New Pew Survey on the Middle Class: Americans gloomier, debt-ier

by: Hannah Farber

Mon Apr 14, 2008 at 12:41:15 PM EDT

A new Pew Survey has some great data about Americans describing themselves as 'middle class.' 

 First of all, they're basically everybody.

The survey asked respondents to place themselves into one of five groups -- upper class, upper middle class, middle class, lower middle class and lower class. About half (53%) say they are middle class; some 19% percent say they are upper middle class and another 19% say they are lower middle class; 6% say they are lower class and 2% say they are upper class.

So if you count "upper middle class" and "lower middle class," which Pew Forum doesn't seem to do, that's 91% of Americans describing themselves as some form of middle class.  Here's what really amazes me:

Fully four-in-ten Americans with family incomes below $20,000 say they are middle class, as do a third of those with incomes of $150,000 or more.

I could never muster much enthusiasm for the 'Is America a class society' debate but happy for people to throw some theories out there. People don't want to admit they're rich/poor; judge themselves in comparison to their neighbors, etc. At any rate - middle class Americans are spending a lot more money than they used to, though they're not making a lot more money - they're doing it by taking on a lot more debt:

A new single family house is about 50% larger and existing houses are nearly 60% more expensive (in inflation adjusted dollars) now than in the mid 1980s. Goods and services that didn't exist a few decades -- such as high definition television, high speed internet, and cable or satellite subscriptions -- have become commonplace consumer items. And the costs of many of the anchors of a middle class lifestyle -- not just housing, but medical care and college education -- have risen more sharply than inflation.

As expenses have risen, middle income Americans have taken on more debt, often borrowing against homes that, at least until recently, had been rising rapidly in value. The median debt-to-income ratio for middle income adults increased from 0.45 in 1983 to 1.19 in 2004. Ratios have also increased for upper and lower income adults, but not by as much.

Americans are the most pessimistic about the direction of their fortunes than they've been in a generation:

More than half rate their life today either worse (31%) than their life five years ago or the same (25%). Just 41% say their life today is better. In the 44 years that these "ladder of life" questions have been asked in Pew and Gallup surveys, these are the most bearish ratings ever recorded.

Yikes.