So there are certain kinds of assumptions around being a middle class person that have sort of

shattered.

And wages, really in some ways, are a reflection of the productivity and skills of American

workers.

Four in ten Americans say that money affects them negatively and the state of their mental health.

The consumers that have a whole lot of debt really are struggling to survive.

The middle class was once a symbol of the American dream.

But the American middle class today paints quite a different picture.

Being middle class, I feel like you're really just in between a rock and a hard place, you know.

You're in a spot where everyone's like, Hey, you're doing better than, you know, low class.

You're doing great. You should be fine.

And you're underneath the people who are actually doing fine.

It was at least a secure category.

Your kids would go to a school that you felt at least okay about.

You probably owned a car or two and you owned your own home and you could pay for your kids'

college educations.

So there were certain kinds of assumptions around being a middle class person that have sort of

shattered. A survey in 2018 found that a third of middle income adults don't have $400 to

cover an unexpected expense.

In polls, when people are asked about being middle class, they frequently are less likely to say so.

And more people now urge the pollsters to suggest that they're working class.

So I think that many people who maybe in prior years would have thought of themselves as middle

class now no longer think of themselves that way.

So when we think about economic status, we think about it as some static, you know, state of the

world. That you are either poor or not poor, you're middle class or you're not.

But in fact, the reality is that many middle class families will experience one or a few years

in poverty. In fact, most American families will have years where they'll be poor or near poor.

That precarity, that uncertainty, that is now a feature of the middle class experience for most

U.S. families.

So what exactly happened to the American middle class?

A study by the Pew Research Center discovered that the middle class, which was once comprised of

the majority of Americans, has steadily shrunk since the 1970s.

About 61% of American adults were considered middle class in 1971, compared to just

51% in 2019.

However, the issue still remains widely debated.

When people think about the state of the middle class and whether or not it's shrinking, it really

is a difficult question, and I think the reason why is that as a nation, we've not actually

established a formal definition of middle class.

I was at a seminar recently where somebody literally said, there is no middle class anymore.

The middle class is gone.

And I thought, oh, dear, you know, that's political rhetoric.

And I understand that it's a sort of a standard for saying that folks in the middle are hurting,

but it's just really not accurate.

We looked at the size of the middle class in these 16 rich countries in 1985 and again in 2016.

And one of the things that surprised me was the size of the middle class in the United States did

not change. It was about 59% in 1985, and it was 59% in 2016.

Experts instead prefer the term "squeezed" to describe what's happening to the middle class

today.

Even if the middle class hasn't statistically shrunk, I do think that the middle class faces

more in the way of pressures to maintain or even build upon their position.

What it takes to actually live a middle class life, to have quality of life, in many American

cities is not what it once was.

They're not necessarily able to pay their rent easily.

They can't own a property.

If they're in their thirties, they may not feel comfortable having kids because they realize that

having a child would be too expensive.

And forget about medical care.

If you have one thing happen to you physically, often people don't have good enough medical care,

they don't have any insurance.

This all goes into making somebody part of the squeezed middle class.

As the middle class lifestyle grows more expensive and uncertain, it's also moving farther beyond the

reach of younger generations.

In 2019, just 60% of millennials were part of middle income households in their twenties,

compared with almost 70% of baby boomers.

Meet Chantal Jacob.

Chantal lives in suburban Texas with her husband and one child.

And while a household income of just over 100,000 should put her family in the middle income tier,

she says that her family is still struggling toward financial stability.

Sounds great. Six figures.

But once we got married, the taxes that come out of my check before I even get any money, before

all of my benefits, $500 come out of my check automatically.

And then you add in insurance, life insurance for my spouse, myself and my son.

And I also have money going aside for my son's college fund.

It's not a lot because I can't do that much, but I want to have something for him.

You know, my check that starts off at about $3000 goes down to $2200 before I even get to touch

it. Our rent's about $1700.

Electricity is about $150.

Phone bill's about $280.

Internet's $60.

We both have vehicles.

Those are about $800.

Insurance on those vehicles is about $400.

On food, $400 to $500 a month, but that's increasing.

We budget down to the dollar.

And sometimes it's very disheartening to work all week and have people tell you like, Oh, you're so

lucky, you have a great job.

And you're like, Hmm, I don't know about that.

There are several reasons why the middle class is feeling squeezed.

The first reason is stagnated income.

Between 1970 and 2018, the middle class share of aggregate income fell by 19% in the

U.S. In comparison, the share of aggregate income for upper income households saw a rise of

19%. Another study by the Brookings Institute found that income in the middle class has grown

half as fast compared to both the bottom 20% and the top 20% of income tiers once

taxes and transfers were taken into account.

If a stay at a company for a while, my income becomes stagnant.

You know, it increases by a couple thousand.

I generally have to job hop to have increases in my income, which in itself is not

security.

Middle class workers over the last 40 years have not been able to adequately benefit from the

productivity growth, the expansion of the pie, in the economy.

We've measured this and found that the typical worker has fallen 43 percentage points behind the

growth of productivity.

What that means is that the middle class worker could have earned one percentage point more per

year in compensation growth over the last 40 years, and they didn't get it because there was an

erosion of labor share of overall income and because of rising inequality such that the top

10%, particularly the top 1%, and even more so the top 0.1%, took in much of the gains

from the growth of the economy.

While incomes stagnate, the cost of living has risen dramatically over the years.

To put it into perspective, the average household income in the U.S.

saw just a 16% increase over the last 50 years.

In comparison, housing costs increased by 190% and college tuition shot up by nearly

264% in the same time period.

I first moved in over here in these apartments I live in five years ago.

My income, my rent was like $1100.

It's now $1700.

That's $600 increase happened.

I did not have a $600 increase, like my income did not increase at the same rate.

Rising expenditures, rising prices, in health, housing and education are very real and they've

put a tremendous amount of pressure on households in the middle whose income simply doesn't go as

far as it used to.

The situation is even worse in cities where the cost of living is already higher.

An analysis in 2018 found that raising a family and a middle class lifestyle in expensive coastal

cities like San Francisco or New York needs an income of at least $300,000 a year.

For reference, just 10% of all households made $200,000 or over in 2020.

I'd recently saw an apartment next to the building I work in in Plano, and I was like, It'd

be great to walk across the street to work.

And it was like $2,400 for an efficiency.

And I'm like, That's insane.

And then it's like for what I have, they call a townhome, three bed, two bath, $5,500.

I'm like, Well, absolutely not.

Like I'm going to pay $5,500 and I don't own it, it's not mine?

It's just getting worse. And everyone is like, I feel like native people are being pushed out into

the suburbs and then people from out of state can come in and enjoy the beautiful fruits of Dallas

and have fun and be close to the restaurants.

And, you know, I have to live out here and, you know, it's not bad, but it's not Dallas.

I'm from Dallas. I grew up there.

That's where I want to be. But how it is now, you know, it's just not affordable.

Policy making might be both the fault and the solution of the middle class squeeze.

There is no help whatsoever.

There is no policy in place to assist people, and I feel like as soon as you get a job or as soon as

you're working, they're just like, Oh, that's all you need is a job.

You got it. You know, go forth and have at it.

The stagnation of wages and paychecks for people started in the seventies when productivity started

growing more slowly, but really accelerated after 1979 and 80 when there was a huge growth of

inequality, when the top 1% took off, when the stock market grew, but people's paychecks didn't.

And that has to do with issues of deregulation, excessive unemployment, the weakening of unions,

the failure to raise the minimum wage, globalization with low wage countries that really

put the kibosh on blue collar job opportunities in many places.

The point is that it's not that the economy got worse.

It was that there were policy decisions made so that the economic growth did not filter down to

the vast majority.

The country wasn't built by Wall Street bankers, CEOs and hedge fund managers.

It was built by you.

It was built by the great American middle class.

In response, the Biden administration came into office in 2021 with a promise to revitalize the

middle class.

The $1 trillion bipartisan infrastructure bill from November 2021 and the upcoming Build Back

Better Act both include provisions aimed at financially supporting middle income families.

But as Congress continues to find itself in stalemate.

Only time will tell whether these bills would really have an impact on the survival of middle

income households.

I don't see any change effects.

My friends that were struggling are still struggling.

I'm still budgeting down to every dollar trying to get things done.

So I just feel like if the changes are happening, they're not trickling down fast enough for us to