Showcase of Undergraduate Research and Creative Endeavors (SOURCE)

The Middle Class Problem

This paper addresses the issue of why the middle class is shrinking in the U.S. After defining the ”middle class,” statistics will be provided on this shrinking section of American families. The following section will review factors such as the occupations of people who are considered middle class, and their levels of income. This section will shed light on factors such as the types of jobs people work and the impact those jobs have had on the shrinkage of the middle class. Literature and data will be used to show the effects of job choice and how it relates to increasing income disparity. Another question that will be addressed is why income growth among the middle class is stagnant. This paper will also explore how location affects disparity and the impact on the next generation. With a problem this complex, there are multiple solutions and potential long-term effects we can explore. A simple solution such as raising wages seems easy enough to propose, but that leads to other issues, such as remaining competitive. Also, raising wages would just lead to inflation, and people wouldn’t gain any actual wealth. Another example could be taxing the rich more heavily so that wealth can be redistributed to lower income families; this may sound good on paper, but in reality, it would cause some negative externalities. In this paper, these possible solutions will be analyzed from an economics cost-and-benefit perspective.