Middle class: 'On the edge'

[CNNMoney]

Middle class: 'On the edge'
Experts tell Congress that middle class is struggling with stagnant wages, rising debts and increased expenses.

NEW YORK (CNNMoney.com) -- America's middle class is increasingly squeezed by sagging incomes and soaring expenses, experts told Congress on Wednesday.

Adjusted for inflation, median household income dropped by $1,175 between 2000 and 2007, said Elizabeth Warren, professor at Harvard Law School, in written testimony before the Joint Economic Committee.

At the same time, the average family is spending $4,655 more on basic expenses, such as gas, housing, food and health insurance. Gas alone costs $2,195 more for a family making the same commute in May 2008 as it did eight years earlier.

Families with children saw their child care costs soar. Those with children under age 5 spent an additional $1,508 a month, while after-school costs for older children rose $622.

To cover these soaring expenses, many people have had to turn to credit cards. Nearly 10% of total disposable income in the United States goes to paying off such debt, Warren said.

"There have never been since the Depression so many families standing right on the edge," Warren said. "Families have tightened their belts. They have cut down in every discretionary spending area they possible can."

"These costs are tearing a hole in the family they simply can't make up," she added. "You can't cut out enough lattes to pay for health insurance in America." ......................


http://money.cnn.com/2008/07/23/news/economy/middle_class/index.htm?postversion=2008072314