Middle class shrinks as income declines
Home & Textiles Today Staff -- Furniture Today, November 2, 2012
In 2010 the median household income was $59,127, a 6.1% decline from 2007 when the median household income was $62,941. According to a recent study by the Pew Research Center not only have incomes decreased, but the middle class is shrinking in size as well. Last year, 51% of adults in the U.S. defined themselves as middle class, compared with 56% twenty years ago and 61% forty years ago.
For the purposes of the study, Pew defines the middle tier as those living in households with an annual income that is 67% to 200% of the national median; the upper tier are those living in households above the 200% threshold, and the lower tier are those living below the 67% threshold.
This is an important group for the furniture industry. According to Furniture/Today's 2011 Consumer Buying Trends Survey 40% of furniture and bedding buyers have incomes between $50,000 and $99,999, considered to be middle class.
The sharpest decline in the middle class can be seen in those adults with less than a high school diploma. In 1971, 53% of adults having less than a high school diploma were in the middle class; in 2011 that number dropped to 37%, with the majority falling into the lower-income tier.
The biggest portion of the middle class, 42%, say they are in worse shape now than they were before the recession. While 32% say they are in better shape and 23% claim there has been no difference in their financial situation.
As a result in declining incomes, 62% of the middle class say they have cut spending because money was tight in the past year. Another 29% report having trouble paying bills and 18% say they have had trouble getting health care for themselves and their family in the past year.
Yet, this group maintains some optimism as 78% of the middle class believe their standard of living compared with their parents during their peak financial years will eventually be the same or better.
Furniture Today's Ray Allegrezza Speaks with Stephen Bogart about Fine Furniture's New Bogart Line