"Is there still a middle class, and if there is, how are they coping financially in this recession? You hear it all the time. The gap between the rich and the poor is getting wider and the middle class is shrinking or becoming nonexistent."
~John M. Roberts~
Whenever there is an economic downturn, especially if it is a deep recession, people start worrying about their financial well being. Although everyone has felt the sting of the current recession, the middle class may have been hit the hardest. You hear it all the time. The gap between the rich and the poor is getting wider and the middle class is shrinking or nonexistent.
Many of those in the so-called middle class are struggling to keep their status intact. Many have lost their jobs and their homes. They lost much of their retirement income due to the collapse of the stock market, and have found that their 401k's have been depleted. In essence, many in the middle class have joined the ranks of the working poor.
What does this mean? It means that they can't retire, providing they still have a job. It means that they have had to give up many of the comforts that they have enjoyed for so long. They are struggling to make ends meet and are having to downsize their homes, their cars, and their lifestyles.
As we look around, it is hard to believe that the economy has changed as much as it has in such a short time. Just a few years ago, everyone was enjoying an unprecedented rise in fortunes. Jobs were plentiful, incomes were expanding, stock investments were rising at a rapid pace, home ownership was booming, and there didn't seem to be an end to the good times.
But all of that has changed. Although the worst of the recession is said to over and the job market is showing positive signs of rejuvenation, there is a long road ahead in terms of getting back to where we once were economically. It will take many years for people to recoup their losses, if they recoup them at all.
The job market has left millions of people out of work. Issues such as health care, college tuition costs, the creation of new jobs, and how to pay for the wars in Iraq and Afghanistan have to be addressed. Federal, state, and local governments are running out of money. And to make matters worse, the partisan bickering between the Democrat and Republican parties isn't making things any better.
Is the middle class losing ground? Is it harder for the current poor to move into middle class status as many in the middle class are becoming poor? Is the way we have become accustomed to living being eroded away? In essence, everyone has had to tighten their belts by cutting spending, making pronounced changes to their lifestyles, saving more of their incomes, and taking a hard look at where they want to be in the near and distant future.
There has been a dramatic shift in what we perceive as our short term financial goals. For those who still have jobs, there won't be raises any time soon. Instead, pay cuts, furloughs, and layoffs are scaring the daylights out of a lot of those same people.
How can people continue to thrive when many have seen their incomes decline while food and housing remain high. On top of that, the goods and services that are the staples in their lives are either remaining the same or increasing in price? Basic services such as gas, electricity, telephone, computer, and heating are going up and politicians are still trying to decide whether or not to add more taxes to an already overtaxed population.
Those who live in middle class neighborhoods have seen their property values drop dramatically, in some cases as much as half. Along with the loans that were taken out on their properties when the economy was booming, today, many have absolutely no equity left or they owe more on their properties than they are worth.
How can the middle class survive and start thriving again? The stock market has to rebound sharply and the housing market has to be rejuvenated. The only way this can happen is if people are put back to work with solid, long term, good paying jobs. People will have to start spending less, saving more, stop using their credit cards unless absolutely necessary, and they will have to learn to live much more conservative lifestyles. Some adjustments will have to be made, but in the end, the middle class will survive and thrive. It won't be easy but with focus and determination, it will happen.