The middle class, long a bedrock of the American economy, is contracting. In most metropolitan areas, there are now fewer people living in middle-income households compared with the year 2000, and more people living in both poorer and richer ones. The fabled American middle now barely represents a majority of the overall population (51%).
A new analysis from Pew Research looks at households in 229 metropolitan areas, representing about three-quarters of the population. The middle class share fell in 203 places. The share of people in the upper-income bracket rose in 172 places, while the share classed at low income rose in 160 metros.
Pew defines middle income as between $42,000 to $125,000 a year for a household of three, low income as below $42,000, and upper income as above $125,000. It notes that the declining middle is not all bad news. In places like Midland, Texas, the middle-income share has fallen 53% to 43%, but the share of households on upper incomes has expanded from 18% to 37%.
But Pew’s analysis is mostly a less-than-happy one. Nationwide, median incomes for U.S. households were down 8% in 2014 compared to 1999, showing how many people are doing worse than at the turn of the century. Across all areas, including the metros in the latest analysis, the share of people in the low-income brackets rose from 28% to 29%.
“The decline of the middle class is a reflection of rising income inequality in the U.S.,” says Pew. “Generally speaking, middle-class households are more prevalent in metropolitan areas where there is less of a gap between the incomes of households near the top and the bottom ends of the income distribution. The middle-class share decreased more in areas with a greater increase in income inequality.”