The decline of the middle class and the causes of it

(Before I begin this discussion I would like to provide a “better” definition of “Middle Class”, which is to some degree subjective based upon the different costs living by state. Personally I think that Middle Class should not necessarily just be defined by income level per say, but should include this as well: Having the economic ability to support oneself or their family without any government assistance.)

I think most will agree that the middle class has been on a decline for many years now, and one can find numerous studies to support that. Here is just one:

Heck it was often the case many years ago that 1 person working could support a family of 5 or 6, whereas today it often takes 2 people working to support a family of 3 or 4. My dad and father in law – neither college educated and the only family member working – were both better off financially than my wife and I are now both working with college degrees. I assume some of you could cite similar examples.

Usually in this discussion income inequality is brought up, which is arguably is a component of this situation, but is it really the primary reason for the decline of the middle class? I would argue that a much greater factor is the increased cost of living? Personally when I add up the following:

  1. Property taxes. 2. Health insurance/care costs. 3. NJ state taxes & 4. Federal income taxes. That accounts for about $40,000 (property taxes and health insurance = about $25,000 of that total). The ironic thing is that on the websites I looked at $50,000 yearly income was supposedly middle class. Furthermore when you consider the cost of other necessary things like groceries – about $12,000 per year, heat/electric $5,000 per year, mortgage/rent $2,000-$4,000 per year (for NJ) – we’re now at over $60,000 per year in necessary expenses for a family of four. There are numerous other expenses (the cost of college for example) that I’m not including here that bring this cost up well over $100,000 per year! There’s the old saying it’s not what you make it’s how much you keep!

So what are your thoughts.

Expenses are basically what you make them. Part of where you live play a HUGE part.

Example. Where I live my property tax is $500 a year ($50/month). My state income tax is just under 5%. Health insurance. If it wasn’t covered by my employeer (mostly) would be a huge setback ($500/month).

My food bill – well I’m single so It’s no where near 12k a year More like 5k a year. House I’m in right now – mortgage would be around 600 a month (what kind of house in Jersey are you living in with 166 to 300 a month mortgage/rent payment???).

Now you can be frugal and cut expenses. Like cell phone find a cheap plan, then get less expensive phones (one I have cost $100). for a vehicle? Spend time and find an older one that isn’t as much money (have a good trusted mechanic look over it).

There are just a lot of things that people spend money on that they don’t NEED but want.

Person I know both the hubby and wife works. EACH makes more than I do a year. My cars are paid off (one I just got, and my old one will be going to my daughter when she turns 16). My ATV is paid off. Camp trailer I just bought was for cash. I’ve got other toys (cash). I’ve got some money in the bank for emergency’s and live a comfortable lifestyle.

This other couple drives brand spanking new cars. Latest Iphones (kids get the hand be down year old ones). They head to Vegas every couple months. Curise every year. You get the point. They complain a lot that they don’t have money for things they need to do.

We are all born without tangible assets so in that way…“we” are all equal. What separates us the most regarding advantages in life…is our parents. If we are born into a family of a happily married couple, who place a strong value on their offspring receiving an education, we are way ahead in life.

Then what’s required is effort and sometimes that means a boot up a young person’s butt who isn’t mature enough yet to make the right decisions in life. Those same two parents are in the best position to apply that boot in a loving, nurturing manner that will have positive results.

Lastly is the mindset that upward mobility in the financial world is like trying to run up an escalator that’s going down. You’ll expend more energy in the attempt than the actual progress you’ll achieve…it isn’t fair but that’s life in a nutshell. Divorce, children born out of wedlock, schools not being able to discipline students and the necessity for two working parents all contribute to the reduction of a middle class IMO.

One word: Reagonomics

We are basically still in a Reganomics influenced economy.

-Minimize the unions
-lower taxes for the wealthy
-cut spending on effective government programs
-lack of enforcing the Sherman Act in any real way.
-Skyrocketing healthcare and Higher Education costs

Both parties and administrations are responsible for this. (Along with some SCOTUS decisions)

But it is clear, the conservative economic ideology, heavily favors the wealthy and well connected. We need more democracy/socialism mixed in with our capitalism.


No you don’t need two incomes, people want them, it’s a choice. And you can’t compare what it takes to live now to back then fairly. People didn’t have cable, high speed internet, cell phone plans and relatively safe cars just to name a few modern expenses that weren’t around back then. Oh and the shrinking middle class? The majority of them moved up in class, not down.

Forego all the modern amenities and live in a tiny house like they did back then and you can make it on one blue collar income. Cook your food from scratch, don’t eat out, give up your cell, your second car, daycare, the internet, cable, modern medicine, airbags etc and enjoy that good old fashioned 1970’s prosperity.

Sure, before my parents got divorced, we were living on one blue collar income, dad worked at GM. But our house was about a 1,200 square feet, with one bathroom for six people and we had one car, didn’t eat out, didn’t have a credit card, and didn’t go on vacations except to drive to a relatives house in another state.

Having children can substantially raise ones cost of living that’s for sure. I would argue much more so today than years ago.

This is the problem with you old farts, it’s not 1970 anymore. Suggest living a simple 1860 lifestyle next time, that way you’ll REALLY minimize expenses.

Everything is rising except my paycheck. I’m glad the corporations and the wealthy got those heafty tax breaks, though. I’m going to cross my fingers and hope that some of that trickles its way down to me.


Choice again, why is it so much more expensive to have children today? Because we give them things our parents never dreamed of. It doesn’t cost more to house, feed or clothe them. Well, it doesn’t cost more to do so to the same standards as 1970 anyway. It does if you buy them designer clothes, prepared foods and a much bigger house.

Instead of hoping for trickles of money to reach you, try getting a skill that is in demand enough to earn what you want.

Some of the larger expenses have nothing to do with any of the points you list here, for example NJ property taxes and state taxes. Also the cost of groceries has gone substantially over the past few years. I personally view it as way over simplification to blame Ronald Regan for all the the points you list.

One word…Globalization.

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What, you don’t suggest I live like it’s 1660 anymore?

Looks like someone didn’t even bother to read the study.

Actually our house is smaller than the house both of our families grew up in. Also my wife and I try to be very frugal.

Expand on that.

Do you think outsourcing, or technology and automation is what caused good blue collar jobs to decrease?

Relating to trade, how many small/medium companies are doing business with markets overseas, that were not available to them in the past?

I concur globalization has had an effect, and was/is not handled as well as it could be.
When “free trade” primarily benefits large corporations, that does need to be addressed.

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Actually next year when all of the tax benefits are fully implemented my family and I are going to benefit by over $4,000. And we live in NJ.

Not quite right. True, workers have been hurt by some actions, but those actions also hurt others who exist in a more precarious position. The middle class should come from small business, not workers. Small business are usually the major victims of business stifling regulations. These regulations actually benefit big business because they have the monies to comply, but small businesses do not have the necessary monies to comply.

If you want to try and compare what it cost to live in 1660 like it has any relevance then I would certainly point out why it’s different today.

In the new generation, a smartphone is a necessity.

Yes technology and automation had effect but IMO they both created a better middle class which I believe was off set by globalization and illegal labor.

I also agree free trade benefits corporations, it’s why they’re pushing back so hard now.

Yes “some” smaller business are having success with markets overseas but I believe it’s being offset by overseas good flooding our market.

Now I’m not accusing representative nations for this decline as much as I’m accusing trade with non representative nations that’s harming the middle class.