Why the U.S. middle class is feeling squeezed

A few theories and some data.

"New suburban housing near Cedar Park, Texas" by rutlo, CC BY 2.0

If Twitter does end up dying, one thing I’ll miss will be tweets like this:

Jacob Shell @JacobAShell

"1990s middle class lifestyle" means 3-bedroom house, 2 cars, annual family road trip holiday, every 5 years overseas holiday, the 2-3 kids go to solid 4-year colleges, something like home roof repairs is financially non-catastrophic. In 2022 I've described a 400K/yr+ household.

The tweet isn’t quite accurate (as we’ll see), but I like it for three reasons. First, it gives voice to the economic vibes and feelings of regular Americans. Second, it spurs robust and lively debate on the economic condition of the country — a welcome change of focus from the culture wars. And third, it allows experts to very rapidly and publicly weigh in with data to shed light on the discussion.

In this case, Shell’s tweet reveals a very common anxiety — that the things that define a middle-class life are becoming out of reach for regular Americans. It’s all well and good to point to cheap gizmos and fun social media apps, or to numbers showing that real median personal income has gone up in America since 2000 by about 10.5%, but for most people those things just aren’t a substitute for the comfort and security of a house or the economic opportunity afforded by a college education. It’s not just a few people on Twitter, either — consumer confidence is near record lows, while the late 90s it was near record highs, even though employment rates in the two periods are similar. And the percent of Americans who self-identify as being part of the middle class has declined a bit since over the last two decades.

Why are middle-class Americans feeling insecure about their hold on the necessities of a middle-class life? Jacob Shell isn’t really right about his particular claim — as we’ll see, it doesn’t take anywhere near a $400k income to afford the 3-bedroom house, 2 cars, etc. But there are actually plenty of reasonable reasons that the U.S. middle class might be feeling a lot more squeezed than they did in the 1990s.

The “3 bedrooms and 2 cars” lifestyle hasn’t moved out of reach — but other things have