advertisement
advertisement
  • 1 minute Read

The Once-Great American Middle Class Is Shrinking

Sure, more people are rich–but a lot more people are poor, too.

The Once-Great American Middle Class Is Shrinking
[Top Photo: trekandshoot via Shutterstock]

The American middle class has been described as the “greatest economic engine in history” and “a pillar of the American Dream.” But these days it’s not what it was. In fact, the majority of Americans now fall outside that demographic: More people have “upper” or “lower” incomes, according to a major new analysis.

advertisement

The Pew Research Center says there are 120.8 million adults living in middle-income households against 121.3 million in lower- and upper-income households. In 1971, there were 80 million adults in the middle and 51.6 million in the bottom and upper tiers. Over the last 45 years, there’s been a “hollowing out” of the middle, with the bottom tier jumping from 16% to 20% of the population, and the upper-tier going from 4% to 9%.

In one sense, the shift has some positives: It shows that more people are progressing from the middle class to higher incomes. But it’s also indicative of growing inequality and a loss of spending power among people who have traditionally driven the American economy. Between 1970 and 2014, the middle’s share of income dropped from 62% to 43%, while the top’s portion went from 29% to 49%. Middle incomes have actually fallen 4% since the year 2000, while those at the bottom remain stagnant, according to Pew’s report.

Tim Roberts Photography via Shutterstock

Pew defines “middle class” as income of between $42,000 to $126,000 annually for a household of three. For other family sizes, the numbers vary. Couples without kids, for example, need about $34,000 a year to qualify. Lower-income households make two-thirds of the median, while upper-income households make double. To see where you stand, type in your numbers to this calculator.

Since 1970, the middle class’s income has increased by 34% overall–so it’s not like things have been terrible. But, again, those gains haven’t been shared at all equally. Older Americans, married couples, and African Americans have seen the greatest progress, though the elderly and African Americans remain more likely to be in the lower-income tier, and least likely to be in the upper-income group. Those without college degrees are increasingly penalized in today’s economy, “experiencing a substantial loss in economic status” over the 45-year period, Pew says.

See more from the study here.

About the author

Ben Schiller is a New York staff writer for Fast Company. Previously, he edited a European management magazine and was a reporter in San Francisco, Prague, and Brussels.

More

Video