Authored by Erika Rawes, The Cheat Sheet; originally posted at USA Today,
Though there is some debate over the exact income a middle class household brings in, we do have an idea of who the middle class are — most working class people. Today’s bourgeoisie is composed of laborers and skilled workers, white collar and blue collar workers, many of whom face financial challenges. Bill Maher reminded us a few months back that 50 years ago, the largest employer was General Motors, where workers earned an equivalent of $50 per hour (in today’s money). Today, the largest employer — Wal-Mart — pays around $8 per hour.
The middle class has certainly changed. We’ve ranked a list of things the middle class can no longer really afford. We’re not talking about lavish luxuries, like private jets and yachts. The items on this list are a bit more basic, and some of them are even necessities. The ranking of this list is based on affordability and necessity. Therefore, items that are necessity ranked higher, as did items that a larger percentage of people have trouble paying for.
Vacations
A vacation is an extra expense that many middle-earners cannot afford without sacrificing something else. A Statista survey found that this year 54% of people gave up purchasing big ticket items like TVs or electronics so they can go on a vacation. Others made sacrifices like reducing or eliminating their trips to the movies (47%), reducing or eliminating trips out to restaurants (43%), or avoiding purchasing small ticket items like new clothing (43%).
New vehicles
Very few people who earn the median income can afford to buy a new car or truck. Interest.com recently analyzed the prices of new cars and trucks, as well as the median incomes across more than two dozen major cities, and found that new cars and trucks were simply not affordable to most middle-earners.
“Median-income families in only one major city [Washington DC] can afford the average price Americans are paying for new cars and trucks nowadays.” As of 2013, new cars are priced at $32,086, according to the study. Mike Sante, Interest.com’s managing editor reminds us, “just because you can manage the monthly payment doesn’t mean you should let a $30,000 or $40,000 ride gobble up all such a huge share of your paycheck.”
To pay off debt
These debt statistics come from Debt.org: “More than 160 million Americans have credit cards.” “The average credit card holder has at least three cards.” “On average, each household with a credit card carries more than $15,000 in credit card debt.”
Not only do we have large amounts of credit card debt, we also have student loans, mortgages, cars, and medical debts. Our debt is growing faster than our income, and many middle class workers have trouble staying afloat. Money-Zine evaluated debt growth and income growth over the past few decades and found that “back in 1980, the consumer credit per person was $1,540, which was 7.3% of the average household income of $21,100. In 2013, consumer debt was $9,800 per person, which was 13.4% of the average household income of $72,600. This means debt increased 70% faster than income from 1980 through 2013.”
Emergency savings
To provide ourselves with a degree of financial security, we are supposed to have emergency savings to protect ourselves in the event of job loss, illness, or some other catastrophe. Most members of the middle class don’t have at least six months of emergency savings, however, and some working people have no such savings.
A Bankrate survey found that only around one out of four households have six months of emergency money saved, and many of them are in the higher income groups. Another one-fourth have no emergency savings at all, and the remaining household have a small to moderate amount of savings, but not enough to cover six months of expenses.
Retirement savings
If you reach the retirement age with little or no money saved, Social Security is probably not going to be enough to cover your basic needs. Even if you want to work for your entire life, you have no way of knowing whether or not you will be physically capable of doing so.
Although having a lack of a retirement savings is a risky move, so many people bet on double zero, just hoping that things will work out in their favor. While some members of the middle class neglect this aspect of financial planning because they are procrastinating, there are also some workers who cannot afford to set this money aside. Nearly half of those who don’t save for retirement say it’s because they simply don’t have the money.
As of late, around 20% of people near 65 have not saved anything for retirement at all, and the majority of people — 59% — worry that they don’t have enough money saved for retirement, according to a Gallup Poll.
Medical care
Medical care is a basic necessity and something we’d think would be affordable for someone earning a middle income. A Forbes article published data indicating that workers in large companies — many of whom are members of the middle class — “face nearly $5,000 in premiums, co-payments, deductibles and other forms of co-insurance.”
During the past few years, these costs have had a large impact on working Americans. A report by Feeding America found that a shocking 66% of households say they’ve had to choose between paying for food and paying for medical care — 31% say they have to make that choice each and every month.
Dental work
According to the U.S. Department of Health and Human Services, “the U.S. spends about $64 billion each year on oral health care — just 4% is paid by Government programs.” About 108 million people in the U.S. have no dental coverage and even those who are covered may have trouble getting the care they need, the department reports.
Oftentimes, people will purchase medical coverage and forgo dental because it’s so expensive. Plus, dental insurance may cover only 50% of the more expensive procedures, like crowns and bridges. This leaves those who have insurance with large co-payments.
In many cases, middle-earners will delay or even forego some of these procedures in efforts to save on costs. According to the CDC, nearly one in four adults between the ages of 20 and 64 have untreated dental caries (like cavities or infections).
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If only they had listened to Janet Yellen and found rich parents or bought businesses….!
But they are distracted…
Too much bad news, end of the middle class, the rise of the .01%ers, ebola, the demise of the dollar, oil will start WWIII, deflation, hyperinflation, if we vote at all the choice is between dumb and dumber.
I fired a worker on Friday and another today, and I didn’t even feel a bit sad or any remorse, go get your free shit!
I’m so desensitized to bad news, I laughed out loud when my pilot buddy sent me this video of a wing suiter dieing, splat!!! HaHaHaHaHaHA!! Motherfucker!
Derivatives – The Unregulated Global Casino for Banks!
http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html
Who Runs the World? Conspiracies, Hidden Agendas & the Plan for One World Government
http://humansarefree.com/2014/10/who-runs-world-conspiracies-hidden.html
Well…they say the new Obamacare premium quotes won’t be out until after the November election. I already have a $10,000.00 deductible and there is no way I will go higher. If they double my health insurance cost I won’t play anymore, I’ll have to sit it out. Not too worried as I have not had a claim in the 15 years I have been with my present carrier………not one. What happens when they price folks out of the market? Might be able to afford a vacation but I don’t have the time, last one I took was ten years ago. Own my own business and can’t afford employees anymore thanks to the gubmint.
I saw that article on ZH today, and thought I would copy and paste the best damn comment in response to it that I’ve seen on the internet in years, from someone going by “chindit13”:
Perhaps I haven’t found it in the history books, but when was this Golden Age when the Middle Class could afford vacations, new cars, quality dental care, etc., except for that brief post-WWII era when the US had the advantage of not having a blown-up production base, and when no one gave a shit if Chinese or Indians starved to death?
What everyone really seems to be upset about is that humanity is returning to the mean in terms of relative lifestyle, and that non-highly skilled labor has no pricing power. Well, that has been the case for the masses pretty much since Oldavai Gorge, except for this recent blink of an eye. Welcome back to the Old Normal! Did you forget history?
We had a good run, but it wasn’t the norm. It was an aberration. We got spoiled, and then we did what the typical Wall Street analyst does, which is project the present or very recent past into an infinite future. We came to the belief that we had some birthright to live as well or better than our parents. Ain’t gonna happen. We already had Peak Lifestyle.
Everything about which the Doomer Crowd here complains each and every day ad nauseum are either unrealistic fantasies (like any of you would be doing better if we had a gold standard), or are the stopgap measures societies took to extend the good times for as long as possible (debt, fiat, active Central Banking—symptoms, not causes of what ails us).
Labor is in surplus. That is what is driving everything. Efficiency is on the rise, which makes labor even more redundant. Cut out fiat, the Fed, fractional reserve, whatever…it will change absolutely nothing. None of you would be better off, none of you would get a better job, and not a single additional person in Greece or Spain or France would get a job either. Virtually none of you is necessary to a functioning society. Neither am I, but unlike most of you folks here, I know I was born at a good time, in a good place, in the right color and gender. I know I was lucky, so I don’t carry the false anger that makes most of you hate everything, especially your own increasingly miserable lives. That Old Normal is a letdown to those who feel entitled.
The period 1950 to about 2005 was the absolute peak of human comfort and ease, especially in OECD countries. There was never an easier time in all of human history to succeed and live a pleasurable life. The unskilled or the barely skilled, who had the good luck to have been whelped within the borders of a highly developed country like the US, had virtually no excuse to be anything but successful. In particular, white males coming to adulthood during that five plus decade period probably had to go out of their way, or just be complete fuck-ups, to fail.
It’s now over. Absent a rare and necessary skill, the lifestyle of an OECD citizen is going to drop to the level of a developing world citizen. The undeserved Birth Advantage (low-skill worker getting popped out in a highly developed nation) has been repealed. Most people no longer feel they owe anything to a person simply because the person materialized within the same man-made borders. Why should they? It’s not like any of you care about me or I give any more of a shit about any of you than I do some female living in rural Bangladesh. In fact, I probably prefer her, because she doesn’t feel entitled and isn’t constantly whining. She accepts the inherent unfairness of existence and deals with it. We all got spoiled and held our leaders to a higher standard that we hold Gods/the Universe. Is it fair you were born the way you were born? Go complain to The Man, since He did it.
There is historical precedent, or a good example, for what is happening now, albeit for this example there was a better resolution than anyone today is going to get. In the mid-19th Century, Cyrus McCormick built his combine. It could do in a day what it previously had taken fifty men a week to do. Most of the agrarian labor force was suddenly made redundant. Lucky for them there was something called the Industrial Revolution, so they had a place to go. All we’ve got is the Social Networking Revolution, and it is anything but labor intensive.
The equivalent of a thousand McCormick combines are materializing today in virtually every field of endeavor. As humanity approaches the Singularity, this trend will accelerate. International lifestyles are going to meet in the middle. India and China (and that Bangladeshi female) will rise a bit; the US, EU and other developed country labor forces are going down. A lot.
Sure the Fed and all the financial machinations are adding to the problem, but their total impact is negligible compared to the reality of massive human redundancy. If anything, they’ve prolonged the party a bit, but will make the initial hangover more painful. It was going to be painful regardless. We’re just living in the proverbial interesting times.
The elite, however, will do what they have done in every economic iteration in history, which is to find a way to come up trumps. Darwin always Rules.
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It does put things into perspective. And I believe llpoh has been saying the same thing for quite some time.
PJ – I have been saying the exact same thing over and over. I really appreciate that you noticed!
I know I am a broken record on that stuff, but until people realize that their exalted position was an illusion born of a particular, distinct set of circumstances that will never again repeat, they will have no chance to protect themselves.
I like his “combine” analogy. I have made the agrarian analogy many times – in 1900 half the population worked in agriculture. It is now 1.5%. Then, taking advantage of resources, a growing population, and not having our manufacturing capacity destroyed in WW2, the US surged until around 2000 (the guy says 2005, but I think the end was a little bit earlier). Manufacturing was the backbone of the middle class. But US manufacturing became more expensive on a world scale, and manufacturing has become more efficient by 2.5-5% each and every year – so that more is made by fewer each year. There is no stopping that trend. Fewer folks are needed in manufacturing each year – and that is where the middle class jobs were. And the effect of global competition is magnifying the loss of manufacturing jobs.
Now the jobs for the low skilled are service jobs – and these jobs do not create anything. They are and will be low paid.
So if you do not have high skills, you are screwed. And that is the fact, Jack. Nothing the government can do, will do, or could have done will change this. Delay it, yes, but prevent it, no.
And when you combine these issues with the fact that the current generation is the first generation in US history which will be less educated than the previous generation (20% will have more education than their parents, but a whopping 20% will have less), you have a recipe for economic failure going forward.
As the guy says, there is a regression to the mean – the world’s poor are going up, and the US average is going to drop substantially. My guess, based on calcs on the back of an envelop, put the drop to come at around 30 – 40%, so there is a long way to go yet. Real income has only dropped a few percentage points so far, but it is going to continue.
More and more folks will be finding out they simply do not have the skills to compete. Currently 50% of wage earners earn under $30k. I expect that number to increase to say 70- 80%. It is what it is.
PJ – you forgot to add “don’t have kids!”. I always love that.
I agree completely with the post by PJ. It states exactly what I have come to believe for quite a long time, the person that wrote that expressed my beliefs far better than I ever could.
And yes Lloph has been saying the very same thing and I have always agreed.
Only one small difference I have with what Lloph just posted, or maybe you could say it’s a huge difference, and that is I have also done the calculations as to where the standard of living for the US is likely to settle out at, and my numbers look like a 50 to 60% decline from where we are now.
Either way it’s going to be a painful adjustment and there will be no avoiding it.
ASIG – the greatest battles in TBP history have been such quibbles – 10 per cent versus 9.5 per cent, etc.
Lloph
OK that was suppose to be a 🙂
Great comments by all ……… this is how TBP used to be … every single day.
Stuck – ebb and flows are to be expected.
I am looking for the appropriate opportunity to start and old-fashioned shitfest. I tried to prod the Admin about his OWS predictions, but he would not bite.
I think it is time he posted a 9/11 truther article, and invites DP to the festivities. That is usually good for a really big turnout – nutjobs versus the rest of the world.
The run down old victorian mansions that were the spooky haunted houses when I was a kid were the remnants of a huge boom time when average people were elevated in society just as today. The crash of 29′ generated more millionaires than any time in our history. Residents of those above mentioned mansions took vacations and bought new cars, granted horseless carriages were a new thing. What makes the recent Mcmansion and it’s inhabitants any different? Booms and busts of the same type are not new.
All of this misery is George Washington’s fault. I believe every scourge that has plagued mankind since the beginning of time can be directly traced back (or forward) to General Washington. Yep. He’s the devil I tell ya.
indialantic
Amen! +100
I welcome you as a charter member of the George Washington Was A Real Pussy (GWWARP!) foundation for truth.
GWWARP forward!!
The facts about Washington are irrefutable, Stucky. The 10 Plagues of Egypt, Europe’s Black Death, the Titanic, Karin Carpenter’s anorexia all have one name in common.
Probably just giving a percentage delta doesn’t register with most so let me give a more easily understood reference.
The Standard of living in the United States will decline to the level close to what Mexico and central America is at today.