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Middle Class Lost Significant Financial Ground Over Last Decade

New studies show that while the economy is improving, it will be years before the middle class recovers from the damage endured over the past decade.

America’s middle-class earners lost significant ground during the last decade as their incomes dropped for the first extended period since World War II, according to a report released Wednesday by the Pew Research Center.

The decade also saw a significant widening of the household income gap between the wealthy and the middle class, the old and the young, and people who are married vs. unmarried.

The report found that, while the economy is recovering, it likely will be years before the middle class can entirely reverse the deep losses suffered over the 10-year span.

“The last decade featured two recessions, and it featured a housing market collapse,” said Richard Morin, a senior editor at the Pew Research Center, a nonpartisan organization based in Washington, D.C. “We saw a dramatic increase in unemployment, and an anemic recovery.”

Nationwide, middle-class household incomes declined by 5 percent from 2000 to 2010, to a median of about $69,000, the report found. Middle-class wealth – assets minus debt – plunged by 28 percent, largely due to the housing bust.

In the Sacramento region and across California, the median household income fell by 7 percent over that period, after adjusting for inflation, according to a Bee review of census data.

The young were hit particularly hard. The report found adults under age 30 falling out of the middle class faster than most other age groups.

Jon David Jr., a 25-year-old Roseville resident, was not surprised by those findings. David was recently laid off from his job selling medical equipment.

David put himself through Sierra College and California State University, Sacramento – “I worked to pay for everything because I didn’t want debt,” he said – but has found few stable opportunities since graduating in 2010.

“I see buildings around here with so much potential for business,” he said, standing on K Street in a shirt and tie following a job interview. “But it just seems like everything goes downhill.”

Also faring poorly were singles such as Bonnie Reed of Yuba City. Married couples saw their household incomes rise faster than others, which also may relate to age.

“It’s back and forth,” Reed said. “It’s tough to find a job that will fit my situation – and that is worth having.”

Before the recession, Reed had a good-paying job with the local electric company. Now she’s working two low-paying jobs and is back in school. She had a third job, but was released last month.

“That was the good one – a reception job,” said Reed. “It was better paying.”

Despite the tough times, a plurality of middle-class residents surveyed by the Pew Research Center expressed optimism that the economy would improve.

“Some of that is just faith in the future: ‘Things may be bad now, but tomorrow will be better,’ ” Morin, of Pew Research, said.

But, he added, people also notice that the economy and job market are improving, albeit slowly. The local unemployment rate, for instance, has fallen by more than a percentage point in the last year, though it remains above 10 percent.

“Things are not getting better fast, but the movement, such as it is, is going in the right direction,” Morin said.

Rocklin resident Jason Dunkelberger has been up and down enough the last few years to know that bad luck doesn’t last forever. But he’s also one missed paycheck away from personal catastrophe.

Within the last few years, Dunkelberger has lost his job at a local casino; spent time without work; found a job at a toy store; found another job holding signs at intersections; got a promotion to supervise sign-wavers; got his hours cut due to the economy; lost his car to the bank; got it back when his hours got restored.

“It’s going to take a couple of months to get back on track,” he said, a few days after retrieving his car.

Overall, middle-class earners saw their standing fall in relation to wealthy households, the Pew report found.

The middle class controlled 45 percent of the nation’s income in 2010, down from 62 percent in 1970, according to the report, titled “The Lost Decade of the Middle Class.” Meanwhile, the upper class controlled 46 percent of the nation’s income, up from 29 percent in 1970.

The middle class is also shrinking, the report found, as the lower and upper classes expand.

The Pew report comes in the midst of a presidential campaign, as the candidates argue over whose policies will do more to help the beleaguered middle class.

More voters who identify as Democrats belong to the middle class than those who identify as Republicans, the report found. More middle-class voters surveyed had faith in President Barack Obama’s policies than Mitt Romney’s.

David, the unemployed college graduate, will likely vote for Romney, but he’s unhappy with both parties, and doesn’t think either candidate knows how to fix the economy for the middle class.

“I’m going to keep pounding the pavement,” said David, who has posted a résumé online at Craigslist and will lose his apartment soon if he doesn’t find work.

“I’m not looking for a $90,000-a-year job. I just want enough that I can sometimes turn on the air conditioner.”

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