The Middle Class Squeeze at 25-Year High in 2005

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    America’s middle class is getting squeezed. Costs for typical middle-class expenses – housing, transportation, medical care and college – have risen faster than prices in general. At the same time, earnings have largely been flat in inflation-adjusted terms. Weekly earnings had fallen three years in a row by December 2005, according to data from the Bureau of Labor Statistics.

    As a result, in 2005, households had to work more hours in 2005 to pay for these four expenses than at any point in the past 25 years.  At the end of 2005, a typical two-earner couple had to work close to 31 weeks to afford these items (figure 1). This is a decline from the high of almost 32 weeks in September 2005 and more than 31 weeks in June of last year, but it is still higher than at any point prior to 2005.