If you’re working as hard as ever but can no longer make ends meet, don’t feel badly. You’re not doing anything wrong and lots of people are exactly in the same boat. High inflation and taxes are to blame, and they’re taking a toll in ways that are obvious and in others less obvious.
The middle class has been under a lot of pressure for years. According to official government data for 2021, which were recently released by the Social Security Administration, half of all Americans make less than $3,133 a month.
There was a time when a family could get by on that, but not anymore - even with lots of belt tightening. These days, this monthly income may not even cover the rent.
The following statistics were compiled by the Social Security Administration and reported on The Most Important News website. You may find these numbers surprising.
More than 30 percent of all US employees earned less than $20,000 last year;
More than 41 percent of all US employees earned less than $30,000 last year;
More than 52 percent of all US employees earned less than $40,000 last year;
More than 62 percent of all US employees earned less than $50,000 last year.
Here’s another statistic from the SSA: The median wage for 2021 was just $37,586. This means that half of the country is making less than this amount – not very convincing that the economy is strong and creating good jobs.
Lies, Darned Lies, And Statistics
Benjamin Disraeli’s observation that numbers can be spun to give misleading impressions is as true today as ever. Still, it’s difficult to put a positive spin on statistics as the following illustrates.
In 2022, the poverty level of a family of five was $31,040. Given soaring rents, utilities, and other essentials, this doesn’t leave much wiggle room before sliding into poverty.
Even Americans earning $50,000 a year are no longer middle class; they are barely holding on – regardless of how these numbers are presented or twisted. Incidentally, the earnings the SSA came up with are before taxes, so in reality they’re not even as much as they appear to be.
These numbers tell several stories and one of them is that the middle class continues to shrink. Some are fortunate and moving into upper income, but many others are gradually slipping into the lower income group. It has become extremely difficult for them to lead the same lifestyles as they did five years ago and certainly ten years ago, and this is unlikely to improve any time soon.
A Piece Of Pie, Please
“Household net worth has increased since the COVID lockdown lows,” writes Lance Roberts in the Epoch Times. “However, household net worth is predominately held by the top 10 percent of income earners, leaving the bottom 90 percent fighting over the remaining 30 percent of the wealth.”
LendingClub reports that as of September 2022, 63 percent of Americans are living paycheck-to-paycheck – just below the all-time high of 64 percent made last March, but barely so.
The statistics cited above give insight into the financial pressures out there, but the specifics are even more revealing.
Did you know that 18 percent of Americans can’t afford to purchase three meals a day? Or that 40 percent of small businesses couldn’t pay their rent in October? Or that two in five households were forced to turn to food banks in the last 12 months?
It has also been reported that many people have stopped taking medications or getting medical care because they cannot afford the cost.
Far Reaching, Surprising
If millions of people continue to experience such intense financial pressure, there could be far-reaching and even surprising ramifications.
One of those is the way people will try to cope. “A majority of families are becoming dependent on additional debt to make ends meet,” explains The Epoch Times – even though in the long term this will add to their problems. .
According to the latest New York Fed report, “credit card debt surged by $46 billion in the second quarter…as consumers struggled to maintain their standard of living.”
During the pandemic, government stimulus programs helped many millions of cash-starved households and small businesses survive. But now that the bills for those are coming due, economists say we are paying for those programs with high inflation, rising interest rates, and related difficulties.
Back To The Future?
Should the government help with new stimulus programs? Adding billions to the government’s already bulging deficit may not make much economic sense but they do offer short-term benefits. And many people want those payments to resume.
“Today, people just want Uncle Sam to hand them money in order to mitigate the pain of rising prices,” according to schiffgold.com.
A very recent poll taken by Newsweek also came to this conclusion. It found that 63 percent of respondents said the government should issue new stimulus checks to tackle inflation.
Stimulus programs may sound like a thing of the past, but don’t be so sure. If the decibel level for them becomes loud enough, influential politicians could be swayed to support them again.
And stimulus programs could happen in a variety of ways, such as with basic income – a policy that gives every adult a fixed amount of money regularly. Or health benefits could be expanded or taxes lowered dramatically for some income groups.
A new survey by Gallup found that more than half of Americans believe the current political parties do such a poor job that a third major party is needed. So along with the decline of the middle class, there are growing political, economic, and social problems. Let’s hope these will be addressed before the situation gets out of hand and the unexpected happens. And these days nothing should be left to chance.