Is the Middle Class Still Shrinking?

Yes, middle income households have relatively less:

But, in other ways, they have more.

The Middle Class

The U.S.

Concentrating on cash, culture, and credentials, we can start with a definition.

Cash

Seemingly easy to quantify, scholars debate the money side of the middle class. Some look at a median and others at quintiles. In addition, it is possible to focus on the distance from a poverty line or purchasing power. And still, we have not specified if we mean disposable income or if household size makes a difference.

Even for one variable–median income–Pew Research disagrees with economists Alan Krueger and Lester Thurow:

Culture

During 2010, NY Times journalist David Brooks expressed a timeless description of the middle class:

“To be middle class is to have money to spend on non-necessities. But it also involves a shift in values. Middle-class parents have fewer kids but spend more time and money cultivating each one. They often adopt the bourgeois values — emphasizing industry, prudence, ambition, neatness, order, moderation and continual self-improvement. They teach their children to lead different lives from their own, and as Karl Marx was among the first to observe, unleash a relentless spirit of improvement and openness that alters every ancient institution.”

Credentials

The credential approach takes us to education and occupation. For education, we can use criteria that relate to years of school and one’s highest degree. If you did not graduate from high school, it is more likely that you are a lower income household whereas a college degree takes you to middle and upper income.

Predictably also, a job is your ticket to the middle and beyond:

Especially if you work in tech, business, or finance:

The Global Middle Class

Moving from the U.S. to the world, we see a rather dramatic scenario where the middle class soared in the Asia-Pacific region:

Our Bottom Line: Income Shifts

The good news is that median household incomes (in 2023 dollars), increased substantially from 1970 to 2022. Rising 78% to a $256,920 median, upper income households had the biggest jump. But middle income households also had a respectable 60% increase with $106,092 the current median. As for lower income, the percent increase sounds good at 55% but the amounts are much smaller ($22,831 to $35,318).

However, climbing the class ladder does depend on where you live. In a 50-state list, Yahoo Finance placed Utah at #1, then Idaho and Washington, as the easiest states to move from middle to upper income. Meanwhile, in Alaska at #50, the shift was least likely.

So, where are we?

Always, with posts like today’s I like to return to the coast of Great Britain, Explained by a classic paper from mathematician Benoit Mandelbrot, the shorter the ruler, the longer and longer (and longer) the coast. Or, thinking of a shrinking middle class, the closer you look, the more you see:

My sources and more: Again, Brookings, Statista, and Pew were handy for data. In addition, I thank Brookings for the credentials classifications. Then, this (outdated for stats) paper and Yahoo Finance provided analytic insight. And finally, I hope you will compare last year’s post to now.

Please note that in several of today’s paragraphs, we quoted from a past econlife entry.