Middle-class squeeze
People belonging to the middle class find that inflation in consumer goods and the housing market prevent them from maintaining a middle-class lifestyle, undermining aspirations of upward mobility.
[1] As well as this, the term was further propelled into the public consciousness when it was used by former UK Labour Party leader Ed Miliband, who promised to come to the defense of the group in 2010.
[4] The term "squeeze" in this instance refers to rising costs of key products and services coupled with stagnant or declining real (inflation-adjusted) wages.
"[1] Charles Weston[5] summarizes the middle-class squeeze in this way: "Being middle class used to mean having a reliable job with fair pay; access to health care; a safe and stable home; the opportunity to provide a good education for one’s children, including a college education; time off work for vacations and major life events; and the security of looking forward to a dignified retirement.
The costs of important goods and services such as healthcare, college tuition, child care, and housing (utilities, rent, or mortgages) have increased considerably faster than the rate of inflation.
[6] Another narrative described by Paul Krugman is that a resurgence of movement conservatism since the 1970s, embodied by Reaganomics in the United States during the 1980s, resulted in a variety of policies that favored owners of capital and natural resources over laborers.
As noted in the article, the heyday of the American middle class, and its high expectations, came in the Fifties and Sixties, when the median U.S. family income (adjusted to 2001 price levels) went up from $14,832 in 1950 to $27,338 in 1970.
The rising prosperity was, however, halted by the inflation of the Seventies, which carried prices aloft more rapidly than wages and thus caused real income levels to stagnate for more than a decade.
[1] Insurance and health care is an important factor regarding the middle-class squeeze because increases in these prices can put an added strain on middle income families.
[15] The rise in prices also causes a harm to working middle-class Americans because it makes it more costly for employers to cover their employees, as shown by the fact that in 2007 60% of companies offered their workers health insurance down from 69% in 2000.
[6] The Center for American Progress reported in September 2014 that the real (inflation adjusted) cost of higher education for middle-class families had risen by 62% between 2000 and 2012.
[6] The Center for American Progress reported in September 2014 that the real (inflation adjusted) cost of rent for middle-class families had risen by 7% between 2000 and 2012.
[6] The squeeze on the middle class is also causing difficulties when it comes to saving money for retirement because of decreased real incomes and increases in consumer prices.
