The middle-class has never been more popular—or more squeezed. Thanks to the upcoming presidential election, Americans who are neither rich nor poor have been the subject of new studies, cable news debates, and campaign speeches. When Republican presidential candidate Mitt Romney was caught deriding the “47 percent” of Americans who don’t pay federal income taxes, he was forced to quickly explain his remarks—and insist that he does, indeed, care about middle-class Americans.
Meanwhile, President Barack Obama took to the David Letterman show to emphasize that he, in contrast to his opponent, wants to represent all Americans. “My expectation is if you want to be president you've got to work for everybody, not just for some,” he told Letterman.
The hoopla over that 47 percent comment comes on the heels of a Pew Research Center report that shows the middle-class experienced a particular rough decade in the 2000s. The report shows that both household income and net worth declined over the decade, and the size of the middle-class itself shrunk. (Median income for a four-person household is just under $70,000 a year.)
This week, a second report came out, from the Consumer Federation of America and Primerica, which further outlines why middle-class Americans are feeling so pinched right now. It found that part of the problem is Americans’ own poor decision-making: Two in three respondents said they had made at least one “really bad financial decision,” with an average cost of $23,000.
The report’s analysis of data from the Federal Reserve’s most recent Survey of Consumer Finances found that the typical middle-class family lost about 28 percent of its financial assets between 2007 and 2010, and now has $27,300, which includes retirement savings and checking accounts. About half of middle-class families have credit card debt, and the median amount held is $2,700.
While many voters are looking to the next president to help turn their financial woes around, How Rich People Think author Steve Siebold argues that Americans can do a lot to help themselves by simply changing the way they think about money. He says that middle-class Americans differ from wealthy Americans in their outlook, which holds them back. Here are some of the differences he highlights:
- Middle-class Americans focus on saving while the wealthy think more about earning.
- Middle-class Americans are driven by fear while the wealthy are driven by freedom and possibility.
- Middle-class Americans are emotional about money while the wealthy are logical.
As Romney and Obama each try to make their case that they are the ones who can give the middle-class a boost, those kinds of observations probably won’t help them win any fans among voters, who are looking for policy changes that will help their own bottom lines.