Washington, D.C. — The average middle-class household’s net worth dropped by nearly half—or $82,500—between 2001 and the aftermath of the financial crisis in 2010, a new report released today by the Center for American Progress reveals. And while the good news is that some of the lost wealth has begun to be rebuilt, the recovery is far from whole. Net worth has rebounded by $14,000 but still remains $68,000 below its 2001 level, meaning that the next president and U.S. Congress will need to undertake a bold new agenda to restore economic security to the middle class. CAP’s report outlines a wide range of ideas for how to boost wages and restore wealth to ensure that the economy works for all and not just the wealthy few.
“More than 15 million jobs have been created since the start of the Obama administration, and wages are on an upward track—a remarkable accomplishment given the severity of the Great Recession. Looking at middle-class wealth, however, it’s clear that many middle-class families have not felt a full recovery from the devastation of the financial crisis and recession, which decimated housing values and retirement savings for millions,” said Carmel Martin, Executive Vice President for Policy at CAP. “Our next president and our next Congress must continue to focus on raising wages and rebuilding wealth and pursue policies that ensure that all Americans—and not just those at the top—can share in our country’s economic gains.”
“The financial crisis and Great Recession, together with an array of domestic and international economic trends, hit middle-class families hard. The policies put in place since then have brought important progress, but more remains to be done,” said Andy Green, Managing Director of Economic Policy at CAP. “And all of these policies are tied together. When a financial crisis destroys employment, states face declining revenues, and so they raise tuition at public colleges or cut programs that offer affordable child care. A policy agenda focused on the middle class must invest in the American people and productivity; strengthen worker voice and standards; ensure financial stability and vibrant, long-term oriented competition; and address the genuine challenges of globalization.”
CAP’s analysis tracks middle-class income stagnation beginning in 2001 and the dramatic decline in wealth from the financial crisis and Great Recession. While the average middle-class household’s net worth was nearly halved after the Wall Street crash, CAP found that the impact of the crisis was even harsher on families of color: For instance, the net worth of African American households virtually disappeared between 2001 and 2013, falling from approximately $36,000 to just $7,000. The long recovery toward full employment since the Great Recession has kept wage growth low, which—combined with rising costs for middle-class families—has left families with less money to set aside for retirement.
CAP’s report also examines cost increases associated with key pillars of middle-class security—including child care, housing, higher education, and healthcare—and offers recommendations to enable more affordable access to these middle-class essentials. The report further looks at how these economic trends are affecting some of the United States’ most vulnerable populations—including immigrants; the lesbian, gay, bisexual, and transgender community; individuals with disabilities; and African American and Latino communities—and provides policy recommendations specifically targeted at ensuring that all Americans can participate in the economic recovery.
Read “Raising Wages and Rebuilding Wealth: A Roadmap for Middle-Class Economic Security,” edited by Carmel Martin, Andy Green, and Brendan Duke. Read the fact sheet on the report here.
For more information or to speak with an expert, contact Allison Preiss at [email protected] or 202.478.6331.