degree — a stark recognition of persistent racial inequality.

The results are not pretty. As of 2013, this group’s median annual income stood at about $45,000, down 16 percent in inflation-adjusted terms from 1989, with a big part of the drop occurring since 2001. Over the same period, a more commonly used measure of the middle class’s fortunes — the median income for all families — declined just 1 percent. Here’s how that looks:

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