Middle class' share of the nation's income is shrinking

— -- For Reno car salesman Tim Ticknor, the squeeze on his middle-class existence gradually has turned into a chokehold.

In 2005, he was making more than $90,000 a year selling used cars to people who had moved to the Southwest for its booming economy. It was an income that allowed him to rent a townhouse with his wife and daughter in a gated community.

Over the next six years, as the economy slowed, so did his income. First, it dropped to $70,000, then after a time it fell to $30,000.

Today, the car dealership where Ticknor last worked is bankrupt, and he is hustling as a day laborer for a temp agency. He and his family had to move into his mother-in-law's mobile home because they couldn't afford to pay rent.

Ticknor's story reflects how, across the nation, the middle class' share of the nation's income is shrinking. Reno, which has among the highest rates of unemployment and foreclosures in the United States, is a stark example: The share of income in the metro area that was collected by the middle class fell from 49.8% in 2006 to 45.8% in 2010, the year after the 18-month recession ended.

A USA TODAY analysis of Census data found the Reno area was among 150 nationwide where the share of income going to the middle class — generally made up of households that make $20,700 to $99,900 a year — shrank from 2006 to 2010. Metro areas where the middle class' share of income dropped outnumbered those where it grew by more than 2-to-1.

"The lower share of income is a way of saying income inequality is growing in the middle," says Paul Taylor, executive vice president of the Pew Research Center, who has studied the shift. "The vast middle has less of the pie than it had before."

Income is shifting to the top tier of households, especially those in the top 5%, Taylor says. The top 5% earn more than $181,000 annually.

In 2010, the top one-fifth of U.S. households collected 50.3% of all the nation's income, up from 49.9% in 2006. The lowest-earning one-fifth of households collected just 3.3% of the nation's income, down from 3.4% in 2006.

That leaves the three-fifths of households in between — a common definition of a broad middle class. It collected 46.3% of the income last year, down from 46.7% in 2006.

Analysts call it the middle-class squeeze.

The data are the latest signs of a trend that dates to the 1970s, says Heidi Shierholz, an economist with the Economic Policy Institute. Back then, 53% of the nation's income went to the middle class.

She says that during the 2000s, households in the middle class began losing ground because their incomes were not growing. The recent recession made it worse as employers cut work hours, furloughed workers, froze salaries or imposed layoffs. At the same time, the value of family assets, such as homes, went down.

"Families are taking substantial losses," Shierholz says. "The really scary thing is, there's no relief in sight."

A 'humbling' experience

In Reno, a metro area of 425,000 people, unemployment jumped from 4% in 2006 to 14% last year. Adjusted for inflation, the median income dropped 10% in the same period, to $50,699.

Rows of for-sale signs in every neighborhood and empty storefronts tell the story of a city whose middle class has been hit hard.

Ticknor, 45, says he is one of those casualties.