Middle class squeeze

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The middle class squeeze is the situation where increases in wages fail to keep up with inflation for middle income earners, while at the same time, the phenomenon fails to have a similar impact on the top wage earners. Persons belonging to the middle class find that inflation in consumer goods and the housing market prevent them from maintaining a middle class lifestyle, making downward mobility a threat to counteract aspirations of upward mobility. In the United States for example, Americans are making better salaries, with the median household income having risen from $36,847 in 1967 to $48,201 in 2006, but this money does not provide what typically has been considered middle class, creating, instead, a barrier between the middle class lifestyle and the median income for Americans that had not existed before. ^[1]

Middle class squeeze may be due to inequality in increase in the amount of income brought home by wage earners of different economic status. For example, the top 1% of wage earners continue to increase the share of income they bring home,^[2] while the middle class wage earner loses buying power as his or her wages fail to keep up with inflation.

It may also be due to job instability due to increased layoffs, or inflation. While middle income jobs become fewer, those earning the middle income wage can purchase less with those dollars now than they once could. ^[3] This includes diminishing ability to purchase such staples as milk and produce, and necessities like health insurance, due to price increases in food and medical insurance being higher than wage increases. ^[4]^[5]