Anxious families are feeling the strain of an economy on the edge and finding it's easy to fall behind.
Dawn Higgins enjoys taking her 11-year-old daughter on camping trips and watching rented movies together at home.
But even those simple pleasures are a compromise. The flights they once took to San Francisco, New York City and Washington, D.C., to visit friends and relatives are memories. Higgins has even canceled cable television to save money.
She works two jobs -- as an administrative assistant at a Fortune 500 company and a transcriptionist from her rented townhouse in White Bear Lake -- but Higgins is barely making ends meet. Utilities and gas prices have sapped her budget. She commutes about 200 miles a week to Golden Valley.
"I have no financial wiggle room whatsoever, even with two jobs," says the 40-year-old single mother. Her father helped her twice this year "get over a few financial bumps."
While increasing numbers of foreclosures and Wall Street's woes make headlines, millions of middle-class families like Higgins and her daughter are losing ground. By every economic criterion, financial pressure on America's middle class is growing. Nest eggs are shrinking, wages are falling, expenses are rising, debt is expanding.
Baby boomers are the most anxious of all, according to a recent report by the Pew Research Center.
"They've experienced a lot of economic dislocation in the past year," said Rich Morin, a senior editor at Pew. "Losing jobs, having to cut back. They're the ones seeing the value of their homes decline in this market or paying off their children's college debt. Even though they're in good financial shape, they tend to be financially stressed."A generation ago, a one-income family spent about half of its income on the basics of housing, health care, transportation, child care and taxes. The other half was flexible, to be used on food, clothes, entertainment, savings.
Compare that with today. Although two-income families make more money, more than two-thirds of household income gets eaten up by the basic five expenses. If someone gets sick or laid off, there's no one else to put into the workforce.
And this year, in particular, rising food costs -- considered a flexible expense by economists because families can pare back on how, what and where they eat -- have swallowed more of families' paychecks.
"What's happened is that the American budget has changed," said Elizabeth Warren, a Harvard law professor who has been studying families, debt and bankruptcy for more than three decades. "This is something nobody talks about."
The largest and most necessary household expenses have shot up by $4,655 since 2000, according to Warren's analysis of government data. Meanwhile household income has fallen by $1,175.
The cleft widens for families with children. While wages sagged, the day-care bill for a child younger than 5 went up $1,500 during this period, and after-school care rose $600. The cost of going to a state university mushroomed nearly $2,800, according to the College Board.
"There's a lot of finger shaking at families," said Warren, who in July presented some of her findings to the Joint Economic Committee of the U.S. Senate and House. "If they're financially squeezed, it's because they over-consumed -- they bought too many toys, too many designer outfits, too many things they didn't really need. The data show this is not true. People are going broke trying to raise kids in the middle class."
Tough to define
So just what is the middle class? It's a description that defies a single definition because it has social, economic and even political meanings.
Presidential hopefuls Barack Obama and John McCain are both wooing middle-class and blue-collar workers, who make up a large chunk of crucial undecided voters.
Obama would give tax cuts for households that make up to $150,000; McCain would double the tax exemption for children and other dependents to $7,000.
Economists often define middle-income as falling between 75 percent and 150 percent of the Census Bureau's national median. For a family of three -- which is close to the typical American household -- that translates into income of $45,000 to $90,000.
While people often think of the middle class as a monolithic mass, the Pew Research Center suggests there are four distinct groups, from satisfied to anxious.
Whatever the definition, most people want to belong to it. About 53 percent of American adults claim membership in the fuzzy borders of the middle class, according to Pew. That includes two in five who earn less than $20,000 a year and a third who makes more than $150,000.
But in a report that Pew described as its most pessimistic assessment of personal progress in nearly a half-century of polling, the nonprofit, nonpartisan group found that life is changing for the middle class -- and not for the better.
"This notion that the middle class lives in suburbia, is a white family of four and might have to cut back on videos or lattes -- that's not the real picture," Morin said. "There's a lot nipping at the heels of the middle class. People are experiencing multiple problems ... so that it's harder now to get ahead and easier to fall behind."
In the past, people were able to put money aside during economic boom times, softening the blow of downtimes. But that feels like a luxury to today's middle class. As the economy and stock market soared during the early part of this decade, the benefits largely zoomed past working families whose real-time wages haven't risen since 1999.
In the past six years, the middle class saw the sharpest deterioration in insurance coverage of any group, according to a study released in August from the Commonwealth Fund. The rate of adults paying more than 10 percent of their income toward health care doubled for those earning $40,000 to $60,000. Today, two in five working-age adults, or 72 million people, report a problem paying their medical bills -- a 7 percent jump in two years.
For blacks and Latinos, moving into the middle class and staying there became particularly challenging. A Pew Charitable Trust study found that nearly half of blacks born to middle-class parents in the 1960s ended up among the bottom percent of earners as adults.
Taking a longer view, the middle class is undoubtedly wealthier, better educated and more diverse in gender and race than it was 20 or 30 years ago. But economists speak of a "hollowing of the middle," as some people have fallen into the lower incomes while others have risen to higher incomes. In 1970, about 40 percent of adults lived in the middle-income households. Today, it's 35 percent.
And the gap between rich and poor continues to grow. In 1980, the average executive earned 42 times as much as the average factory worker. Today, it's 400 times. At the same time, the cost of an existing single-family home became 60 percent more expensive, Pew found.
Meanwhile, the middle-class lifestyle is getting more expensive. A majority of people consider cell phones, high-speed Internet, cable and satellite television services a "new essential."
Borrowing against the future
Union leader Bernie Hess of the United Food and Commercial Workers in St. Paul, a trustee for the union's retirement plan, said he has noticed an ominous sign.
"I'm seeing more and more members taking loans out against their 401(k)s," he said. "If they're doing that, you know they're in trouble. Businesses are shutting down because the economy sucks. Folks are out of work. We're getting more calls about foreclosures."
George Pokorny worked for more than three decades at the same nursing home. But in today's economy, that longevity isn't worth much. When the home shut down in April, the St. Paul resident was sent packing with a small severance and a spot on the unemployment roll.
The 57-year-old is job hunting, but Minnesota has been losing jobs this past year, not creating them. "It's bad," he says. "It's very competitive, especially now at my age." He's calculated that he could make ends meet at a job making $9 or $10 an hour, almost half his old wage. But even those are hard to come by. He's even tried Pep Boys and Home Depot.
For him, the state's recent extension of unemployment benefits was a lifeline. "If unemployment stops, we're bankrupt," he says.
Against this backdrop of angst, optimism -- the classic middle-class trait -- still exists, but pollsters have to look harder to find it, especially among baby boomers.
Two-thirds say they've already done better than their parents, and most are confident things will be better five years from now. And their children? Most expect the future to be rosy.
"We cast hopes and fears into the future," said Morin. "Even if life isn't good now, it'll be better for us and better for our kids. That optimism typically has defined the middle class. And that is still true."
Jackie Crosby • 612-673-7335