How the middle class is disappearing and the effects of it
There are a few proclamations more common in American politics than “the middle class is declining” or “our middle class is getting squeezed.” Generally, such statements are made without context or any explanation as to why this is happening.
The true reason, or at least the largest contributor, to middle class stagnation and decline is that the cost of three key necessities have increased far more than wages and salaries have.
Wage stagnation is a problem, of course, and a severe one. But the cost of living in the United States, especially in areas with higher paying jobs, is a large part of the problem as well.
So what are the necessities that I’m talking about? Briefly, housing, healthcare, and childcare.
Housing costs, especially in coastal cities, and even in large cities and college towns across the U.S., have increased drastically. These expenses contribute to making some high-paying jobs in coastal cities far less lucrative. The average income in San Francisco, for example, is about $77,000 a year. The median rent is about $3,500 a month, or about $35,000 a year. So a person making the median income will, before taxes, end up losing almost half of that income to rent.
The second problem is healthcare costs, which have been rising above inflation levels for years.
This holds wages down because employers have to spend more money to cover the healthcare benefits of employees. Or, worse yet, employees have to cover it themselves. Self-employed people and small business owners are especially at risk, since they have to buy their own insurance without a benefits package.
Healthcare costs make having children more expensive, and drain middle class workers’ retirement savings more rapidly as they age. Moreover, the increased cost of care makes it harder to even reach the middle class, and can make it impossible for low income families.
Finally, we come to childcare. Childcare, and daycare in particular, has grown far more expensive in the past few decades. The cost? Over $140 per week, on average.
To make matters worse, there is a gap between 3 p.m. and 5 p.m. Children typically end school at about 3 p.m., unless they’re signed up for sports or other extracurricular activities.
Work, on the other hand, tends to end at about 5 p.m. Assuming typical hours and two income households, parents face a two-hour gap between when their children come home from school and when they get done with work.
Middle class stagnation has a lot to do with the increased costs of fundamental necessities, like housing and healthcare. Education costs are a huge factor as well, but it’s possible to be in the middle class without a bachelor’s degree, although it is definitely more difficult.
To help American families get out of the “squeeze”, candidates in 2018 should look to bring down the costs of housing, healthcare, and childcare.
Feature photo by Maria Ly | MSU Reporter.