middle class

Washington Lets Shrinking Middle Class Twist in the Wind

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Letting sequestration happen is just the latest burden Washington's politicians have dumped on a struggling and shrinking middle class.

Unless our bickering lawmakers come up with a solution, the Congressional Budget Office estimates that sequestration could knock 0.6% from the nation's gross domestic product and cost up to 750,000 jobs.

And this comes while most middle-class families are still struggling to adjust to the 2% reduction in their paychecks that occurred when Congress allowed the payroll tax break to expire on Jan. 1.

If it seems that Congress doesn't care about the plight of the shrinking middle class, it's probably because they're so far removed from a middle-class lifestyle. They earn $174,500 a year, far above the U.S. median salary of $50,000, and nearly half are millionaires.

Meanwhile, life keeps getting worse for the shrinking middle class - yes, shrinking.

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Downward Mobility is Crushing the American Dream

Forget about getting ahead. For many in the middle class these days it's more about not sliding backwards.

It's called downward mobility and it's crushing the American Dream.

According to a study conducted by the Pew Charitable Trusts, nearly one out of three U.S. citizens born into middle class households in the 1960s have lost their economic status.

And because the study used data from 2004 to 2006 - before the Great Recession - the numbers today could be even worse.

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"Being raised in the middle class is not a guarantee that you'll have that same status as an adult," Erin Currier, project manager at Pew's Economic Mobility Project, told CNNMoney. "With all the economic turmoil in the past four years, there's good reason to think that downward mobility is more severe."

Pew used three different criteria to assess the economic status of the study subjects. According to two criteria, 28% dropped out of the middle class; a third measure showed downward mobility for 19%.

Pew defines the middle class as those falling between the 30th and 70th percentiles of income.

It compared the households of the target group in 1979, when middle class meant incomes between $32,900 and $64,000, to their income in 2004-2006, when middle class meant making between $53,900 and $110,000.

Any middle class workers hit by the current recession will have a long road back.

In another Pew study, half of people who lost 25% or more of their income during better times in 1994 were still making less money four years later. One third of the group had not recovered even after 10 years.

With the unemployment rate still at 8.5% and so many people working at jobs making less than they once did, it will take years for the middle class to recover - if it ever does.

No Longer the Land of Opportunity

Once envied as the land of opportunity, the United States is no longer the best place to climb the economic ladder - far from it.



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Question of the Week: U.S. Consumers Squeezed by Inflation, Worry About Middle Class Pinch

The U.S. Federal Reserve has made one thing very clear: It views deflation as public enemy No. 1, and it will do everything in its power to keep that ruinous downward spiral in prices from taking hold.

But is the U.S. central bank focused on the wrong threat? And if that's the case, are U.S. policymakers setting the stage for a consumer-crippling inflation spike?

While the Fed has announced more quantitative easing to pump more money into the U.S. economy - hoping that would encourage lending and spending - a cadre of cash-strapped consumers is worried the stimulus measures will actually ignite long-term inflation.

There is a precedent: The current policy is similar to one taken in 2003 - 2004, when the Fed kept rates near a record low and inflation rose faster than initially predicted.

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