The Squeezing Of America's Middle Class

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The idea of a thriving middle class has always been at the heart of the American dream. The concept really took off in the wake of World War II, when the GI Bill started helping everyday Americans pay for college or vocational education and take out loans to buy homes.

By the 1950s, TV shows like "Leave It to Beaver" were presenting an idealized picture of middle-class life. Dad worked, Mom took care of the kids, and there wasn't much talk about how they'd pay the bills.

But today the American middle class is struggling.

"It seems as if health care, retirement security, being able to pay for kids' college, being able to hold on to and afford a home are real sources of anxiety for middle-class Americans today," Jacob Hacker, a professor of political science at Yale University, told Sunday Morning correspondent Rita Braver.

Hacker, an author of a new book that focuses on problems facing America's middle class, says the middle class is more of a symbol than a concrete definition.

"I think the symbol is people who are not rich, who have to work hard, usually both parents are working," he said. "They probably have children, that's sort of the image that we have. It's a hard-working middle-class family with kids, making $60,000 to $80,000 a year and feeling really strained economically."

Case in point: Jan and Karen Seidler of Youngstown, Ohio:

Together, the Seidlers make about $80,000 a year before taxes. It's a second marriage for both and they have four kids. Two sons are still in college, which costs the family $45,000 a year. The Seidlers pay for the boys' living expenses but both sons are taking out loans for tuition. Karen Seidler said her parents could afford to send her to college but she is having trouble paying for her children's education.

"I can't, and especially having two at the same time, it's impossible to pay for both of their tuitions and then keep up with all the other bills," she said.

Her job as a respiratory therapist at a local hospital does provide some occasional raises.

"But the 3 percent that we received in September was, between the groceries going up and our health care out-of-pocket costs [going up], we're not really getting ahead," she said.

And like many other Americans, the Seidlers recently faced a downturn in earnings. Jan Seidler now runs the Youngstown Community Improvement Corporation. But he landed his current job only last year, after losing his previous position as a sales director at a hospital. He was unemployed for seven months. They dipped into their savings and now worry what will happen if there's another emergency.

All across the country, middle class Americans are beginning to wonder whether they'll ever have the kind of economic security they thought hard work would bring them. A major reason is that the middle class share of the American Pie has shrunk in recent years.

As executive compensation skyrocketed from 2003 to 2004, the average after-tax income for the richest 1 percent of U.S. households went up almost 20 percent, while after-tax incomes for the middle fifth of the nation — the middle of the middle class — went up only 3.6 percent.

Looking back 25 years — starting in 1979 — the contrast is even greater. The top one percent saw a whopping 176 percent jump, while the middle fifth of Americans saw only a 21 percent rise. That's a big difference, but although 21 percent still seems high, Hacker says it's not high enough.

"We know that the cost of healthcare over that period has quadrupled or gotten even bigger than that," he said. "We know that the cost of housing has gone way up. We know that the cost of college tuition has gone through the roof. The fact is that being middle class means spending a lot more money than it used to. But people don't have a whole lot more money to spend then they used to."

Democrats in Congress have focused on the middle class squeeze. In the Democrats' State of the Union response, Senator Jim Webb of Virginia said the middle class is "losing its place at the table."

The middle class squeeze is a becoming a rallying cry for Democrats on the presidential campaign trail:

"And as our economy changes, let's be the generation that ensures our nation's workers are sharing in our prosperity," Sen. Barack Obama (D-Ill.) said when addressing a crowd.

"The leadership here in Washington seems to ignore the middle class and hardworking families across our country," Sen. Hilary Clinton (D-NY) said in a speech.

In fact a new study shows that in 2005, the top 10 percent of Americans collected almost half of all reported income in this country. This is their biggest share since 1928.

Nonetheless, some scholars say that middle class Americans still have plenty to cheer about.