American Dream Turns to Nightmare: The Decline of the United States Middle Class

Abstract: The United States middle class has become a major topic of discussion and debate over the past several years, playing an intricate part in economic and political policies today. The reasoning behind this is due to the acknowledgement of the average American household struggling to maintain their standard of living with rising costs of goods and services along with stagnating wages. Unemployment is still relatively high and the economy is continuing to struggle with recovery from the 2008 recession. Starting with the Golden Age for the middle-class households in 1960, the middle class is analyzed over time and ends with the 2010 census. Although the consensus is that the middle-class households are struggling today, the extent of this struggle is not universally agreed upon and open for new research. This paper attempts to expand the discussion on the topic of the United States middle class and what is occurring to the household within this class. Analysis will also be on households living below the poverty line and households in the top 1% of income earners. Based on real household income, cost of education, homeownership, and purchasing a new car will be compared against stagnating wages. Using micro level data, households will be created and variables transformed for an in-depth analysis using basic regressions and statistics in order to capture what is occurring to America’s middle class.