Do you feel the walls closing in around you? You might if you number yourself among the American middle class. A newly released Pew Research Center study shows that the so-called middle class, once the dominant social-economic group in the country, is losing ground.
That’s not to say Middle Classers would lose a tug a war with either the group on the economic rung above or below; their numbers still exceed either upper-class or lower class populations. But where once the folks in the middle exceeded both other categories, Pew says now that taken together, the total of lower- and middle-income people now equals MCs. In other words, as the Pew report states, “in early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined.”
By contrast, in 1971, the middle class numbered 80 million while the upper and lower classes totaled 51.6 million. (See more from the Pew study here.)
Pew calls it a tipping point, because along with a loss in bench strength for that tug of war, comes a hit to its economic standing. “Middle-income Americans have fallen further behind financially in the new century,” says Pew. “In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.
“Meanwhile, the far edges of the income spectrum have shown the most growth,” the report continues. “In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971. On the opposite side, 9% are in the highest-income tier, more than double the 4% share in 1971. At the same time, the shares of adults in the lower-middle or upper-middle income tiers were nearly unchanged.”
The implications for commercial real estate can be indirect and long in presenting themselves. But you can rest assured that retail and multifamily are the two sectors standing to change the most over time as the trend continues.
About the Author
John Salustri is one of the nation’s most respected writers in the field of Commercial Real Estate. A multiple award winner for excellence in journalism, John is the founding editor of GlobeSt.com, the nation’s premier news and information site for the commercial real estate industry. Today John is a freelance writer and editor, focusing on helping companies boost their industry presence through enhanced web and print content.
Image source: pewsocialtrends.org