NewsWire: 5/16/22
- Since 1971, the share of American adults in the middle class has fallen from 61% to 50%. As the middle class has shrunk, the ranks of upper-income adults and lower-income adults have increased. (Pew Research Center)
- NH: According to a new Pew analysis, the share of American adults living in middle-class households was 50% in 2021. Fifty years ago, this was 61%.
- Pew updates their figures on the size of the middle class every few years. They define middle-income adults as those with an annual household income that is two-thirds to double that of the national median income, after having been adjusted for household size. In 2020, this was about $52K to $156K annually for a household of three. “Lower-income” adults have household incomes under $56K, while “upper-income” adults have household incomes greater than $156K.
- The share of American adults living in middle-class households has been stable since around 2011, when it was 51%. Prior to this, it steadily declined every decade since the 1970s, for a total drop of 10 percentage points.
- Yet while the size of the middle class has remained steady for about a decade, the share of aggregate income held by this group has continued falling. In 2020, this was 42%--down from 62% in 1970. The middle class’s declining share has been entirely due to larger gains in income over time among upper-income households. The share of aggregate income held by upper-income households has surged from 29% in 1970 to 50% in 2020. Over the same period, lower-income households’ share of income ticked down from 10% to 8%.
- Which groups made the biggest gains in income over the past five decades? The answer won’t be a surprise to NewsWire readers. Leading all demographic groups was the 65+, who increased their share in the upper-income tier and reduced their share in the lower-income tier for a net gain of 26 percentage points. (See “The Graying of Wealth…in One Picture.”)
- Younger age brackets did not fare as well. 30- to 44-year-olds and 45- to 64-year-olds both saw net gains of only 2 percentage points, while 18- to 29-year-olds actually regressed. They increased their share in the lower-income tier by a net 2 percentage points.
- Married men and women (see “The Marriage Premium Keeps Growing”) also made double-digit gains. Both groups nearly doubled their shares in the upper-income tier (from 14% to 27%), and neither saw an increase in their share in the lower-income tier. Unmarried men, in contrast, saw an 8 percentage-point increase in their share in the lower-income tier. Overall, unmarried men and women were much more likely to be in the lower-income tier than their married counterparts in 2021.
- The gaps based on education level were biggest of all. Across all demographic groups, adults who do not have at least a bachelor’s degree have fared the worst over the past five decades. High school graduates increased their share in the lower-income tier and reduced their share in the upper-income tier for a net decline of 26 percentage points.
- These findings underscore the huge premium that marriage and education now hold in terms of upward mobility. Americans’ class status—as well as their ability to stay in that class--is increasingly determined by their marital status and level of education. Another recent Pew study found that since 2000, roughly 70% of middle-class households remain in the same income tier a year later. The remaining share move up or move down the economic ladder. But adults with a high school diploma are twice as likely as those with at least a bachelor’s degree to slip from the middle-income tier to the lower-income tier. Middle-income adults without a high diploma are more than 3x likely to regress.
- The last time we wrote about the middle class in 2019 (see “The World’s Imperiled Middle Class”), we highlighted several surveys showing that the share of people who feel as if they are part of the middle class has been declining. Americans are increasingly more likely to describe themselves as “lower” or “lower-middle” class. With upper-income households continuing to amass more and more wealth, even those who fit the definition of middle class can’t help but feel as if they are falling behind.
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