I think there’s something basic missing from Noah Smith’s post at Bloomberg on the shrinking middle class:
Why do fewer Americans identify as middle class? One obvious possibility is that the middle class has been spreading out, separating into a well-to-do upper-middle and an expanding working class. The evidence shows that something like this has been happening for decades now.
and that’s immigration. Let’s say, just hypothetically, that you import 25% of the American population in the form of immigrants and their children and most of these immigrants identify as lower class or working class. Of course the percentage of people who identify as middle class will decline. That’s not economics or sociology—it’s mathematics.
It also suggests a policy solution: import a greater percentage of immigrants who self-identify as middle class. To do that you’ll need to control who comes here and who doesn’t which for some reason appears to be anathema.