Hard times are getting even harder and it turns out that all the talk about rich getting richer and the poor getting poorer is definitely true.
For the first time in more than four decades, the middle class is no longer a majority in the United States. They are “falling behind financially” and have been outnumbered by the richest and poorest, according to data released by the Pew Research Center.
The analysis by the Washington, D.C.-based think-tank shows populations in the highest and lowest income brackets grew significantly over the last few years, subsequently pulling adults out of the middle class and in opposite directions.
The beginning of the year saw 120.8 million adults living in middle-income households, compared with 121.3 million Americans living in lower and upper income homes combined.
“In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971,” the researchers wrote. “On the opposite side, 9% are in the highest-income tier, more than double the 4% share in 1971. At the same time, the shares of adults in the lower-middle or upper-middle income tiers were nearly unchanged.”
Moreover, the median earnings for all income groups have improved since 1970s, but it was the highest earners who enjoyed income gains the most. Wages for top earners rose 47 percent between 1970 and 2014, while middle-income workers only saw an improvement of 34 percent.
During this time, the earnings of low-income Americans rose about 28 percent.
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However, despite the improved wages, it was the Great Recession's crippling of the U.S. labor market that exhausted workers’ wallets.
"Although 2014 incomes are generally higher than in 1970, all households experienced a lengthy period of decline in the 21st century thanks to the 2001 recession and the Great Recession of 2007-09," the Pew report explained.
Less than half (49.9 percent) of American households are now considered middle-income. The survey defines middle-class as “adults with an annual income of about $42,000 to $126,000 for a household of three, in 2014 dollars.”
Long story short, the 29 percent of Americans considered low-income and 21 percent classified as high-income now roughly equal the middle class that has been the majority and labor market's backbone for decades.
“The state of the American middle class is at the heart of the economic platforms of many presidential candidates ahead of the 2016 election,” researches Rakesh Kochhar and Richard Fry wrote in the report.