Middle Class: Fewer, Poorer, Gloomier

Economic doldrums, which have hit younger adults harder than most, appear to be slowing the U.S. birth rate to levels below what's needed to sustain the population.America's middle class has shrunk, slipped backward in income and lost some of its characteristic optimism. One tangible piece of evidence of flagging faith in the future is a notable drop in the U.S. birth rate coinciding with the onset of recession in 2007.

These gloomy findings from the Pew Research Center hint at why presidential candidates have had a hard time tracking and tying down the middle-class vote this year. America's middle class is undergoing what could be a fundamental change and they are more than a little cranky.

Pew released a new study this week titled, "The Lost Decade of the Middle Class," based on a survey of 1,287 adults who describe themselves as middle class and fit that description based on data from the U.S. Census and Federal Reserve.

In the survey, 85 percent of respondents say it is harder now than a decade ago to maintain their standard of living. Their downbeat assessment, Pew says, follows a decade in which mean family incomes for middle class households actually shrunk. 

While some middle class families moved up the income ladder. more moved down. The ranks of the middle class dipped to 51 percent of all U.S. adults, down from 61 percent in 1971. Now 29 percent of adults inhabit the lower-income tier and 20 percent the upper-income tier. Only the upper-income tier experienced an increase in its share of the American income pie.

In addition to a backward slide in income, middle-income families lost a significant chunk of their wealth as a result of plummeting housing prices and hollowed out retirement accounts in the last recession.

A lot of the blame for middle-class miseries is laid at the foot of Congress (62 percent), but 54 percent blame banks and financial institutions and 47 percent pin the tail on big corporations. George W. Bush gets tagged by 44 percent and Barack Obama by 39 percent.

The Pew survey shows middle-class Americans tend to believe more in Obama's economic policies (52 percent) than his GOP challenger Mitt Romney's (42 percent). Not surprisingly, wealthier Americans see it the other way, with 71 percent favoring Romney's policies over Obama's 28 percent.

Maybe the most unsettling finding from the Pew survey is a slight drop in the middle-class view of work and ultimate success. Only 67 percent of middle-class respondents agreed that "most people who want to get ahead can make it if they are willing to work hard." Almost 30 percent said "hard work and determination are no guarantee of success for most people."

The economic blows absorbed by the middle class over the last decade have muted their optimism. Less than a quarter express confidence they will have enough income and assets for their retirement years. A larger percentage say there aren't confident in the future at all.

Writing for NewGeography, Joel Kotkin says one of America's biggest advantages in the past has been vibrant demographics, with higher birth rates and population growth than many of its economic competitors.  But the 2010 U.S. Census revealed the American birth rate fell below what is needed to replace our current population. Even immigration, both legal and illegal, is slowing, he says.

One reason, Kotkin speculates, is the disproportionate impact of the recession on younger people in their child-bearing years. This age group, even those with college degrees, faced higher unemployment and steeper income declines in the downturn. Their shakier economic position dissuaded many from having children or at least postponing the start of a new family.

Pew data also indicates single adults fared worse than their married counterparts in the recession, undoubtedly because married couples often have two wage-earners and could survive if one spouse lost his or her job.

The connection between economic hard times and child-bearing isn't just an American phenomenon, Kotkin says. In 2011, 15 European nations reported declining birth rates.

Economic pessimism, mixed with cynicism over government inaction and corporate actions, could sharply alter the American political landscape, perhaps as soon as this November.