Middle class gets squeezed

It's tough out there. For anyone supporting a family on a regular paycheck and not a fat stock portfolio, the economy has not been kind in recent years. Hidden within some of the rosy-sounding economic statistics is the truth: Most American families are having a harder time. Prices are going up for food, energy, health care and higher education while wages for typical breadwinners are not keeping up.

The Census Bureau reported that last year there was a rise of 0.7 percent in median household income to $48,201. That might seem like a positive trend, but below the surface the news isn't so good.

Earnings by full-time workers fell last year by more than 1 percent, meaning that the rise in household income is likely attributable to an increase in the number of hours worked or the addition of members of the household in the work force, not a pay raise.

Since 2001, the gains in the economy have largely accrued to the people at the top of the economic ladder. There is little trickling down. The median income of households headed by someone younger than 65 was more than 2 percent lower last year than in 2001, even though the five years between 2001 and 2006 were ostensibly a time of economic recovery. Meanwhile, the share of income going to the top 5 percent of households is at record levels, and it was only this group that enjoyed earnings higher in 2006 than in 2000.

Beyond dealing with stagnating wages, middle-class Americans are confronting inflation that is not being reflected in broader indexes. We all know the pain being felt at the gas pump and when the monthly electricity bill arrives. But far less attention has been given to the rise in food prices.

Staples of the American diet rose by double digits over the last year. Egg prices went up 33.7 percent from July 2006, according to the Bureau of Labor Statistics. Whole milk was up 21.1 percent, navel oranges 13.6 percent and beans 11.5 percent. Yet the inflation figure for all goods and services was a reasonable-sounding 2.4 percent, because things like computers and clothing went down in price.

Another disturbing statistic reported by the Census Bureau is that there has been a marked expansion in the number of Americans who don't have health insurance. Last year alone, 2.2-million Americans lost their coverage, raising the total to 47-million uninsured. Those lucky enough to still enjoy employment-based health coverage are paying a lot more for it. Most companies are asking employees to shoulder higher deductibles, premiums and co-pays as employers struggle to absorb sharp increases themselves.

The use of the term "health care crisis" is not too strong, yet the Bush administration seems uninterested.

With all the attention being paid to the vagaries of the stock market and the sub-prime mortgage industry, the economic story of America's middle-class neighborhoods is being missed. Life is getting harder in this country for everyone but those at the top.

[Last modified August 31, 2007, 21:29:28]