Recent research by the Pew Research Center has confirmed that the middle class has been getting smaller since the 70’s. The continuing inequity is pushing households into either the lower or upper classes.
Middle Class Incomes, after adjusting for inflation, tax, and government benefits, have increased during the period. But the amount of increase has been so small that it has pushed the majority of middle class households to the lower end of the spectrum.
Defining the middle class has always been difficult. The researchers at Pew defined it as two-thirds to double the national median income after accounting for household size. In 2020, that was a household income for a family of three between $52K and $156K.
To explain the problem, it’s easiest to look at the difference between the classes. In the period from 1970 to 2020 the median income of the individual classes increased as follows…
1. Upper Income + 69%
2. Middle Income + 50%
3. Lower Income +, 45%
During that same period, aggregate incomes which are defined as incomes not adjusted by inflation, taxes, or government benefits, have changed in the following manner.
1. Upper Income + 21%
2. Middle Income – 20%
3. Lower Income – 2%
The current problems of rampant inflation and governments increasing increasing fees and taxes only exacerbate the problem. The pending possibility of a recession simply adds to the nightmare.
Let me leave you with this.
When I was a boy growing up in Uptown we were poor. We were so poor we couldn’t even pay attention.
But things were different in the 70’s. Men worked and women stayed home to take care of the children and manage the homefront.
Back then, it only took one person in a family working to maintain a reasonable lifestyle.
Fast forward to when I was graduating from DePaul in the late 80’s. All of a sudden both the husband and wife needed to work to pay the bills. It was difficult, but we found our way.
Here we are twenty years into a new century, and it now takes more than two people working to maintain a middle class lifestyle. Look at your lifestyle. Look at your bills and tell me how difficult things have become.
What’s the answer? If you’re reading my column you’re probably an entrepreneur, which means that you already know the answer.
In my short 55 years on this planet I’ve had a front row seat to the economic changes which now threaten our way of life. The answer simply is that your entrepreneurial endeavor must succeed.
Your income needs to go into the upper class. Staying on the hamster wheel won’t get it done.
I founded my company 31 years ago and gave it the name we now bear for one reason. We find ourselves in difficult times, and my most fervent prayer is that you use my company to help you find your solution.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.