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The shrinking middle-class in America

The societies across the globe continue to face challenges, which impact global evolution. Within the United States, a notable social concern is represented by the shrinking of the middle class, a phenomenon that has accelerated throughout the past recent years. The current project finds that the main causes of the trend are represented by changes in society and economy, and more recently exacerbated by the economic crisis. The solutions proposed to resolve the issue include economic measures for job creation, political reforms to support the labor market and improve government services or efforts to improve the access to education.

Table of contents

Introduction

31.1. Introduction to the topic of the shrinking American middle class

51.2. Background to the research

51.3. Origin of the research interest

61.4. Research questions

61.5. Research significance

72. Literature review

72.1. Introduction to the chapter

82.2. Review of the available literature

82.1.1. Defining the middle class concept

122.1.2. Measuring the middle class

142.1.3. Historic approaches to the shrinking of the middle class in the United States

173. The research methodology

204. Data collection and discussion

214.1. The causes of the shrinking American middle class

254.2. Facts and figures of the shrinking middle class in America

304.3. Proposed solutions to addressing the shrinkage of the American middle class

355. Conclusions

355.1. Summary of findings

385.2. Limitations of the study

395.3. Future research

References:

1. Introduction

1.1. Introduction to the topic of the shrinking American middle class

The society represents the nucleus of planetary functioning and evolution throughout the world and throughout the history. Societies strive to function as integrated constructions in which the people life and function together based on legal and moral principles. The stability of the society is then quintessential for the well-being of the entire community and the entire planet.

Throughout the past recent years, the stability of the societies across the globe has been challenged by a wide array of elements. Within the international context, despite globalization, major differences still exist in ideologies, and these often lead to devastating military conflicts. Within the African countries then, the society is characterized by decreased living standards, deathly diseases which are now managed in the Western Hemisphere, yet the medicine is insufficiently available in the region; this makes the life expectancy at birth the lowest in the world. Also, within the Middle East, the societies still battle human rights issues, insufficiency of water or immense income inequality as a few rich ones activate in the petroleum industry and the large majority of the population loves in poverty, some even in extreme poverty.

Within the Western Hemisphere, some of the social problems mentioned above have been addressed to a rather successful degree, others nevertheless remain or new ones are created. Within the United States for instance, some of the more notable social problems include the restricted access to health care, the weakening economic power of the population or the shrinking of the middle class.

The shrinking of the middle class in the North American country virtually refers to the fact that the American population, once well structured into lower, middle and upper class, is now shifting its composition. In the late years then, more and more people have migrated from the middle class to the lower class and this trend is starting to raise concerns within the sociological community. Additionally, interest has been manifested by the academic community, who invested more resources in the research of this phenomenon.

Throughout the current project then, the emphasis falls on the assessment of the shrinking middle class in the United States. The first step to be completed in this sense is represented by the review of the literature, in an effort to create the basis of the future research effort. Then, the methodology of the research would be presented and the research questions would be answered. Finally, the findings of the project would be restated in a centralized manner and the limitations of the study would be revealed.

1.2. Background to the research

The current research is the first on the topic of the shrinking middle class in the United States conducted by the current researcher. In other words, the study will be a fully new one, which will not integrate previous works from the same researcher. The information integrated will be entirely collected from other sources, of reputable and reliable origin.

1.3. Origin of the research interest

The interest for the current research was raised during the conduction of generic research and the search for a topic of interest on which to write. As mentioned before, the interest and background on the topic of the shrinking middle class in the United States had been limited, but during the process of generic research, the topic became more interesting. Questions were as such raised in terms of the meaning and causes of the shrinking middle class, the causes and prospective solutions to resolving the issue.

The interest in the topic was further deepened by the better understanding of the process, combined with the ability to understand it within the private context of the family. My and my family's traditional belief in the American dream had been based on the expectation of rewards due to hard work and loyalty, but throughout the past recent years, it has become more obvious that the attainment of the American dream was mostly a matter of luck. The values in which I was raised however made me more eager to go deeper in understanding the world and applying my values and hard work in both personal and professional endeavors.

1.4. Research questions

The research questions represent the starting point in the construction of the future research in the meaning that they enunciate the concerns raised and the issues to which answers should be provided. The currently presented questions then would be further on addressed individually and they would constitute the pillars of the actual research process.

In this order of ideas, the current study strives to answer the following:

(1) What are the causes generating the shrinking of the American middle class?

(2) What are the more notable facts and figures about the shrinking of the middle class in the United States?

(3) What solutions can be devised and implemented to slow down and even reverse the processes of shrinkage among the American middle class population?

1.5. Research significance

The current research endeavor is characterized by two important significances. One of its significances is revealed at a theoretical level, whereas the other is manifested at the practical level. More specifically, at the theoretical level, the importance of the current study is represented by the fact that it researches the available literature and centralizes the most relevant and reliable information; it as such presents the valid data on the shrinking of the American middle class in an integrated and easily accessible manner. This current study then can serve as a mechanism of understanding the literary standpoint regarding the issue, but could also constitute a starting point for future research endeavors.

Secondly, at the level of the practical significance, this is revealed through the ability of the study to provide useful information to practitioners, such as policy makers, sociologists, demographers and so on. Additionally, it constitutes a reliable source of information for the average public, interested in the topic of the shrinking middle class American population. With this objective in mind, the study would be constructed in a means and with the usage of a terminology that is accessible to the general reader.

2. Literature review

2.1. Introduction to the chapter

The literature review section of the current research project sets out to create the basis for the future research effort. The literature review as such helps to assess the available sources and create an understanding of the topic to be addressed. In order to increase the efficiency and reliability of the literature review section, it is important to consult and integrate data from three specific sources of information.

These three sources refer to the books and textbooks, journal articles in the specialized media and internet articles. Each source of information is characterized by its own strengths and weaknesses and the combination of the sources leads to the maximization of the ability to capitalize on the data, as well as the minimization of the independent shortages of each source.

At the level of the books and textbooks for instance, these address the issues of interest in a detailed manner and to an in depth degree, but they might be outdated. In the specific case of middle class America shrinking, the topic is rather novel and the expectation is that few books are recent enough to adequately address this topic. It is then necessary to combine the information retrieved from books with information retrieved from journal and internet articles.

The journal articles are the most reliable sources of information, since they are peer reviewed. Also, given that they are constructed in smaller dimensions, they can be delivered to the public in a quicker manner, and they can as such be more relevant in the context of a novel issue. Nevertheless, the journal articles are often constructed on niche subjects, which might have a variable relevance in a specific research context. Finally, the internet articles are the ones of the most actuality, yet they are seldom peer reviewed. In other words, the information they contain might be biased and unreliable, and it is necessary to conduct additional research to validate the findings from internet sources.

2.2. Review of the available literature

2.1.1. Defining the middle class concept

The topic of the shrinking middle class in the United States is a relatively novel issue and the number of sources discussing the topic is fairly limited. Additionally, there does not yet exist a universal agreement upon some basic aspects of the shrinking of the middle class, such as the very definition of the middle class or the measurement of its size.

At the level of the definitions, the literature provides some notable explanations of the middle class, but the authors have yet to agree on a single and best applicable definition. The lines below reveal some of the definitions of the concept of the middle class, as these are presented within the available literary sources:

The middle class represents "the socioeconomic class between the working class and the upper class, usually including professionals, highly skilled laborers, and lower and middle management" (Leonid and Polyakov, 2009).

(a) "The middle class is the part of the society that can afford (public assistance is not included) material and cultural wealth presented as the result of mass production and cannot afford luxury goods without discount" (Leonid and Polyakov, 2009).

(b) "Scholars of the antebellum northern middle class have differed significantly in their definitions of the term. Peter Sterns maintains that the concept of the middle class is one of the most enigmatic yet frequent in social sciences. Historians… toss the term about with gay abandon. The new social historians, adds Mary Ryan, have been preoccupied with the elite and the working class and treat what lies in between as the unstable terrain of mobility studies. For Ryan, middle class means those who were neither industrialists nor proletarians but occupants of the intermediate, middle-level social ranks" (Wells, 2004).

(c) Then, according to a more modern source, and in a more simplistic formulation, the middle class represents "a social group that consists of well-educated people, such as doctors, lawyers and teachers, who have good jobs and are neither very rich nor very poor" (Cambridge Dictionaries, 2012).

(d) Finally, from a financial and economic standpoint, the middle class is understood as the totality of the individuals "who fall between the working class and the upper class within a societal hierarchy. In Western cultures, persons in the middle class tend to have a higher proportion of college degrees than those in the working class, have more income available for consumption and may own property. Those in the middle class often are employed as professionals, managers and civil servants" (Investopedia, 2012).

Despite the lack of agreement in the definition of the middle class, Steven Pressman (2007) states that the academic community and the individual researchers should continue to strive to create a proper definition. He argues that the most unconstructive manner in which one could approach and understand the middle class is represented by the middle class being the second of three classes present in society. This definition is highly limited due to the fact that it ensures the continued existence of the middle class within the society, without clearly stating its traits and characteristics.

In such a setting then, the approach implemented by Pressman in the creation of a definition to the concept of the middle class is that of a threefold approach to understanding the middle class. At the first level, emphasis is placed on the sociological dimension of the middle class; at the second level, the focus falls on the economic dimension of the middle class, and last, the emphasis falls on the people's idea of what constitutes the middle class.

From the sociological standpoint then, the middle class is represented by educated people, who resort to resort, rather than violence, in order to resolve their problems, and who also have a stable career. At this level then, the middle class is defined in terms of the behavioral patterns of the individuals, as well as educational and employment status, which represent social and economic indicators of their status.

"The middle class on this view are people who have achieved a certain educational level, whose jobs have a certain level of social status, and who have a particular set of values and attitudes" (Pressman, 2007).

At the second level, the middle class can be defined as formed from the people who earn incomes that can be found at middle levels on the grid of income distribution.

"A second meaning of middle class is an economic one. By this definition, being middle class means having a middle-class standard of living or having an income level that is somewhere in the middle of the income distribution" (Pressman, 2007).

These people are then assessed in terms of the incomes they register, but the authors often find it difficult to clearly state what level of income they should register in order to be integrated in the middle class. In 1985, Thurow assessed that the people making between 75 and 125 per cent of median household income would be integrated in the middle class. Since then, this measure has been accepted by a wide array of empirical researchers.

Finally, at the third level, the middle class is defined in terms of the people's perceptions regarding the meaning of the middle class and their own belief of whether or not they belong to the middle class. Within the United States for instance, it is now assessed that the middle class is formed from people registering incomes between $30,000 and $200,000. Still, when asked of their own perceptions of the middle class, most respondents indicate that they belong to the middle class, even if they would be below or above it (Pressman, 2007).

This final dimension of defining the concept of the middle class is a rather unstable and unreliable one, since it includes the objectivity of the population. Still, as an integrated part of a three fold approach, it represents the best solution to striving to define the concept of the middle class.

2.1.2. Measuring the middle class

Similar to the effort of defining the middle class, or probably to an even more intense level than that, the measurement of the middle class is a highly complex and difficult task. As Sam Pizzigati (2004) puts it, "measuring the middle class, to be sure, is no exact science." Similar to the definitions then, the researchers have defined several ways of measuring the middle class.

Donald J. Shoemaker (2009) states that a useful approach to measuring the size of the middle class is represented by the identification of the individuals who respond to four specific traits. In other words, according to Cohen's middle class measuring rod, the people in the middle class can be identified and counted based on four particular traits. At the first level, it is assumed that the people in the middle class, mostly the young males, do poor in school and register weak educational performances. Then, at the second level, the assumption is that the weak performance in school is directly linked with higher degrees of delinquency. Third, the weak educational performances are resulted from a conflict at the level of the middle class values and the values and perception of the lower class youth. Last, the fourth assumption is that delinquency among the lower class male youth often occurs in the context of gangs, as an effort to establish oneself and cultivate anti-social values.

In such a setting then, the measurement of the middle class takes the form of "evaluations of school performance or behavior according to norms and values thought to be associated with the middle class, such as punctuality, neatness, cleanliness, nonviolent behavior, and so on" (Shoemaker, 2009).

Shimelse Ali and Uri Dadush (2012) state that the global middle class can be measured through the measurement of the number of people who own cars. In other words, the fact that a family or an individual owns an automobile places them in the middle class. Within the United States and other western states that are more economically and socially advanced, this measure of the middle class is inapplicable, since car ownership in these states is increased at the level of all social classes. Nevertheless, the measurement tool of car ownership is a simplistic method which can successfully be applied within the emergent countries, where car ownership is a sign of "relative affluence" (Ali and Dadush, 2012).

Finally, another method to measuring the size of the middle class can be represented by the assessment of the wealth accumulated by the families and individuals. At this level, Chiara Gigliarano and Karl Mosler (2009) state that the middle class can be measured in terms of the income it generates, as well as the possessions which determine its overall wealth. Furthermore, to assess the evolution of the middle class through time, the two German researches propone the analysis of the dispersion rates within the middle class.

2.1.3. Historic approaches to the shrinking of the middle class in the United States

The available literature revealed its first concerns regarding the shrinking of the middle class in the United States throughout the 1980s decade. At this stage, it assessed some economic changes which would lead to the decreasing middle class. Most of the articles of the day stated that the employment opportunities that were being created within the country in those times were either top positions, or bottom positions. Specifically, there existed limited opportunities for new job creation and employment in middle income jobs. As a result, with fewer employment opportunities, the population came to generate less middle incomes, leading as such to the shrinking of this population category (Rosenthal, 1985).

During the decade, the focus on the shrinking of the American middle class was at an incipient level, with the phenomenon still having to be clearly pinned down. While some academicians recognized the early signs of what would become a wider social and economic problem, others did not believe in the pertinence of the shrinking phenomenon, but argued that it was in fact a "myth" (Rosenthal, 1985).

Those who however recognized the early signs of an increasing problem warned about the social and economic impacts of the shrinking middle class. They even argued that political tensions could arise as a result of a new two class society, and that this new society would also impede the entire community from further evolving. In the words of Neal H. Rosenthal (1985):

"They warn that this trend could lead to political and social unrest stemming from a two-tired society, fewer advancement opportunities for those on the lower range of the earnings ladder, and even economic disaster as the great purchasing power engine of the middle class loses steam."

In 1988, three years after Rosenthal published his findings related to the causes of the shrinking middle class in the United States, two authors, namely Michael W. Horrigan and Steven E. Haugen took a different approach. The researchers as such agreed with the importance of the topic and recognized that indeed the phenomenon of middle class shrinking was real. They as such believed, like most other researchers, that the shrinkage of the middle class was caused by the inequality in the distribution of incomes. Due to this inequality, the middle class was as such shifting to the upper and lower class.

Horrigan and Haugen identified a gap in the previous research conducted in the meaning that they found that the previous researchers had formulated generic findings, based on observations. The two authors as such devised and implemented more complex analysis methods; particularly, they used the sensitivity analysis in an effort to assess the "secular changes in the size of the three classes over time" (Horrigan and Haugen, 1988).

Based on this analysis, the authors came to the intriguing finding that the middle class was shrinking while the upper class was expanding. The changes in the lower social class were less obvious, with the exception that they seemed to become poorer. In other words, while the population in the lower classes remained rather stagnant, the levels of income registered by this category of the population decreased. The final conclusion of Horrigan and Haugen then is that the representatives of the middle class were getting richer and moving up the social class ladder.

Overall, the historic approaches to the shrinking of the middle class in the United States have evolved from a point at which the phenomenon was neglected, to a point where it was recognized, and then assessed. Still, even after its recognition, the implications seemed unimportant in the meaning that the shrinking of the middle class was not perceived as a threat. Today however, as the world faces the threats of the economic crisis, the issue of the shrinking middle class becomes more severe at the social, economic and political levels, forcing researchers to revisit the issue (Collado, 2010).

3. The research methodology

As it has been mentioned before, the scope of the current study is that of answering the initially posed research questions in order to better understand the dimensions of the middle class shrinking in the U.S.A., as well as the promotion of some potential solutions in this sense. At this level however, it is important to reveal the approach and mechanisms through which the answers would be provided.

The research methodology employed throughout the current study is that of the onion ring methodology, consisting of six subsequent levels, in which the top level has to be completed before the researcher moves on to the next level. The six layers of the onion ring methodology refer to:

The research philosophies

The approaches to research

The research strategies

The research choices

The time horizons of the research effort, and last

The techniques and procedures of the research process (Saunders, Lewis and Thornhill, 2009).

The research philosophies represent the means in which the author of the research process approaches the generation of knowledge. Traditionally, there are two research philosophies, namely the positivistic approach and the phenomenological approach. The positivistic approach sees that the researcher observes the researched community and phenomenon and retrieves theories based on the observations. Through the phenomenological approach, the researcher believes that the world assessed is far too complex to be integrated in theories that can be formulated to explain the entire phenomenon. In such a setting then, the assessment of the shrinking American middle class is based on the combination of the positivistic and the phenomenological philosophies in the meaning that the researcher constructs findings based on analysis, yet assesses them in the phenomenological context, without devising universal theories.

The approaches to research refer to the means in which the research approaches and collects the information to formulate final conclusions. There are two types of approaches, namely the inductive approach and the deductive approach. In the case of the inductive approach, the researcher observes the phenomenon and formulates their findings; in the case of the deductive approach, the researcher formulates a theory, and then devises hypotheses to test the validity of the constructed theory. In the situation of the American middle class shrinking, the research approach would be an inductive one.

The research strategies can normally be classified into seven specific elements, as follows: (1) the experiment, (2) the survey, (3) the case study, (4) the action research, (5) the grounded theory strategy, (6) ethnography and last, (7) archival research. Like in the case of all the other components of the onion ring methodology, there is no right or wrong selection in the meaning that it is up to the researcher to select those specific elements which best respond to the particular needs of the ongoing research endeavor.

In the current setting then, the research strategy selected is represented by the case study. This tool is highly popular within the research community due to its benefits, such as ease of usage or the ability to research several aspects of the topic.

"Case study research excels at bringing us to an understanding of a complex issue or object and can extend experience or add strength to what is already known through previous research. Case studies emphasize detailed contextual analysis of a limited number of events or conditions and their relationships. Researchers have used the case study research method for many years across a variety of disciplines" (Soy, 1997).

In the case of the shrinking middle class in the United States, the case study strategy would be employed to answer the initially posed research questions.

Following the research strategies, the onion ring methodology also forces the reader to consider the research choices. These virtually refer to the mono method, the mixed methods or the multi-method. The current study will implement the single method, in the meaning that will only rely on case study to retrieve findings, rather than combining more research strategies or methods.

The time horizons of the research project refer to the span and duration of the research effort, with two options being available, namely the longitudinal and the cross sectional time horizons. The longitudinal research effort spans throughout an increased period of time and assesses the evolution of the phenomenon. The cross sectional time horizon refers to the "sectioning" of the research phenomenon at a specific point in time and the analysis of several of its dimensions, at that point in time (Oriesek, 2004). The current project employs the cross sectional time horizon, as it assesses the shrinking of the middle class American system at the present point in time, at the level of various dimensions.

Finally, the research techniques and procedures that can be employed by the researchers refer to the qualitative and quantitative methods of collecting and analyzing the data. The quantitative approach is characterized by the usage of numeric facts and figures, supported and processed through statistical processes. The benefit of this method is that the findings are sustainable by evidence, and they can also be applied to explain the behavior of the overall community, not just the selected sample.

In the case of the qualitative research techniques and procedures, the methods employed would be characterized by observations and verbal expressions of the findings. The usage of facts and figures is restricted and the extrapolation of the results is impossible; in other words, the findings only apply to the assessed phenomenon and within the context of the assessed population (Taylor, 2005). In the assessment of the shrinking of the American middle class, the current project employs the qualitative research method as this best applies to the specifics of the initiated research.

4. Data collection and discussion

At this level of the research project, emphasis would be placed on the review of several available sources in order to respond to the initially posed research questions. With the aid of the case study approach, the questions would be answered in an integrated and structured manner, in which they would represent specific sections of the current chapter. The emphasis at this stage would fall on the collection of data from various sources, as well as the discussion and analysis of the identified information.

4.1. The causes of the shrinking American middle class

As the literature review has shown, the initial focus on the shrinking of the American middle class was revealed during the 1980s decade, when it was still uncertain whether the phenomenon was indeed a reality, or merely a myth. During those times, the causes associated with the decreasing size of the middle class were represented by the limited creation of new employment opportunities within the middle income segment. In other words, the employment opportunities created at those points mainly referred to top positions or bottom positions (Rosenthal, 1985).

At this initial level, two different causes were identified as generative of the shrinking middle class. On the one hand, it was assumed that the middle class shrunk as a result of the decreasing individual incomes, whereas, on the other hand, the second viewpoint saw that the shrinking of the American middle class was caused by decreases in the family incomes. In terms of the individual income decreases, these were pegged to industrial restructuring and the need for new jobs. In the case of the family income decreases, the causes for this were represented by both changes in industrial sectors, as well as changes in demographics; family incomes were as such decreased due to an increasing number of single person / earner families.

"Changes in the distribution of earnings of individuals may be caused by changes in the occupational structure of the economy that reflect changes in industrial structure and technology. In addition, changes in the distribution of earnings within each occupational and changes in relative earnings among occupations can affect the distribution of earnings of individuals. Changes in the distribution of earnings of families are affected not only by these same factors, but also by changes in family structure. For example, increasing numbers of dual earning families can lead to an increase in the proportion of families with high earnings and increasing numbers of single person families can lead to an increase in the proportion of families with low income" (Rosenthal, 1985).

Overall, the causes of the decreasing middle class in the United States were pegged to economic reasons due to inequalities in the distribution of the incomes or changes in the labor force. As the business community evolved, new employment opportunities were created and these usually targeted bottom employees and top laborers. Such a trend is consistent in a society where mechanized work and technologic innovation were introduced.

Initially then, the shrinking of the American middle class was not taken into serious consideration as a source of economic and social repercussions, but in the face of the current economic crisis, the issue is being revisited. In other words, the economic crisis represents a new and significantly more important cause for the shrinking of the American middle class and creates a context in which further analysis has to be conducted.

"Recently, there has been quite a hue and cry about the U.S. becoming a two-class society, with a shrinking middle class. This trend was first noticed in the 1980s, but was not considered a threat. Almost three decades later, as the U.S. And the world face economic recession, this particular hitch in the demographics has gained more and more importance with the economists and policy makers. The problem however is more financial than social or political. The financial conditions, as existent in the U.S., are forcing the middle class either to go up the ladder or to come down off it" (Collado, 2010).

Ultimately then, the current status of the American economy, in which the current crisis plays a major role, is the main determinant of the shrinking of the American middle class. Hallie Seegal (2010) has created a list of seven critical factors causing the sustained shrinkage of the American middle class. These are presented and briefly analyzed below:

As the state budgets of the public institutions decrease, the federal agencies come to cut funds on crucial services; the population as such gains less access to the necessary support and its living standards decrease, forcing it to spend more on necessities. Its inability to spend more on leisure activities moves the population out of the middle class area.

The corporations, the engines of the economy, are skipping out on paying their debts. This subsequently leads to the shrinking of the national budgets and the decreasing of the federal ability to provide services for its population.

The third cause is represented by the crumbling infrastructure in the United States. At this level, the population and the economic agents come to use weaker roads, bridges and to as such have less access to the necessary services and utilities, and also this leads to an increase in the cost of living.

Then, the educational system in the United States is in a perpetuated state of crisis. The educational system is unable to provide equitable education to all of its students and comes to create a few excellent graduates and numerous low performing graduates; and also numerous undergraduates. These latter two categories find it more suitable to find jobs in the lower paying class, changing their position from the middle class to the lower class.

In the second half of 2007, the credit crisis broke out and it subsequently set in motion the entire global economic crisis. One specific outcome of the credit crisis was that the people became unable to repay their mortgages and the banks started to repossess the real estate properties. Families were as such evicted and their homes were seized, to as such force them out of the middle class into the lower class.

Another reason as to why the middle class is shrinking is represented by the unsustainable economic model. Specifically, within the United States, 79.6 per cent of the gross domestic product is generated by the services sector, with the industry accounting for 19.2 per cent and the agricultural sector accounting for 1.2 per cent (Central Intelligence Agency, 2012). This model of decreased production is not economically viable within the long-term and it also causes the immediate problem of high unemployment rates among the formed agriculture and industry workers. These people find themselves out of work and out of new employment opportunities and subsequently move down the social and economic ladder.

Finally, Seegal mentions that the costs of health care within the United States are soaring. This issue is a highly stringent one within the country and its causes and manifestations are multiple. Still, at a most basic level, people gain more difficult access to health care and the costs of health care increase, forcing the people to spend more and more on this necessity. While some are forced to sell their properties to pay the medical bills, others spend more and more of their income on health care. Regardless of the method of managing the health care bills, this new threat further adds pressure on the American middle class and accelerates its shrinkage.

All in all, the current state of the economy forces the shrinkage of the middle class in the United States and most of this population seems to be headed towards the lower class, unlike the 1988 findings of Horrigan and Haugen, who believed that the people were moving up the social ladder. This current evolution is the result of the economic crisis, as well as that of several other underlying problems of the American and global economy, such as high rates of consumption, coupled with a decreased emphasis on economic stability.

4.2. Facts and figures of the shrinking middle class in America

As the methodology chapter has clearly pointed out, the current project is constructed with the employment of the qualitative methods of analysis. This virtually means that the study uses observations and phenomenon assessments, rather than statistically supported methods.

Still, in order to increase the validity of the study findings, it is also necessary to integrate some facts and figures that support the relevance of the final findings. At this level then, emphasis is placed on the quantitative elements of the study and the presentation of some of the more notable findings regarding the shirking of the American middle class.

A first point in this sense is represented by the presentation of the income inequality within the United States, which is revealed through the chart below (1917 through 2007):

Source: Seegal, 2010

Historically, the highest income inequality in the country had been registered in 1927, when the variable was measured at 49 per cent. Since then, and up until the 1970s decade, income inequality had followed a descendant trend and seemed to stabilize at 33-35 per cent. Starting with the 1980s however, the income inequality once again began to increase and the trend accelerated during the 1990s. At the beginning of the third millennia, a slight decrease was observed in income inequality, yet the ascendant trend was easily resumed and the income inequality of today is at its historic peak.

To further back the notion of the shrinking American middle class, Michael Snyder at Business Insider coined a list of 22 proven statistical facts and evidence that the middle class is shrinking. This evidence is used as argument for those misbelieving the phenomenon, but also as alert to the entire nation. These statistics refer to the following:

(1) 83 per cent of the stocks traded within the U.S. are controlled by 1 per cent of the population

(2) 61 per cent of the Americans live from one pay check to the other; in 2007, this figure was of 43 per cent and 49 per cent in 2009

(3) 66 per cent of the growth registered in incomes between 2001 and 2007 was allocated to the richest 1 per cent of the population

(4) 36 per cent of the American population does not contribute to their retirement funds

(5) 43 per cent of the Americans have saved less than $10,000 for their retirement years

(6) 24 per cent of the American workers have postponed their retirement plans throughout the past year

(7) In 2009, more than 1.4 million citizens have filled for personal bankruptcy, which represented a 32 per cent increase comparative to 2008. The evolution of the personal bankruptcies is revealed in the chart below.

Source: Seegal, 2010

(8) Comparative to the rise in housing costs since 1975 through today, only 5 per cent of the American households have managed to increase their income at the same growth rate

(9) Now, more than ever, the American banks own more real estate property than the actual American population

(10) Today, the ratio between the pay check of an executive and that of an average worker is of a staggering 300 to 500; in the 1950s, the ratio was at 30 to 1.

(11) Starting with 2007, the year of the crisis commencement, the bottom 80 per cent of American households possessed 7 per cent of the liquid financial assets. This is revealed in the chart below:

Source: The Institute for Policy Studies, quoted by Michael Snyder, 2010

(12) Half of the income earners in the country, namely the bottom 50 per cent income earners collectively possess less than 1 per cent of the country's total wealth

(13) In 2009, the average bonuses on Wall Street were 17 per cent higher than their 2008 values

(14) Currently, the average employee with the government earns 60 per cent more than the employees in the private sector

(15) The top 1 per cent of the American household own next to double the portion of corporate wealth comparative to 1997

(16) At 35.2 weeks, the time it now takes an average American to find a job is higher than ever

(17) Nearly half of the current American employees work in the services sector, where salaries are generally low

(18) Historic peaks are also registered in terms of the Americans on foods stamps, an estimated 43 million in 2011

(19) Due to globalization, the American workers are expected to compete with workers in more cost effective regions, such as Chinese, who work for 86 cents an hour or Cambodian workers, who receive 22 cents per hour

(20) In 2009, despite the financial crisis, the number of millionaires in the United States increased to 16 per cent

(21) 21 per cent of the American children live under the poverty line and this is the highest rate of the past twenty years.

(22) The top 10 per cent of the Americans now earn an estimated 50 per cent of the national income (Snyder, 2010).

4.3. Proposed solutions to addressing the shrinkage of the American middle class

The middle class is an important structure within the modern day society, ensuring overall balance and equilibrium. The current state of the decrease in the middle class in America is a dangerous trend which has to be stopped. At this level then, the focus falls on the presentation of some notable solutions, as these are proposed by several authors and researchers.

In 1999, Frederick R. Strobel and Wallace C. Peterson argued that the issue of the shrinking middle class in the United States should be approached and resolved through economic measures to create new jobs in the middle income segment. Furthermore, the two authors propose the creation of political support in these measures and the overall improvement of the political act.

"The preventive solution proposed is a new Deal that would boost public investment, reduce military spending and adopt a policy of full employment and job creation in the primary labor market, including measures to eliminate adversarial labor relations. Also necessary are reforms to end the domination of political life by money and enhance the legitimacy of government intervention in U.S. society" (Camfield, 2001).

These propositions forwarded by Strobel and Peterson are rather generic and necessary in the overall social, economic and political context. The authors nevertheless do not propose any distinctive and clear methods as to how the middle class shrinking process could be halted. These solutions, aside from being generalist, seem idealistic and with limited applicability within the real life context.

The solutions of Strobel and Peterson are furthermore inapplicable since they do not consider the realities of the modern day market place, in which the corporations sustain economic prosperity and in which the pursuit of profitability is essential. The two authors as such present the severity of the middle class shrinkage, but see it as a transgression, rather than an objective phenomenon, occurring in a wider context, which is made more complex by several other issues, aspects and dimensions.

Allan Ornstein (2007) promotes a more distinctive solution to resolving the problem of the shrinking middle class. He as such militates for the redistribution of the wealth across the American population, and in this, he places increased emphasis on the alignment of the population's access to education. The author also militates for the improvement of the social contract between the population and the government. His solutions can also be assessed as generic and they resemble those of Strobel and Peterson in the meaning that they include government efficiency and economic forces. Still, the solution proposed by Ornstein is more sound and valid since it also approaches the issue of educational inequality. As it has been mentioned before, the educational system is endangered and it represents a source of shrinkage within the middle class. This integration of the educational dimension of the topic makes the solution proposed by Ornstein more sustainable in practice.

Finally, a more distanced and practical approach is implemented by Eric Jackson (2011). He starts out by assessing the severity of the issue and then contrasts the view points of the political parties. On the one hand, there are the Conservatives, who believe that the shrinking of the middle class is to be blamed on the very population, who made poor investment decisions during the dotcom period and the recent real estate bubble. The Conservatives then also believe that the issue could be resolved through the implementation of lower taxes in order to stimulate domestic economic activity, rather than the loss of jobs as a result of offshoring and outsourcing.

On the other hand, there are the Liberals, who take a different stand. They do not rush to blame the population nor do they concentrate on the causes of the shrinkage within the American middle class. At the level of solutions however, they believe that better educational attainment is the key to reducing the shrinkage phenomenon. Additionally, they argue that the better formed and skilled employees, who need to be retained within the domestic sectors, will also help to repopulate the middle class in the United States.

Based on these two sets of solutions, as well as on his own analysis Jackson (2011) created a list of six solutions to be implemented in the resolution of the process of shrinkage among the American middle class. These are briefly stated and assessed below:

(1) The adoption of the Ryan Bill, through which the American state would have an increased power to impose tariffs and quotas on the imports from China, and through which the country could also file complaints about the Chinese currency policy. This measure would help protect the domestic industries and would stimulate domestic consumption, as opposed to imports. Still, it does not appear to be suitable in the context of globalization and international efforts towards market liberalization.

(2) The support of the education process through governmental subsidies, but also in a more direct manner, through the identification of the labor force shortages and the training of future workers in those fields. This solution is practical and approaches the long stated problem of education as a source of middle class shrinkage.

(3) The encouragement of immigration. At this level, it is believed that the labor force, while it appears to be saturated and this is supported by a 9 per cent unemployment rate, is suffering from an insufficiency of workers in specific domains, such as technology or health care. This shortage of skilled labor could then be resolved by allowing more immigrants in the country.

(4) The encouragement of the tradition from oil to natural gas. This solution is supported by the fact that oil increases the dependency on the OPEC countries, and also since the U.S. has increased resources of natural gas. At this level, the country would become able to create more employment opportunities. The costs in this direction is however increased, due to numerous environmental concerns.