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<div class="">September 18, 2013</div>
<h1>America’s Sinking Middle Class</h1>
<h6 class="">By
<span>
<a href="http://topics.nytimes.com/top/reference/timestopics/people/p/eduardo_porter/index.html" rel="author" title="More Articles by EDUARDO PORTER"><span>EDUARDO PORTER</span></a></span></h6>
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<p>
In some respects, 1988 has the feel of an alien, distant era. There was
no such thing as the World Wide Web then. The Soviet Union was still
around; the Berlin Wall still standing. Americans elected a Republican
president who would raise taxes to help tame the budget deficit. </p>
<p>
On Tuesday, however, the Census Bureau reminded me how for most
Americans 1988 still looks a lot like yesterday: last year, the typical
household made $51,017, roughly the same as the typical household made a
quarter of a century ago. </p>
<p>
The statistic is staggering — hardly what one would expect from one of
the richest and most technologically advanced nations on the planet.
</p>
<p>
I have written <a title="The article." href="http://www.nytimes.com/2013/07/31/business/economy/in-us-an-inequality-gap-of-sobering-breadth.html">several times</a> before about how <a title="The article." href="http://www.nytimes.com/2012/10/31/business/choose-your-capitalism.html">measures of social</a> and <a title="The article." href="http://www.nytimes.com/2012/08/15/business/economy/slipping-behind-because-of-an-aversion-to-taxes.html">economic well-being</a>
in the United States have slipped compared to other advanced countries.
But it is even more poignant to recognize that, in many ways, America
has been standing still for a full generation. </p>
<p>
It made me wonder what happened to progress. </p>
<p>
Consider: 36 years ago this month, when NASA launched the Voyager 1
probe into space, 11.6 percent of Americans were officially considered
poor. The other day Voyager sailed clear out of the solar system into
interstellar space — the first man-made object to do so — recording its
environment on an 8-track deck. </p>
<p>
Using the same official metric — which actually undercounts the poor
compared to new methods used by the Census today — the poverty rate is
15 percent. </p>
<p>
To be sure, we have made progress over the last 25 years. The nation’s
gross domestic product per person has increased 40 percent since 1988.
We’ve gained four years’ worth of life expectancy at birth. The infant
mortality rate has plummeted by 50 percent. More women and more men are
entering and graduating from college. </p>
<p>
We also have access to far more sophisticated consumer goods, from the
iPhone to cars packed with digital devices. And the cost of many basic
staples, notably food, has fallen significantly. </p>
<p>
Carl Shapiro, an economist at the University of California, Berkeley and
an expert on technology and innovation who stepped down from President
Obama’s Council on Economic Advisors last year, calls the progress in
information technology and biotechnology over the last 25 years
“breathtaking.” </p>
<p>
“Most Americans partake in the benefits offered by these new
technologies, from smartphones to better dental care,” Professor Shapiro
said. Still, he acknowledged, “somehow this impressive progress has not
translated into greater economic security for the American middle
class.” </p>
<p>
In key respects, in fact, the standard of living of most Americans has
fallen decidedly behind. Just take the cost of medical services. Health
care spending per person, adjusted for inflation, has roughly doubled
since 1988, to about $8,500 — pushing up health insurance premiums and
eating into workers’ wages. </p>
<p>
The cost of going to college has been rising faster than inflation as
well. About two-thirds of people with bachelor’s degrees relied on <a title="Related article." href="http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?pagewanted=all">loans to get through college</a>, up from 45 percent two decades ago. Average <a title="The study." href="http://libertystreeteconomics.newyorkfed.org/2012/03/grading-student-loans.html">student debt in 2011</a> was $23,300. </p>
<p>
In contrast to people in other developed nations, who have devoted more
time to leisure as they have gotten richer, Americans work about as much
as they did a quarter-century ago. Despite all this toil, the net worth
of the typical American family in the middle of the income distribution
fell to $66,000 in 2010 — 6 percent less than in 1989 after inflation.
</p>
<p>
Though the bursting of the housing bubble and ensuing great recession
takes a big share of the blame for families’ weakening finances, it is
nonetheless startling that a single financial event — only a hiccup on
the road to prosperity of <a title="Related information." href="http://economix.blogs.nytimes.com/2013/09/10/the-rich-get-richer-through-the-recovery/">Americans on the top of the pile</a> — could erase a generation worth of progress for those in the middle. </p>
<p>
Though the statistics may be startling, the story they tell is,
unfortunately, not surprising. It is the story of America’s new normal.
In the new normal the share of the nation’s income channeled to
corporate profits is higher than at any time since the 1920s, while
workers’ share languishes at its lowest since 1965. </p>
<p>
In the new normal, the real wages of workers on the factory floor are
lower than they were in the early ’70s. And the richest 10 percent of
Americans get over half of the income America produces. </p>
<p>
“Almost all of the benefits of growth since the trough of the Great
Recession have been going to those in the upper classes,” said Timothy
Smeeding, who heads the Institute for Research on Poverty at the
University of Madison-Wisconsin. “Middle- and lower-income families are
getting a smaller slice of a smaller economic pie as labor markets have
changed drastically during our recovery.” </p>
<p>
This story is about three decades old. </p>
<p>
In 2010, the <a title="The study." href="http://www.commerce.gov/sites/default/files/documents/migrated/Middle%20Class%20Report.pdf">Department of Commerce published a study</a>
about what it would take for different types of families to achieve the
aspirations of the middle class — which it defined as a house, a car or
two in the garage, a vacation now and then, decent health care and
enough savings to retire and contribute to the children’s college
education. </p>
<p>
It concluded that the middle class has become a much more exclusive
club. Even two-earner families making almost $81,000 in 2008 —
substantially more than the family median of about $60,000 reported by
the Census — would have a much tougher time acquiring the attributes of
the middle class than in 1990. </p>
<p>
The incomes of these types of families actually rose by a fifth between
1990 and 2008, according to the report. They were more educated and
worked more hours, on average, and had children at a later age. Still,
that was no match for the 56 percent jump in the cost of housing, the
155 percent leap in out-of-pocket spending on health care and the
double-digit increase in the cost of college. </p>
<p>
So either we define the middle class down a couple of notches or we
acknowledge that the middle class isn’t in the middle anymore. </p>
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<p>E-mail: <a href="mailto:eporter@nytimes.com">eporter@nytimes.com</a>;</p>
<p>Twitter: @portereduardo</p> </div>
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