What Causes the “Squeeze”?
There are several factors contributing towards middle class squeeze. Rise in inflation is directly affecting the prices of consumer products and services. Basic requirements like food, housing, education, energy, etc., are observing significant price rise. It is getting difficult for people to manage this price rise with their income. Let’s check out the causes of middle class squeeze.
Basic Necessities
Real Estate
Home is the basic need of every individual. Rise in real estate prices lead to increased expenditure towards housing. People also find it difficult to purchase a house due to high costs of real estate, causing them to strive hard to make monetary arrangements for buying a property. Also, people owning homes tend to sell off their property to gain liquidity in order to meet basic living requirements. Statistics reveal that less number of Americans own homes now as compared to what they did during the 1970s.
Energy
Electricity, fuel and other energy products have seen a significant rise in their prices since the year 2000. The direct and indirect costs associated with rising energy prices have created much pressure on middle class people. In the year 2006, families spent $155 more on energy products as compared to what they did in 2000. This expenditure has risen even more today owing to rising inflation.
Education
Middle class families believe in education as for them, it is the only key to a secure and fulfilling life. But nowadays, the costs of education is also rising. People tend to take loans to pay college fees thus, increasing the burden of expenses.
