WASHINGTON (Reuters) - The U.S. middle class has shrunk drastically over the last 10 years as Americans’ net worth has plunged, wages declined and standards of living slipped away, according to a report released on Wednesday.
Middle-income earners, long seen as the solid center of the country, are pessimistic and place the blame squarely on U.S. lawmakers, banks and big business, the findings by the Pew Research Center showed.
"There's been a very steady, long-term shrinkage" in the number of people in the middle class, said Paul Taylor, executive vice president for nonpartisan research group. "There's also less money in the middle." (For a graphic, see link.reuters.com/dav22t)
Since 2001, median household income has fallen from $72,956 to $69,487 in 2010, the report said.
The median household net worth, which is the value of assets minus debt, dropped from $129,582 to $93,150 over the same 10-year period, according to Pew, which analyzed U.S. data along with its own survey of nearly 1,300 adults who consider themselves middle class.
The center’s snapshot comes in the midst of a close presidential campaign that has become in part a referendum on whether President Barack Obama’s policies have helped Americans as the nation struggles to recover from deep economic woes.
Republican rival Mitt Romney, a multimillionaire former private equity executive who is one of the richest men ever to run for president, has based his campaign on his pledge to build jobs and boost the economy.
Pew’s survey found more of the middle class support Obama’s policies than Romney’s.
More than half (52 percent) of those polled said Obama’s policies would help the middle class in a second term, while 39 percent say they would not. Forty-two percent said Romney would benefit middle income Americans if elected, while 40 percent say his policies would not help, the survey showed.
That may not be surprising given that the poll also found half the middle class adults polled leaned Democratic while 39 percent said they identified more with Republicans. Eleven percent said they were not drawn to either political party.
Still, researchers said they found that “neither candidate has sealed the deal with them, but that President Obama is in somewhat better shape than his Republican challenger, Mitt Romney.”
Polls have shown Obama with a growing lead over Romney.
The plight of the middle class has become a bellwether of the U.S. economy in the wake of the recent Great Recession that officially ran from December 2007 to June 2009, ending just six months into Obama’s first term.
According to the poll, 62 percent of respondents said Congress deserved “a lot” of the blame for the nation’s economic troubles over the past decade, while 29 percent blamed lawmakers “a little.” Banks and financial institutions as well as large corporations were also largely at fault, respondents told Pew.
Various surveys have shown Americans - particularly women, minorities, children and young adults - are still struggling amid the slowest economic recovery since the 1980-81 period.
The shifting middle class over the last decade is just part of a longer trend, Pew researchers said.
About half (51 percent) of U.S. adults fell into the middle class in 2011 compared to 61 percent 1971, as more Americans either moved into upper or lower income groups, the center said.
Over time, the wealthy have also seen their share of total U.S. household income rise, it found. Upper income earners held 46 percent of the nation’s household income in 2010 compared to 29 percent in 1970. In comparison, the middle class’ share of income fell to 45 percent from 62 percent over the same period, and lower income earners share stayed flat at about 10 percent.
(For a graphic, see link.reuters.com/gav22t)
Most middle class adults polled last month also said it is tougher to maintain their standard of living now than it was 10 years ago, Pew researchers said, even though respondents said overall they felt better off than previous generations.
“Any way you slice it, every group in this society has over the long-haul experienced rising prosperity,” Taylor said in a conference call. “But over the last decade they have not.”
Pew’s analysis is based on data from the Census Bureau as well as the Federal Reserve Bank and is broadly in line with separate reports from the two government entities that were released in June.
According to the Census Bureau, household wealth declined by 35 percent to $66,740 between 2005 and 2010 as home values and share prices plummeted. The Fed report showed median family net worth plunged to $77,300 in 2010 from $126,400 in 2007.
For its report, Pew defined middle class as households with incomes from $39,000 to $118,000, a range that is between two-thirds and double the national median.
Its survey is based on telephone interviews from July 16 to July 26 with 1,287 U.S. adults who identified as middle class and has a margin of error of 2.8 percentage points.
Additional reporting by Lucia Mutikani; Editing by Cynthia Osterman