The divide between the haves and have-nots in America is growing at an alarming clip, with the middle class having shrunk significantly in the last decade, according to new research from the Pew Research Center.
Los Angeles Chapter 7 Bankruptcy Lawyer Vincent D. Howard knows that the economic crisis hit this country hard - and despite reports that we have turned a corner, many continue to struggle.
But it's not just about a lower income - it's about greater debt. Most people assumed even if they had hit the financial skids that it was temporary, and that this too would pass. As such, they amassed credit card debt and personal loans and payday advances to help cover those basic expenses, with the idea that they could square up once the economy started to improve.
However, for many people, it's not happening the way they had intended.
This is where a Chapter 7 bankruptcy can help. A lot of people treat "bankruptcy" like it's a dirty word, but the fact is, it is a chance to start over. This is especially critical for people who have found themselves adjusting to a new tax bracket in recent years. You may have already curbed your spending, but the debt isn't going anywhere if you can only scrape together the minimum payments.
However, if you can erase those expenses, you can re-adjust your budget - and even work out a plan to save and prepare for the future, something most people mired in debt see as a pipe dream.
This is underscored by Pew's recent survey, which questioned roughly 2,500 people. Of those who identified themselves as middle class, nearly 90 percent say that maintaining their standard of living has become more difficult in the last 10 years.
What's more, the number who identified themselves as middle class is much smaller.
Unsurprisingly, the blame lies squarely on the housing crisis. For many middle class homes, their house was their wealth. The bubble burst, and along with it, their nest egg. Some economists have referred to this as the creation of a "lost decade" with regard to financial well-being.
When we look at quantifying this, we look at the mean net worth of middle class families. This includes things such as their home, retirement accounts and any other assets minus debt). What researchers found is that figure has fallen nearly 30 percent from 2001 to 2010. That figure was about $130,000 in 2001, but fell drastically to about $93,000 in 2010.
Perhaps even more grating is that the upper class' net worth got about 1 percent larger over the last decade, working out to about $575,00 in 2010. This population of course has not been immune to the crisis, but generally speaking, their assets were more diversified than those with lower incomes.
The middle class, meanwhile, has seen their yearly incomes drop for the first time since World War II. For example, back in 2001, the median household income for four people was about $73,000. It's now down to about $70,000 - and that doesn't factor in inflation. The average income for the lower class is about $23,000, while for the upper class, it stands at a little more than $110,000.
When we look at the dispersion of wealth in the country, Pew found that the rich are also taking up a greater portion as well. In 1970, the wealthy people in the country amassed about 30 percent of the country's overall wealth. In 2010, that percentage had shot up to more than 45 percent. The middle class, meanwhile, who in 1970 held about 62 percent of the wealth, now hold only about 45 percent.
Also in 1970, more than 60 percent of Americans were considered middle class. As of last year, only about 50 percent could identify as middle class.
The one silver lining is that the middle class has become more diverse, with minority groups having made significant overall strides in improving their financial situation. However it's not enough to counter the other outside economic forces that can result in crushing debt.
Los Angeles Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.
The middle class falls further behind, By Aaron Smith, CNNMoney