NEW YORK (CNNMoney) -- It's official. The first decade of the 21st century will go down in the history books as a step back for the American middle class.

Last week, the government made gloomy headlines when it released the latest census report showing the poverty rate rose to a 17-year high. A whopping 46.2 million people (or 15.1% of the U.S. population) live in poverty and 49.9 million live without health insurance.

But the data also gave the first glimpse of what happened to middle-class incomes in the first decade of the millennium. While the earnings of middle-income Americans have barely budged since the mid 1970's, the new data showed that from 2000 to 2010, they actually regressed.

For American households in the middle of the pay scale, income fell to $49,445 last year, when adjusted for inflation, a level not seen since 1996.

And over the 10-year period, their income is down 7%.

"Economists talk about the lost decade in Japan. Well, with these 2010 data, we can confirm the lost decade for the American middle class," said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities. Rising costs for middle class

Sure, it's fair to say Americans at all levels of income, from rich to poor, were hit hard in the decade that started with the dot-com boom and bust, and ended with the Great Recession.

But according to the census data, those losses disproportionately hit the lowest 60% of Americans, while the richest 40% actually gained wealth, relative to the entire U.S. economy.

Much of that trend can be explained by massive losses in the housing sector, the period of high unemployment that ensued, and rising prices that flew in the face of the American family's heightened financial struggles.

Unlike the richest Americans, middle class families have most of their wealth tied up in the equity of their homes, which took a beating in the recession. And high unemployment has left many people with little or no other income at all.

At the same time that Americans had less cash to spend, they were also being hit with rising prices for some crucial items. Even accounting for inflation, it still costs more to buy a home, fill your gas tank, go to the doctor and put food on the table than it did only 10 years ago.

And not only is it more expensive to live a middle-class life, it costs more to get there too. The price of a college education -- still considered the ticket to higher wages and a better lifestyle -- has surged over the last decade, even in spite of the recession.

Facing these burdens, the American Dream is undergoing stark changes, with fewer people choosing to buy homes and more young people postponing their own independent lives. The census data showed about 14.2% of all young people ages 25 to 34 are still living in their parents' homes this year, compared to about 11.8% before the recession began in 2007.

And that poses a challenge for the economy going forward. After all, what will the middle class and the American Dream look like another decade from now, if the younger generations still can't get their feet off the ground? To top of page

Adult-US Comments: This trend will continue unless Americans get rid of ALL the long term politicians running things in Washington. They no longer represent the average hard working middle class AMERICAN. Only the very rich and very poor have benefited from the last 30+ years of policies. The middle class, which is what made America great, is dieing. I urge all voting Americans to vote out long term incumbents, and ONLY vote for politicians that propose real solutions to the many problems facing our country right now. Ignore the rhetoric, patriotic blather, and obvious lies that most of these politicians spew on a daily basis.

Here is my short list of problems that need to be solved (not in order).

• Exploding Federal, State and local Debt.
• Exploding medical costs and too much medicare/medicaid fraud.
• Get rid of campaign financing and replace with Federally funded campaigns.
• Politicians have to abide by all of the laws the rest of us do !
• Wasting tons of money and lives on unwinnable wars in Iraq and Afghanistan.
• Dump Obama's horrible medical plan and start all over.
• Many Millions of illegal immigrants in this country who don't pay taxes and use lots of our resources (medical, schools, etc).
• A horribly bloated and complicated tax system riddled with loopholes for special interests.
• Antiquated Marijuana and prostitution laws that need change.
• Import tax on most products from China and on out sourced services too.

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