The reason economic uncertainty is growing is fairly straight forward. Middle income jobs have become harder to find, employment in general is less stable and wages and household income's have been stagnating.
After much debate, there is broad consensus around this topic. Just in the last week the Harvard Business Review published The U.S. Economy is Only Doing Half its Job and the progressive Economic Policy Institute released their Top Charts of 2015.
Both focus on the failure of the U.S. economy to raise living standards, especially among moderate and low income Americans. Key quote from the HBR article:
America is producing ample prosperity ... Large companies in the United States are prospering alongside the economy as a whole. In terms of inflation-adjusted dollars and as a portion of GDP, U.S. corporate profits have been close to all-time highs in recent years ... Unfortunately, the success of big firms in the U.S. is only half the story of the nation’s economy. When it comes to raising wages and the standard of living of the average American, the news is much grimmer.
This lack of growth in wages and living standards is leading to more people experiencing economic uncertainty. This impacts business and society in a wide variety of ways, with the major impacts driven by people being less willing to make longer term commitments. Just a few examples of what this leads to are lower marriage rates, lower birth rates, lower home ownership rates, higher income inequality and lower economic mobility.
It's also behind the growth of side gigs and why many are choosing to work in the on-demand economy.
They are turning to side gigs to reduce economic uncertainty by adding an additional source of income and creating "life rafts" in case they lose other sources of income. See our Economic Uncertainty section for more examples.
Further supporting the articles listed above, the Pew study found the share of Americans with middle class incomes has declined from 61% in 1971 to 50% in 2015.
Pew defines middle income households as those earning between two-thirds and double the median household income.
In 2014, that meant a three-person household would have to earn between $42,000 and $126,000 to be considered middle-income. They adjust this by household size and the report chart below shows the various income definitions.
As 538 points out in their article on the study, the news is not all bad. One reason the middle class is shrinking is the upper class is growing.
But the shrinking middle class also means more people - including upper class people - are worried about their economic future. This increases economic uncertainty.