The Shrinking Middle Class

I found this article at MarketWatch by Brent Arends about the shrinking U. S. middle class and anxiety over the same interesting, too. In it he has some useful information, for example, a definition of “middle class”:

The “middle class,” counted as people earning between 75% and 200% of the median income in each country, has shrunk since the mid 1980s from 64% to 60% of the population of richer countries.

61% of Americans were middle class by that definition in 1971 and 51% are now. The situation for millennials in their 20s is sharply different than it was for Baby Boomers when they were in their 20s. I can’t help but wonder whether that reflects economic or demographic change or both.

Here’s the conclusion of the piece:

“The recent stability in the share of adults living in middle-income households marks a shift from a decades-long downward trend,” he added. “From 1971 to 2011, the share of adults in the middle class fell by 10 percentage points. But that shift was not all down the economic ladder.”

I don’t find that encouraging. Maybe I’m perverse but a society congealing into an upper class, a lower class, and a struggling middle class, e.g. Mexico, considerably delineated by race, is not what I wanted or expected when I was in my 20s.

3 comments… add one
  • Guarneri Link

    Lies, damned lies and……. always beware articles that keep switching the basis of their statistics.

    The US Census says the median in 2015 was $56K. So 2x is $112K. It’s not hard to imagine a significant reduction in middle class just from people climbing past that hurdle. As I’ve noted before, the US GINI curve has a decided bump on the right side. And think of the salaries of the cost sectors that are killing the $40-$60k earner: health care professionals and education administrators. And the Fed / govt engineered bubble in real estate.

    Let’s look at the other end of the scale. What are prior trade and immigration policies doing to wages? What is higher education subsidy vs promoting the skilled trades doing? And now, free college?

    What’s the common thread: the heavy hand of government policy.

  • steve Link

    From the census Bureau.

    “Median household income in the United States was $56,516 in 2015, an increase in real terms of 5.2 percent from the 2014 median of $53,718. This is the first annual increase in median household income since 2007, the year before the most recent recession.”

    Pretty sure household means everyone in the house, so not sure where the 2X 56 comes from.

    “And think of the salaries of the cost sectors that are killing the $40-$60k earner”

    Fair amount written on this. Labor’s share of income has dropped, and this is an international phenomenon. It is driven by technology, globalization and has also bee accompanied by a huge increase in the share of income going to the very wealthy. The financial sector has grown incredibly. While health care costs affect how money is spent, and I think the tis largely true of education, if we are talking about income then we have other, more obvious places where income is going.


  • Guarneri Link

    People with capital have benefitted from capital asset inflation. Bernanke and Yellin kept Obama from drowning creating it.

    People in subsidized sectors have benefitted disproportionately from, er, uh, subsidy.

    Deal with it.

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