PhotoThe Great Recession ended in June 2009. Officially, that is.

That's when U.S. economic growth, meager though it was, started up again, ending two straight quarters of decline. Over the next six years the unemployment rate gradually came down as well.

But if you ask many middle class consumers, they would be the first to say that, to them at least, it feels like the recession never ended. Economists at the St. Louis Federal Reserve Bank say there's a good reason for that.

William Emmons and Bryan Noeth, senior economic adviser and policy analyst at the bank's Center for Household Financial Stability, have issued a report that clearly shows the American middle class has lost economic ground in recent years.

Two ways to look at it

While there has been much discussion of growing "income inequality" since the financial crisis, Emmons and Noeth have attempted to show how middle class families are falling behind, looking at the problem 2 ways.

The first approach ranks all families by their income or wealth and then looks at those in the middle to gauge how the middle class is doing. But there's a problem with that method. Increasingly, families are moving in and out of the middle class year to year.

So the economists also look at the middle class using demographics - age, educational attainment and race or ethnicity. Under this method, the middle class is most likely to be composed of families headed by someone at least 40 years old who is white or Asian with only a high school diploma or by someone who is black or Hispanic with a 2 or 4-year college degree.

The authors discovered that when defined by demographics, the middle class has been losing ground since 1989. Adjusted for inflation, the median middle-class family in 2013 was well behind the median in 1989, in terms of income and net worth.

During that same time frame, the U.S. population as a whole showed little change in wealth and income.

Steady erosion

"The median middle-class family as we define it suffered a steady erosion of income relative to the family at the exact middle of the overall population of families in each year's ranking," the economists write. "In terms of cumulative growth, the median demographically defined middle-class family's income grew 21% less than the overall median income between 1989 and 2013."

The report focuses on education as a major influence on middle-class fortunes because better education usually leads to better jobs.

Harry Holzer, a Visiting Fellow in Economic Studies at the Brookings Institution, agrees,  writing that when politicians talk about "good middle class jobs," those jobs aren't what they once were.

Construction, production and clerical jobs that paid pretty well but required fairly little education have been disappearing.

"But another set of middle-skill jobs -- requiring more postsecondary education or training -- in health care, mechanical maintenance and repair and some services - is consistently growing, as are skill needs within traditionally unskilled jobs," Holzer writes.

In many cases, Holzer says employers are having difficulty filling these jobs. Part of the problem, he maintains, is neither industry nor the education system has done much to generate employees with the skill sets needed for these increasingly in-demand positions.

"A new set of education and training policies and practices are hopeful in this regard, though policies to more directly expand the numbers of middle-paying jobs might also be needed," he concludes.


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