>> the only live national news show at 11:00 eastern. >> we start with breaking news. >> let's take a closer look. ♪ >> it's where things have been heading, not for the last year or two but for the last 40 years. the largest mass middle class in history is no longer a majority of american adults. the number of poor and richer families has been steadily increasing. we will take a look at what it may mean to a country that built its ideas about itself around a middle class majority. unmiddling america. it's "the inside story." ♪

>> welcome to "inside story." i am ray suarez. the united states was always a little different. instead of having a relatively small coterie of rich families appear big ocean of poorer ones with a middle colleagues between them, the american middle class wassing huge. the group of americans who thought they were middle class was even larger. the big renegotiation of how we make our money, where we live, what we own and what we aspire to, 40 years of it has landed us here. it could be the end of an economic era after more than 4 days of the nation's majority, america's middle class is at the tip point. >> it may be that the middle

class will go under 50%, less than american adults will be in middle income households. a steady decline in the number of middle income households over the past 45 years. in 19 sent, approximately 61% of americans were considered middle class today, that number has fallen to 50%. an 11-point drop in 45 years. >> there has been sort of a poarization in the labor market, more high-end jobs, more low-end jobs and a hollowing out of the middle. jobs back in the 1970s which actually paid fairly like bookkeepers or payroll accountants, things that we now associate as back office, office functions. those were repetitive tasks. computers can do that now. >> pew researchers say the

polarization of the job market led to significant growth in the upper and lower classes though the top tier has grown more. 49%, nearly half of all american income went to upper income households in 2014. that's up from 29% in 1970 while middle income americans have fallen further behind. the median income of middle class households has dropped 4% since the turn of the century, and combine that with the housing market bust and the recession, and their median we think has fallen by 2001. >> there was a pause during the recovery where the share of adults in middle class households, where it sort of held steady at about 51%. so, it looked like for about four or five years like the middle class was sort of -- the shrinkage had stopped.

what the data shows is that the shrinkage has now seems to have resumed, at least from 2015. >> unmiddling america this time on the program. is it a tell me something i don't know moment or a watershed that tells you something really important about the country? joining me is rakesh kosher for the pew research center. welcome to the program. what are we seeing going on here? the dpiksz that i have seen of yourepictions that i have seen of your study have been sort of sky-is-falling, bad news reports but i think it's something more subtle than a good news, bad news story. isn't it? >> it is more subtle. we say the middle class is losing ground. there is a smaller share of the u.s. population. we also mean it is falling behind financially compared with those who are upper income, and the share of aggregate income

held by middle class households has diminished quite a bit over the last 40 years from 63% to 42%. and the shift has been all to upper income households. but the news is not all bad. there are people moving in either direction. if you are moving out of the middle, you are moving down or you are moving up. we find there is more movement up the economic ladder than down the income ladder, and, also, over the last 45 years, incomes are up. but they are not up 4 the middle income households at the same rate as for upper income households. so, it's a mixed picture. there is economic progress. people are moving up the income ladder. incomes are higher, but there is also economic polarization. there are more people at the bottom, more people at the top, fewer in the middle. >> there are people, as you mentioned, moving down, but over the period that you looked at, their share of the national income, even as they got to be a

larger group, stayed almost identically the same. >> right. their share of u.s. income held about 10 percent for the last 45 years. so numbers are up, but share has held steady meaning that their encloses are falling even further behind. households. >> did jobs that middle-income households did move away, go away, simply cease to exist? or did they just stop keeping up with inflation? we got a little hint of that in the report just a moment ago. but in a mass sense, were americans doing a lot of the same work and just not getting raises that kept up with rises in the cost of living? >> right. we adjust the cost of living. >> that's not necessarily part of the story here but jobs are shifting. take a manufacturing job, for example. let's say car manufacturing.

technology has increasingly benefited the designer and the engineer to build better cars. it gives them greater rewards as a result. but the people down the line who assemble the cars, their jobs are gone. they are in the hands of robots. and what used to be formerly middle-income jobs are diminishing in number. but there is also other stuff going on. if you look at inequality, more broadly, people will point to globalization, the outsourcing of jobs, for example, back office jobs done in indians rather than -- in india rather than the u.s. and people point to unions which changes the bargaining power of workers. >> i think americans, if you ask them about what their ideal situation might be might say i are. i just care if you can work your way out of one group into another or if you do badly and make bad choices that you can fall from one group down into the one that's lower.

what do we know about mobility? >> we know that mobility in the united states is less than, say, in europe. the opportunities to advance up the ladder are diminished in comparison to the european counterparts. income inequality there is lesser than in the united states and in the last decade or so, in fact, they are catching up to the united states but we also know, overall, that there is greater division, with more people at the bottom, more people at the higher rungs of the income ladder, you have economic division, economic polarization, and this may link up to other forms of division within society. >> following up on that inequality, it looks from your numbers as if the group moving smartly into that upper income category began to really peel away, take off, almost leave a valley in between themselves and the middle-income group. is that fair? >> yes. financially, it

definitely characterizes what happened to wealth, for example. we trace household wealth from 1983 onward through 2013. so that's three decades worth of what happened to household wealth. in this 30-year period, the we think of middle income households is unchanged. an increase of 2%. a lot of this loss happened in the last six or seven years, post great recession when the housing market bubble burst, but although upper income households were also hit by the recession, overall, their wealth has doubled since 19 -- excuse me -- since 1983. >> thanks to rakeh, kocher. good to talk to you, sir. >> you are welcome. >> other changes in opportunity, mobility, the labor force that's brought the middle class to the door of minority status still underway. will we see the middle class portion of american families continue to shrink?

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>> you are watching "inside story" i am ray suarez. the recent pew research finding that middle class americans are a shrinking portion of the population. joining me now and for the rest of the program, thomas herschel, a professor of development sociology, also the co-author of "chasing the american dream: understanding what shapes our fortunate." in our new york stud yes, robert smith with dimos. let me start with you, professor. for years, many more americans told opinion researchers they were middle class than really were middle class. but with the number of middle income americans trending downward, is that mismatch going awhile? >> well, ray, i think -- i think that, you know, if we look across time, we see there is a lot of mobility and if the elite

level, the top 20% of income ea earners, there is a lot of middle income out of those. when we look at our data in chasing the american dream, we looked at the same simple over time and we found that 70% of americans were actually in the top 20% between the ages of 25 to 60. so, the story of "chasing the american dream" is really about very great social mobility. at the same time, we find a great deal of economi vulnertibility. we looked at how that aclaces we found that 80% of americans are in a situation of serious economic hardship some time during their adult life course. so actually, our story will be more about a lot of mobility and a lot of insecurity. >> robby hilton smith, how does that show up in what people say about where they fit in the wider society, how they think they are doing, and how they think their kids are going

do. >> it's interesting. i think people as you mentioned have a little bit of a misconception about where they fit in to the income distribution and where they fit historically, how their father, parents, and grandparents are doing and how their kids are going to do. you ask some of the middle class, a huge swath of people say that they are. right? but as the professor mentioned, this could vary a ton throughout their life. someone can really go from, you know, being middle class couto upper class in to the lower part and, you know, i think that that security has increased and increase. that's really one of the stories that the pew numbers don't really tell though there are a few others, you know, that doesn't tell as well. >> this is a view of america at 35,000 feet. are their distinctions among and between americans even inside those broad categories.

rich, the middle and the poor? >> i think -- absolutely. >> people sometimes they feel they have a status and it may be they are struggling to go attain. if we look, for example, at the tea party movement, we might see a group of people that expect to be doing better. they are not doing better. so they want to change the way politics happens because maybe they have hit the high numbers at one time in their life course and then they are not able to sustain that. i think a llternativelalternati who are vulnerable at different times of their life, they may feel that they want to come up but they are not able to do so because something has happened. the fact that their factory is shut down or there has been some event in their life or some change, their community has changed. so, i think we see -- i think people are, i think, are anxious about their children's future because they feel something coming at them. some of the things the pure people were just talking about, technology, globalization. they feel major changes coming towards them in the economy and

they are not quite sure how to -- what their future will look like. >> robby hilton smith, same question. >> yeah. i think there is a lot of variability even within those broad categories pew has. remember what their numbers say is the way they define the middle class is a certain band around the median income. right? income. >> just tells you basically how close to whatever the middle is, it doesn't really tell you as much what the middle gets you and how secure you are at an income somewhere in the middle. okay? so though their numbers are adjusted for inflation, there is certainly a number of other costs that inflation maybe doesn't fully take into account, a number of other shifts. >> are black americans or white americans doing even inside the same band, upper income, lower income, middle income, different, accumulating we think

northwest different ways even this other their encloses they are roughly at about the same level? robby? >> yeah. most certainly. we know from the wealth numbers that the wealth of african-americans, i think, there is about a dollar of wealth for african-americans for white americans. their wealth is way lags behind those of white americans and they took, you know, african-americans and latinos took a huge hit after the great recession and it may be larger hit because more of their wealth was tied up in-housing. >> speaks to the increased insecurity for people of color, you know, even at the same kind of income levels at while americans. wealth. >> stay with me. i have watched politicians plan and propose and push why did they say are meant to benefit the middle class with the assumption they were speaking to the interests of most americans. if we go further down this road

with larger shares of u.s. families struggling to get out of poverty or stay rich, will the way different americans see government put pressure on what government does? unmiddling america. it's "inside ♪

♪ >> welcome back to inside story. i am ray suarez. a recent report from pew recommends the american middle class has shrunk, is shrinking and now represents a minority of the adult population. what's strike something that for many years, a large number of americans told opinion researchers they were middle class, all but the richest and poorest americans claimed the status indicating it was something more than a strictly economic did he in addition. we are back now with thomas herschel of cornell university and robby hilton smith with dimos. professor herschel, politicians,

it's a common place where politicians to campaign talking to and promising things to the middle class and if we start to think of ourselves in a different way and something closer to the numbers will politics have to change? >> i think so, ray. i think you are raising an important point. one of the very, i think, interesting findings of the pew studdis that correct people with a high school degree have lost a lot of ground over the last 40 years. we find the same thing in our study which is also of the same period of time, looking at longitudinally looking at the same families over time, that, and this is poignant for white americans who graduated with a high school degree and the baby boom generation now find their labor market tremendously eroded, and that is a group that is experiencing very serious downward mobility i think there was recently al report that talked about higher mortality,

lowered life expectancy for a set of white americans who aren't educationally disadvantaged. the politics of higher education has become very, very expensive. it's expensive to go to college. >> robby hilton smith, you would never know listening to campaigns that 29% of american adults were poor we hear so little about poverty in the current campaign but also in a lot of recent cycles. if there is more concern about more fear of ending up poor, is its there some benefit if you are a national candidate in starting to speak to those issues again? '60s. >> 0, i absolutely think there is a benefit to speaking more to those issues. i think it's unfortunate already that they don't. poverty has been a defendant taboo topic since reagan since the unfortunate welfare queen

and the reforms in the '90s and welfare, you know, politicians have been almost afraid to speak about poverty with this increasing based on income. it's going to be more to speak to just what they can do to help middle class but help people, you know get into the middle class or get back in the middle class. i think politicians start doing respond. >> but at the other end of the rope is an increasingly large class that's more powerful and votes more regularly, robby? >> absolutely. that's, we are seeing that influence more and more, especially after the citizens united decision, money has just been pouring into the political system. there is a lot of studies showing that the policies that politicians push the policies that get en acted are those ones that match the preferences of states. >> money is speaking and having system.

>> professor, you wanted to jump in there? >> i am not sure i want to bring back the 60s without jimi hendrix. that's 1 comment$1 comment. $1.2 trillion in death students have for college, that's a serious issue i think that will inhibit people joining the middle class. that's an important political question. >> or when they do, they will have that ball and chain of that debt dragging behind them into their 30s and their 40s. >> even beyond. even beyond. >> so what do you see do about that? it's something that's really inhibiting secure presence in the middle class. >> i think we need to rethink the whole educational system. right now, primary and secondary education is paid by property taxes. so people's neighborhoods, poor people are disadd vantsaged, people are disadvantaged by their schooling systems and when they get to college, it should be -- it should be something

that's part of -- there should be an economic right in a society that values education so much in the labor market to deny people education on the basis of just. >> robby hilton smith, to close, are we going to end up thinking about ourselves and about our country in a different way if these trends continue? >> i think we will. i just want to echo i couldn't agree more with the professor on higher education. i think we will start think being ourselves different. we already are. with the mention of student debt, college graduates, you know, college graduates who say, you know, the pew report showed was one of the last secure path wafrlthsz in the middle class, encloses of people of other levels declined, they have student debt burdens that are preventing them or slowing them down from getting in to the middle class and feeling security. as that happens and as other people, you know, jobs continue to leave and worse jobs get created in their place people

are more and more just start feeling, hey, maybe this american dream isn't quite so reachable and hopefully start demanding politicians do something about it. >> i want to thank my guests, thomas herschel is a professor of development and robby hilton smith is a senior policy analyst with dimo is: i will be back in a moment with a final thought on middle class status and what a new recognition of economic fragility could mean for some people. stay with us. it's "inside story." and send us your thoughts on twitter@ajinsidestoryam and follow me or visit our facebook page and tell us where did the middle class go? what do you see from your front lawn? what's their disappearance meaning to america? ♪

♪ >> one thing you can safely say about americans, the way we talk about what it means to need help keeps a lot of people who need it from asking for it. aid in the form of, let's say, disability insurance or food stamps exists in the first place because it became clear that from time to time in a modern economy, people need to get help for a time rather than having the bottom fall out of their lives. downward mobility hit millions of american families in the last decade and hit them hard. at the same time, people with enough assets to make a living off of their assets did great but if you lost your job, if a

spouse lost their overtime, if your mortgage lapsed, a lot of people seemed like they were papering over the thought of surprise with shame. after that, the increasing conviction held by americans that class mobility is getting harder, that getting ahead is impossible no matter how hard you work and the u.s. looks like it's losing something precious: a belief in the future. middle class people never wanted everything in return for their hard work. just enough: a house and annual vacation, maybe a little savings to help propel children forward with a good education. that's not going away. it's not unattainable but the numbers would indicate that it's all a lot more fragile than before. i am ray suarez, and that's the inside

story. iran's foreign minister says there is l little agreement on key issues ahead of peace talks in syria. ♪ ♪ hello, welcome to al jazeera i am jane dutton in doha. also on the program, confronting isil, kurdish fighters in iraq appeal for more help in the fight against the armed group. the u.n. admits its response so ex-sex you'll beus carried out by its peace keep in other words central african republic was serious lay flawed. australia spice