A Decaying Dream: The Death of the American Middle Class

Art by Kaitlyn Tan.

Picture this: you’re at Disneyland. As you walk into the park, you are struck by a variety of sensations. The smell of cinnamon and pineapple — foreshadowing churros and DoleWhip — wafts through the air. The sounds of laughter and excitement surround you; everyone is eager to find the rides they've been looking forward to. In the distance, you can see costumed characters roaming Main Street, and you feel hopeful, secure in the knowledge that you’re about to have a great day.

Twenty years ago, this scene might have been pulled straight out of life for middle-class Americans. Now, it is nothing more than a fantasy.

The American middle class is on the decline, and the prosperity which they once enjoyed is declining steadily, borne on by rising costs and stagnant wages. Over the last several decades, their share of aggregate income has fallen. Additionally, middle-class salaries have failed to rise alongside the upper class, signifying lower stability for those hoping their middle class status will provide them with an economic safety net.

As this idealistic concept fades into memory, so does the hope that it once afforded struggling people. Being alive is more expensive than ever before, and the simple luxuries of middle class life are virtually nonexistent to many. Though the average American continues to go through the motions of purchasing clothes and groceries, they do so while being slammed with bills and debts that threaten their place as the median of society. Trips to Disneyland are a mere memory, especially when sudden expenses are capable of sinking them into poverty. And with inflation continuing to rise without an equivalent rise in wages after the pandemic, the future seems bleaker than ever.

Defining Middle Class

The American middle class defies clear definitions, lending itself to ideals rather than grounded classifications. A rigid standard to identify this group might be one provided by the Brookings Institution, placing the middle class within the constraints of being the group making up the middle 60% of America’s income distributions. Others see the middle class as more of an identity than an income group. It is a signifier of stability and financial security, associated with a home and a retirement fund, cars and college, and, of course, trips to Disneyland. There’s safety in identifying as middle class, which is why most Americans consider themselves to be so. However, actually being middle class in America hardly confers the romanticized safety net that many hope for. Instead, rising costs of living and housing prices are creating stress and insecurity for the average American, creating a storm of pessimism that threatens to sink the ever-present American Dream.

The Price of A House

Home ownership was once a firmly held dream of the American middle class. Having a house allows families to feel grounded in their environments and independent from the instability of landlords and noisy upstairs neighbors. Additionally, homes represent a legacy. When buyers enter their very first house, they can imagine their children growing up within its walls, picture themselves aging with the stucco and stone. They can see the lives they will build in these dwellings and feel comforted by the security it will imbue their descendants with. Purchasing a home is truly a momentous occasion for those lucky enough to experience it, but in the modern era, it feels as though a miracle, rather than luck, is needed to achieve it.

To begin, mortgages remain unaffordable to many. Rates on the 30-year-fixed mortgage are at 7.5% as of April, a high for 2024, and in October 2023, rates rose to levels not seen in decades. The jump in mortgage rates is a burden on the housing market, as well as a significant roadblock for those hoping to buy a house.

Understandably, applications for mortgages dropped as rates rose. In fact, October’s spike in rates coincided with a reduction in applications to 1995 levels, provoked by anxiety from homebuyers. There’s a greater problem created by rising rates that shouldn’t be overlooked, either. As rates go up, current homeowners have less incentive to move and purchase new homes, essentially forcing a “lock-in effect” that prevents owners from seeking better properties and leaves first-time buyers struggling to afford their homes.

Of course, the price of a house in itself is by no means affordable, either. Because of the lack of willingness of owners to sell their homes, the amount of homes available for sale does not match the demand. This means that costs are astronomical, and homes are not a good prospective investment. With costs as high as they are, it’s illogical to assume that costs will rise, meaning owners will only be losing money with their purchase, another reason to avoid the endeavor altogether.

Beyond purchasing a home, renting is hardly an easier feat. During the pandemic, rent rates rose dramatically, and while the upward momentum has slowed over the last year, they are now at rates which could hardly be considered reasonable. The US Department of Housing and Urban Development (HUD) says that housing is affordable when it takes up no more than 30% of one’s income. Now, renting in a major city like San Jose or Boston requires a six-figure-salary to even meet HUD’s definition. For a majority of middle-class Americans, who often make below $100,000 annually, the price of shelter becomes a huge and insurmountable burden.

Inflation and the cost of living

Inflation is by no means an unknown struggle for the American populace. When money is tight, everyone hopes that the fiver in their wallet will be worth more rather than less, but recent years have made it so this is rarely the case.

American inflation soared during the COVID-19 pandemic, rocketing up to 9.1% in June of 2022. Though as of April 2024, inflation rates are down to 3.5%, most Americans feel nothing more than despair. A drop in inflation, after all, hardly reflects a similar decline in the price of goods. Instead, it signifies a lower rate of price increase, but with purchasing costs being so high as is, the decline in inflation feels immaterial. The stress on the average household was barely eased during the pandemic due to stimulus checks, but now those checks are in the past, and prices have not gotten any lower.

The great struggle for Americans around the cost of living and inflation can best be summed up in one word: uncertainty.

Most people dream of having not just the money they need to get by, but a little extra. If a new movie comes out, they’d like to see it. If their heat stops working or their car breaks down, they’d like to fix it.

With the cost of living being as high as it is, uncertainty is all the population can feel. For most people, housing costs are sapping their budget, and their money isn’t buying as much as it used to. Almost two-thirds of Americans say they’ve had to cut down on spending, and less than half feel like they are in a good space financially. With so much uncertainty, the simple luxuries of life seem completely unattainable. Once, a Disney trip was a fun surprise for the kids. Now, the average American can’t even consider the hundred-dollar ticket price, which would eat up nearly a day's salary for a minimum-wage worker just to finance a singular ticket.

The impact of economic uncertainty on Americans presents itself starkly in the form of doom spending. Many young people, it seems, are now choosing to spend rather than save, dubbed “doom spending,” because they feel there is no need to save. They see inflation as a harbinger of future economic crises, and as such, think that saving for the future is ultimately pointless. 

With costs being so high, however, there is hardly much that the young middle class can afford. And when not even basic needs feel achievable, “fun” expenses look completely unattainable.

Getting By

The American Dream is a concept frozen in time, a fossilized relic of a single moment when anything seemed attainable and life felt simple. Pursuing the Dream is fundamental to American life, echoing in our every action, from hustle culture to Zillow stalking. No one is truly independent of its presence, so it only makes sense that a majority of Americans hope their middle class status will bring them one step closer to achieving it.

The reality of modern American life is that, much like the Dream, stability is rare and near impossible to attain. With housing costs being as high as they are, the fabled two-story with a picket fence and a huge oak tree in the backyard is nearly too expensive an asset to obtain. Similarly, the cost of living has risen to a point that a majority of Americans feel constantly worried about their finances. As one might expect, being worried about money does not lend itself to emotional stability. The middle class is more stressed than ever, and less than 40% think their situation is likely to improve in a year. This is a dire hallmark of the state of society, and for those hoping for favorable election results, it is a problem that cannot be ignored.

Those in office must work to not only quell inflation, but to bring prices down. Additionally, wages must rise to accommodate the blows of the pandemic. Raising the minimum wage is just one way to achieve this, but protecting and promoting unionization is another. The working class needs better bargaining power, as well as better governmental representation. Ultimately, the dreams of the population must be realized by those who hold office, and must be made to be within grasp. The middle class is the soul of the nation, and if America hopes to thrive for centuries to come, our soul cannot be lost.