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An Upside for the Middle Class
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Citing that study, Heritage Foundation labor economist James Sherk wrote that the stereotype of the overworked American is mistaken. "Americans today can earn a good living while having free time to focus on their own pursuits," he said.
Few economists dispute that typical Americans have improved their standard of living in recent decades. What many worry about is whether they are squeezing themselves more than ever to sustain that lifestyle, as more of the benefits of an ever expanding economy accrue to those on the top rungs of the income ladder.
"To the extent that the middle class is consuming more than you expect given their income does not come without a price," said Robert Frank, a Cornell University researcher. "They are increasingly in debt and they are stressed out about it."
But it is not only lifestyle choices creating the pressure.
Home prices in suburban neighborhoods with good schools have increased sharply, meaning the median mortgage in 2004 was 76 percent larger than a generation earlier. The same goes for the cost of health care and college tuitions. By the time they graduated in 2004, two-thirds of four-year college students were in debt, up from less than half in 1993. They also owed more: an average of $19,200, a 58 percent increase over the previous decade, once inflation is factored in.
Meanwhile, smaller shares of families are covered by health insurance -- nearly 16 percent had no coverage in 2004, according to the census. Also, barely over half of Americans work for employers that sponsor retirement plans of any kind, while only about one in five is covered by a traditional pension as more employers have shifted to defined-contribution plans such as 401(k)s, according to some studies.
"The reason so many middle-income households feel anxiety is because of how much they are being squeezed by home prices, health care and education," said Tamara Draut, director of the economic policy program for Demos, a New York research and group. "Those are three things that we can't pare back."
