The Irrevocable Losses Of The Middle Class
The Article: The Middle Class Loses a Generation’s Worth of Wealth by Theresa Riley in Bill Moyers.com.
The Text: A new survey released Monday by the Federal Reserve shows that middle class American families lost almost 20 years of accumulated wealth from 2007 to 2010. The median American family lost 39 percent of their net worth — from $126,400 to $77,300 — putting them roughly on par with their worth in 1992. The crash of housing prices directly accounted for three-quarters of the loss. The Washington Post reported that “Homeownership, once heralded as a pathway to wealth, became an albatross.”
Additionally, the Federal Reserve reported that median incomes fell across almost all demographic groups during the same period. The only groups to experience a rise in income were nonworking families — namely, retirees and the very poor. Some of that growth was due to an expansion of government aid programs that were part of Obama’s 2009 stimulus package. The decline in median income was most pronounced among more highly educated families and families headed by persons aged less than 55.
As Mark Zandi, the chief economist for Moody’s Analytics, told The Washington Post, “It’s hard to overstate how serious the collapse in the economy was. We were in free fall.”
The Fed’s Survey of Consumer Finances is released every three years to provide details on the finances of American families. Although the data is over 18 months old, it provides a snapshot of the staggering impact that the housing crisis and recession had on the middle class. In this morning’s Washington Post, political reporters Chris Cillizza and Aaron Blake write that we shouldn’t “underestimate the impact that those numbers could have on the 2012 election… There is lots and lots of other evidence … that suggests that voters are going to head to their polling place this fall with a pessimistic answer to the ‘are you better off’ question.”
