Hit on the Middle Class: Loss of Income 2007-2010

This begins a series on problems affecting the middle class in America

The Federal Reserve Board released the Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances in the June 2012 Federal Reserve Bulletin. “The Federal Reserve Board’s Survey of Consumer Finances (SCF) for 2010 provides
insights into changes in family income and net worth since the 2007 survey.” I quote the following information from the report. Today, we will focus on loss of income.

Changes in Income for the Middle Class

The report shares information gathered from 6,492 families interviewed in 2010. The Fed compared the 2010 responses with 4,421 families interviewed in 2007. The Fed found:

• '”Median value of real (inflation-adjusted) family income before taxes fell 7.7%
• Median income had also fallen slightly in the preceding three-year period
• The decline in median income was widespread across demographic groups
• Only a few groups experienced stable or rising incomes
• Median incomes moved higher for retirees and other nonworking families
• The decline was most pronounced among
• More highly educated families
• Families headed by persons aged less than 55
• Families living in the South and West regions
• Every age group less than 55 saw decreases in median income of 9.1-10.5%
• Mean incomes declined especially for the 65-74 age group, a decline of 21.7%
• Median income fell 5.7 % for families headed by a person headed by someone working for someone else
• Median income fell 18.7% for those who were self-employed

Occupational Demographics for Income

Across occupation groups,

• Median income fell most in proportional terms (9.3 percent) for families headed by a person working in a technical, sales, or service job. (Mean income fell 16.0)
• Percentage drop for families headed by a person in a managerial or professional position was 9.1%
• Dollar amount of their decline was much larger because their 2007 median income was much higher.
• Other-occupation group (predominantly workers in traditional blue-collar) median fell only 3.3%. (Mean income fell 16.3)
• Median income for families headed by retirees increased 10.0 percent.”

Wednesday we discuss the Federal Reserve’s report on the middle class’ savings