The American middle class—at certain times the envy of the world and, at other times, the object of its derision—is losing ground financially to upper-income families, according to a report from the nonpartisan Pew Research Center.
The total population of the middle class in the U.S. has dropped from 61% in 1971 to 50% in 2021. From 2011 to 2021, the population of the middle class has remained stable; however, income disparity continues to increase in the U.S. During this same time period, those living in higher-income households controlled an increasing share of aggregate income while the share decreased for the middle class.
Key Takeaways
- The American middle class is losing ground financially to upper-income families.
- The total population of the middle class in the U.S. has remained fairly stable since 2011 but has decreased substantially since 1971.
- Between 1970 and 2020, the share of aggregate income held by the upper class has increased while it has decreased for the middle class.
- Researchers suspect that this difference between the way that the middle class and higher-income households have fared since 2010 is a lingering result of the Great Recession and an earlier recession in 2001.
Reversal of a Downward Trend
Prior to 2011, the American middle class had been shrinking for several decades.
This trend was mirrored in other Western countries during this time period, including Germany, Italy, and Spain. But the opposite was true in France, the Netherlands, and the United Kingdom: The middle class expanded between 1991 and 2010 in these countries, according to a separate report by the Pew Research Center about the state of the middle class in Western Europe.
This report, which looked at the U.S. and 11 Western European countries, found that in the nearly 20 years from 1991 to 2010, the portion of American adults living in middle-class households fell from 62% to 59%.
It defined middle-class households as those with incomes of anywhere between two-thirds and twice that of their country’s median disposable household income. In the case of the U.S., that meant a range of roughly $35,000 to $106,000 a year for a household of three.
The Western Europe study didn’t consider other common markers of middle-class status, such as occupation, educational attainment, or homeownership.
Income Inequality Is on the Rise
While the median income of middle-class households increased by 50% between 1970 and 2020—from $59,934 in 1970 to $90,131 in 2020—the median incomes of those in upper-income households fared much better during this time period: their median income increased from $130,008 to $219,572, an overall gain of 69%. (All incomes are expressed in 2020 dollars.)
Researchers suspect that this difference between the way that the middle class and higher-income households have fared since 2010 is a lingering result of the Great Recession and an earlier recession in 2001. In fact, only the incomes of those in upper-income households increased significantly between 2000 and 2016, from $183,680 to $187,872. For middle-income households, the increase was negligible, from $78,056 to $78,442.
The trend toward income inequality is not new by any means. The income gap between upper-income households and middle-income households (in addition to lower-income households) is the continuation of a decades-long trend.
Approximately 1.7 billion people in the world are living in countries where inflation is outpacing wages.
The Pew Research Center has been analyzing data about income inequality since 1970. For example, in 1970, the median income of upper-income households was 2.2 times the income of middle-income households (and 6.3 times the income of lower-income households). By 2020, these income ratios had increased significantly, to 2.4 and 7.3, respectively.
These numbers reveal that while the incomes of those in upper-income households have more than recovered from the losses experienced during the Great Recession, this has not been the case for lower- and middle-income families. For lower-income and middle-income households, their 2016 income levels were comparable to 1989 levels.
So, while the total population of the American middle class may be stabilizing, this income class is not experiencing the same level of mobility—or gains in quality of life—that has defined the American middle class in the past (and made it a desirable social position). And overall, this trend mirrors the long-runningrise of income inequalityin the U.S.
Economic Recovery After the Great Recession
The economic recovery following the Great Recession of 2007–2009 was one of theslowest in modern times and may have prevented adults with aspirations of class mobility from moving into upper-income households.This economic recovery also had a profound impact on how income is distributed in the U.S.
In general, the decline in the wealth share of the middle class and the rise of income inequality create an adverse climate for economic growth. This is because a relative decrease in the incomes of lower- and middle-income families in the U.S. may result in a decline in overall consumption in the country—this has been shown to increase the level of borrowing (and debt) and decrease investments in education.
For this analysis, the Pew Research Center defined “middle-income” Americans as adults whose annual household income is two-thirds to double the national median, after incomes have been adjusted for household size. In 2021, the national middle-income range was about $52,000 to $156,000 annually for a household of three. Lower-income households had incomes less than $52,000 and upper-income households had incomes greater than $156,000. All of these numbers are in 2020 dollars.
What Income Level Classifies an American as Middle Class?
In 2021, the national middle-income range for a household of three was about $52,000 to $156,000 per year, in 2020 dollars, according to the Pew Research Center.
Which Groups Made the Greatest Economic Progress Between 1971 and 2021?
People 65 and older, followed by Black adults, according to Pew. The oldest group's presence in the upper-income category increased by 25 percentage points, and Black adults by 14 percentage points. However, Black and Hispanic adults are still less likely to be in the middle class and more likely to be in the lowest-income class than other groups and only one in 10 were in the upper-income group.
Has the Middle Class Shrunk Since 1971?
Yes, considerably—from 61% to 50%. Meantime, the upper-income group rose from 14% to 21% of the population, and the lower-income group rose slightly, from 25% to 29%.
The Bottom Line
The poorer economic performance of the middle class compared to higher-income Americans has serious implications for inequality and social justice. It also acts as a damper for economic growth. As the economy continues to move beyond the pandemic and deals with inflation and the effects of the war in Ukraine, it remains to be seen whether these trend lines will continue.
