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AmericA’s middle clAss still losing ground

christian e. Weller and Amanda logan

C enter fo r A m e r i c a n P r o g r e ss July 2008

w w w . a m e r i c a n p r o g r e s s . o r g

C en ter fo r A m er i c a n Prog res s

Introduction and Summary

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merica’s middle-class families are still struggling. With the current economic downturn, economists, policymakers, and pundits alike now recognize what many middle-class families have long been feeling: that their financial security is in decline. Although economists so far have not officially announced the beginning of a recession this year, the sharp downturn in economic growth certainly has made things worse for families who have been struggling for years with massive amounts of debt, declining incomes, and rising prices. For the past two years, the Center for American Progress has calculated a number of middle-class financial security indicators to measure how many families have the financial resources for a spell of unemployment, for a medical emergency, for both, or for an unspecified economic emergency equal to three months of their income. Our figures demonstrate the financial and economic roller coaster ride that America’s middle class has been on. The trends since 1989, the first year for which we have data, showed an increase in middle-class security through the 1990s. After 2000, however, the situation deteriorated very quickly—all of the gains in middle-class economic security were erased within a few years. We have now updated the figures to reflect the trends for 2006 and 2007 and to include more accurate data for 2005 than we had before. All the measures we tracked either decreased further or stayed at their already low levels from 2005 (See chart on page two). Data to 2008 is not available, but there can be no doubt that with worsening economic conditions middle class economic security is taking an ever harder hit. The new data underscore that: ƒ The sharpest deterioration in...