It's no coincidence that many of these jobs require an advanced education.
Those who have been able to hold their own with recession-proof careers that offer high job security have done really well. In the last 15 or so years, we've not only seen two major recessions, but we've also seen an economic shift from a manufacturing-led economy to an information and services-led economy. There's a few key economic and demographic trends going on here. Economic Changes and Middle Class Demographics It's only really been in the last 15 years that the middle class has really taken a financial hit (the upper and lower classes have as well) in addition to a population share hit. So, despite the middle class shrinking in population share since 1971, its income and wealth has not seen a continual downward trend since then. The wealth of each class has had a similar trajectory.Įach income class is wealthier than it was in 1971, but is less wealthy than in 2007 (pre-Great Recession). The first from the tech bubble bursting, the second from the housing bubble/financial crisis. Since then, of course, we've had two major recessions. had a long streak of 4%+ GDP growth, which resulted in an incredibly fast growing stock market. It was the very end of the (first) Clinton presidency and the U.S. The year 2000 is significant, because in many ways, it was when the U.S. Notably, all three classes are making less than they were in 2000. Starting with income, it's worth noting that all three classes are actually making more money, in inflation adjusted dollars, than they were in 1971 (this might be somewhat misleading because there are many more women in the workforce today than there were back then). Income and Wealth by Classįirst, let's take a look at how each of the three classes have done financially, over time, in terms of income and wealth. Why is this happening? I've got some theories – and there's some data in the study to back them up. The most basic interpretation is that the middle class is being hollowed out – those at the bottom of the middle class are moving downward, while those at the top are moving upward. This is a long term trend that does not appear to be going away. You'll also notice that both the upper and lower classes are gradually increasing in size over time. I think we can all agree that is NOT a good thing. The number of households in the lower and lower-middle classes have also increased – going from 25% of households in 1971 to 29% today. I think we can all agree that is a good thing.īut, not everyone is moving upward. Today, 21% are – a remarkable 50% increase in the share of those income classes.
In 1971, 14% of households were upper-middle or upper class. I believe that in any good economy, you would like to see upward mobility in income classes. Here's where things start to get really interesting – the lower and upper classes have also increased in number, however, unlike the middle class, they have also increased in overall population share. It's the middle class share of population that has shrunk, as the overall population has increased notably over time. "Shrunk" is interesting terminology because the middle class in America today is actually bigger than it has ever been in history in headcount. To the right, you'll see a graphical depiction of how the middle class has shrunk over the years. I doubt many 3-person households at $42K in income feel "middle" in terms of purchasing power compared to a "middle" $120K household with 3X the income and an identical family size. In the report, Pew breaks income classes down into the following groups (again, 3-person households): Middle class income can also vary significantly by state (here's an income class calculator to help you determine where you fall). This equates to a fairly wide range of $46,000 to $126,000. What exactly is the "middle class"? Pew defines middle class (or as they prefer, "middle-income") Americans as those with annual household incomes between two-thirds (67%) and double (200%) the national median household income of $62,491 for a household of 3. Let's look at the data and start with this… Is the middle class under attack? Should we all be panicked and enraged? Well, in some ways, yes. 120.8 million adults are now in middle income class households, while a combined 121.3 million are in lower and upper income classes. Pew's biggest eye-opening finding was that the middle class is no longer the majority of the country, having dipped from 61% of U.S. Census data in a super-interesting 74 page study.
Pew Research Center grabbed headlines this past week with their analysis of U.S.
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