Middle-Class Death Watch: The Median Household Is Now Poorer Than in 1984

Moneybox
A blog about business and economics.
July 31 2014 6:04 PM

Middle-Class Death Watch: The Median Household Is Now Poorer Than in 1984

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Melting away.

Photo by Robyn Beck/AFP/Getty Images

You're probably aware that a great chunk of America is poorer today than before the housing crash. But recently, the Russel Sage Foundation delivered a reminder that middle-class wealth is in fact still lower than it was a generation ago. As shown on the graph below, the median household in 2013 was worth about 20 percent less than in 1984. 

As Allison Schrager writes over at Bloomberg Businessweek, middle-class families are poorer today than in the Reagan days for two main reasons. For starters, housing collapsed—and for most Americans, their home is their biggest source of savings by far. Second, household debt has risen significantly over time. Because wealth is just the value of what we own minus what we owe, the typical family is now worth less than 30 years ago.

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Or is it closer to 45 years ago? In case the chart didn't make you depressed enough, consider this: New York University professor Edward Wolff has calculated that, by 2010, median net worth in the U.S. had plummeted to its lowest level since at least 1969. Now, Wolff's research and the Russell Sage report were based on different data sets. But the newer numbers still suggest that middle-class wealth has declined a bit in the past four years. So when it comes to their financial health, many American households might well be stuck back in the Age of Aquarius.

Jordan Weissmann is Slate's senior business and economics correspondent.

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