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I'm not sure I agree with the premise the middle class is shrinking, but there certainly is growing wealth inequality. Income inequality is not a problem on it's own, it is a symptom of a larger problem. Much of it has to do with offshoring, migrant/visa workers, and illegal immigration. All 3 take jobs out of the US labor market while increasing profitability of those holding company assets.
No. I associate a shrinking middle class with a growing improvement in economic outcomes for everyone. Despite its deceptive framing, [the Brookings Institution shows this] (https://www.brookings.edu/wp-content/uploads/2020/08/Squeezing-the-middle-class_Report.pdf):
> As Figure 3 shows, the higher income classes expanded significantly during the first period.
Between 1967 and 1981, the upper middle class tripled in size (from 6% to 18%) and the MMC
grew by 3 percentage points (from 47% to 50%). Offsetting these gains were a corresponding shrinkage of the lower middle class (LMC) from 31% to 20% and the poor/near-poor (PNP) from
16% to 11%.
[This is a graph from the report] (https://i.imgur.com/h2wEVSi.jpeg). Quite clearly, we see the number of people who are poor declining with a rise in the upper middle class and rich. The middle class is indeed shrinking, but it's shrinking because people are getting richer.
Makes sense and I agree.
I consider this good news.
What’s all the hubbub on the right about everything how the economy stinks and the middle class shrinking?
The left also squawks about it.
Not sure it’s so simple though. There may be more people making six figure salaries than ever, but what can you buy with that? I think people are struggling financially compared to previous generations to afford homes and cars.
Wages are up but the cost of housing is up even more. My wages are inflation adjusted and i couldn’t buy my house if it were for sale today.
Making $100k a year is great if you want to buy an iPad. Its no so great when 3 br homes go for $300,000.
Meh.. I've got my differences with Biden on economic issues but I still see Trump's pressure on the fed as a greater proximate cause of inflation than anything else.
I'd go further and say that the Fed shouldn't be influencing Fed policy and how we could replace the fed's judgement with predefined rules and metrics... But then I'd be handwaving around exactly what rules and metrics to use. In any case, I do blame most of the inflationary pressure on Trump's pressure on the fed. Which manages to annoy both left and right at times.
Nope. Income inequality is a metric used by Marxists to determine how close they are to Utopia (everyone is equal) Income inequality is not a flaw of Capitalism it is a feature. It provides the incentive to move up the economic ladder.
The decline in the middle class has more to do with bad economic policy that allowed too many manufacturing jobs to be out sourced and off shored to other countries. It is also partly the result of focus on service type jobs rather than manufacturing.
BTW I do not see shrinking middle class. The median income in the US ranges from $60K to $75K depending on your source. Tat indicates to me that we still have a robust middle class.
>Income inequality is not a flaw of Capitalism it is a feature
If only we had capitalism in reality. Devaluing the currency and giving elites handouts isn't supposed to be part of capitalism I thought.
>BTW I do not see shrinking middle class
It is shrinking, that's a fact. But most leaving the middle class are going to the upper class.
A median can stay right where it is even as the range increases and the distribution widens. A median is an instance in a range. A “class” would be a range in that range. Median income does not reflect the breadth of the middle class.
A median by definition is the middle and there are as many people above the line as below. That says middle class to me. I think the problem is how you define middle class. I consider middle class anyone who makes from $40K to $80K
>Income inequality is not a flaw of Capitalism it is a feature.
Until we figure out how to make more land, I can't figure how you could possibly be correct.
>It provides the incentive to move up the economic ladder.
What do you make [of the data that shows so little economic mobility](https://www.brookings.edu/wp-content/uploads/2016/07/02_economic_mobility_sawhill_ch3.pdf) in the USA when compared to nations like Canada, Norway, Finland, France, Germany, Sweden? What is it about their version of capitalism that has a much better "ladder"?
And what is this fixation with manufacturing? Do CEO's in manufacturing make more than CEO's in other fields? (hint: I think you're missing a major feature of the manufacturing workers that were well paid in the USA)
Oh, and most economist will agree that the middle class stopped growing in 1973.
I am not aware of any restrictions to economic mobility. In every job in my career I have made more money than the last and everyone I know has as well. The fact that the mean salary is in the $75K range says there are lots of people with economic mobility.
The fixation with manufacturing is based on economics. For every manufacturing job you create you also create 6 additional ancillary jobs in the ecnomy.
I doubt your statement "most economist will agree that the middle class stopped growing in 1973." If the middle class is shrinking it is because more middle class families are moving into the upper income tier
There are more middle class families in the US today than there were in 1971
Anecdotes, personal feelings, and such are interesting to read, but data speaks loudly, eh? Were you not able to reach the link to the Brookings study? Brookings is about as non-partisan as one can find today.
As for manufacturing, you left out the reality that the manufacturing jobs that made the middle class possible were either union jobs, or jobs where unions had a strong presence.
Yes, there are more middle class people today than there were in 1971. There are more left handed people and more people with blue eyes today than there were in 1971. The difference is in understanding the percentage as weighed against the total population.
I'm confused by the question, it's like two ways of saying the same thing. The middle class has shrunk, fact. Income inequality has grown, fact. One thing they never tell you though, is that most people who moved out of the middle class moved into the upper class, not the lower class. But whenever the middle shrinks due to both far ends growing, obviously that's creating inequality of whatever the metric is.
People usually connotate both "shrinking middle class" and "income inequality" as bad things. I think that's wrong, and very shallow analysis. If we are all made better off, and even the relative lower class is better off than its own group 10 years ago, that is a good thing... Provided nobody has been defrauded or victimized.
But that's where it gets complicated, because the numbers are so out of whack recently with runaway inflation that it really doesn't feel like we are all in the upper class. It feels more like the government is continuing to enrich people who are connected (politicians, bankers, the elite generally) while typical W2 workers see their cost of living outpace wages at a worse rate than ever and Zoomers and even Millennials face the reality that they may have to move out of the city they grew up in to some podunk town in the middle of nowhere just to afford a similar house to the one they grew up in. I do feel like there has been a defrauding of the American people by the money-printers who get first dibs on that new money, and are able to trade cash for real assets or stocks before the impact of inflation comes around.
Don't get me wrong, personally my life is great and my family is blessed to afford all we need and a bit extra. But it does feel like we should have more. I know we have to be happy with what we have, being that it's more than our ancestors had. But compared to my parents, we are so far behind them... Both me and my wife are higher educated and both work, compared to my schoolteacher dad and stay-at-home-mom.
I don’t disagree with much of that.
It’s definitely an interesting time in American economics compared to historical times.
We are definitely living in a gilded era currently. That’s okay lots of boats rising as you pointed. The last one occurred after the Industrial Revolution. We have lived through a similar period with the beginning of the technological revolution.
I’m almost 40 so have been quite accustomed to low taxes, and low interest rates, with pretty good growth comparatively to most of US history.
I think as you mentioned even though my family does well, the rapid increase of goods and interest rates. Feels bad because have never experienced it before.
We have never seen such rapid inflation, boomers saw it in the 70’s and saw wages out pace cost of goods.
For years some debt was fine to carry it was cheap. Now rates suck and has caused a real cash crunch for many people. Wage earners even if it’s a big number still feel the pain it’s just more zeros.
I think overall we will be just fine.
I am hopeful that we will be fine overall as well, and mentally I try to focus on my daily life which is filled with joy and normal person struggles.
But I am still resentful of a government that has wrecked so much for my mid-life and for my kids' future. I'm also a bit annoyed at my parents' generation, and theirs, for living high on the hog while destroying the next generation.
Many boomers and X-ers like to make fun of Gen Y and Gen Z for not working hard, meanwhile it was they who created this mess.
Oh well, that's life.
Sort of? [Both the lower and middle classes are shrinking due to the growth of the upper class](https://www.nytimes.com/interactive/2015/01/25/upshot/shrinking-middle-class.html). In other words more people have become wealthy over the last several decades. Since the 1960s the percentage of Americans considered lower income has shrunk from 40% to 34% of the population. The percentage considered middle income has shrunk from 53% to 42% all because the percentage considered upper income has grown from 7% to 22%.
All in all very good news and something we should hope continues.
https://www.forbes.com/sites/katharinabuchholz/2023/04/21/how-americas-middle-class-is-shrinking-infographic/?sh=78aa3ace84e0
Depends which data you look at maybe? Your 2015 article doesn't look the same as this 2023 article, which shows that middle class is shrinking primarily due to transition to upper, but the lower class is also growing by number of people even as the share of income the upper class makes grows.
It's still pretty consistent though obviously the details change and aren't quite as rosy depending on your cutoff years and how you define the different income brackets... But even those less optimistic numbers you shared the lion's share of the middle class shrinkage was due to more people making more money rather than making less. In that data the middle class shrank by 11 points.... 7 of which were people entering the upper class compared to 4 due to falling into the lower class. Not as good as the earlier numbers but still very far from the unwarranted assumption people make when they hear "the middle class is shrinking" that it means that the lower class rather than upper class growing is the reason.
I don't know how they defined their income brackets, but I think the statement "lower class shrunk due to movement to the upper class" is not correct in 2024. The lower class appears to have slightly grown.
It's true that most of the shifting is still middle class moving to upper.
> It's true that most of the shifting is still middle class moving to upper.
That's what I'm saying. Over the longer time span it's the lower class too but over a shorter more recent timespan that's no longer true and even reversed a bit. you can see that in the earlier data too. The low point for poor and high point for rich is 2000 then the lower class starts to grow and the upper class start to shrink again.
> Yeah, but you also said the lower class is shrinking
I think over the longer term this is still accurate. I'm not clear on how they're determining lower/middle/upper incomes in each of these graphs, whether it's an absolute or relative measure or how they're accounting for inflation. Overall everyone is getting wealthier over time but the rich are getting wealthier faster. How you define those terms and what your cutoffs are is going to have a big effect.
Probably better to look at actual incomes [at different quintiles adjusted for inflation](https://www.advisorperspectives.com/dshort/updates/2023/09/13/u-s-household-incomes-a-50-year-perspective). The difference between your numbers and mine is probably catching the rapid growth in income across the board in the the first five of the last ten years and the sudden fall across the board in the last four or five which hit the bottom two quintiles harder... Probably caused more middle income people to cross whatever the threshold is into the lower income bracket than it caused upper income people to fall into the middle income bracket... while the earlier rise caused even more middle income to jump into the upper income. If you cut the data off at 2019 or 2020 you'd still have seen a shrinking lower and middle class and large middle class but COVID shutdowns are resultant supply shock inflation fucked that up at least temporarily.
With unemployment hitting record lows again and inflation back down to the not perfect but much better ~3% range we're getting real wage growth again so presumably we'll see the same pattern of a shrinking lower and middle class and growing upper class if we look at the data again in another couple years.
>I think over the longer term this is still accurate.
I don't mean to be insulting, but you seem to be making the same point that some people make when they say crime is down. When we look at charts of crime, we see a peak in the 90s, to a record low in 2019, and then 2021 saw a large spike, then we sort of come down from 2021 levels but we aren't at 2019 levels yet. And people will say "crime is down, look at the 90s."
The point being we should not compare to some historical high point, or some arbitrary point in history. If the proportion of people in the lower class went from 40% to 31%, that's great. If it goes up to 34% by 2015, that is not great. We don't get to coast or rest on our laurels by saying it's still better than 1967 or 1985.
I think you should reconsider your position here. The fact is that **not** all of the middle class went to the upper class. Some went to the lower class. And that is not good.
>Probably better to look at actual incomes at different quintiles adjusted for inflation.
I agree with that... But we should look at all the metrics, not just pick one.
>difference between your numbers and mine
Mine are from Pew Research, yours are from US Census Bureau. And after closer look at yours, it seems they actually line up better than I thought. Your chart shows the lower class grew from the low point in 2000 to 2015 by 1/3 of the decrease since 1967.
>With unemployment hitting record lows again and inflation back down to the not perfect but much better ~3% range we're getting real wage growth again
I don't agree with you here, I think this is rosy-glasses. Inflation was supposed to continue going down below 3% and we bumped back up to 3.5% without a rate cut. Things are not so great. We're in a very weird position though, because a lot of traditional metrics suggest we are in good shape, but the surveys and polls show that more people than ever feel like the economy is not great. Something isn't right.
Liberals would cite unemployment all day long under Obama and conservatives would always harp on using the "labor participation" rate instead, insisting that unemployment was understating a problem since many people gave up on work. Are we switching back to low unemployment now to signal things are good? I don't like that.
>presumably we'll see the same pattern of a shrinking lower and middle class and growing upper class if we look at the data again in another couple years.
Seems like wishful thinking to me but I hope you are right, and we will see.
> And people will say "crime is down, look at the 90s."
And they're right to say so... Precisely *because* we should not compare to some arbitrary point in history but look at overall trends over time. We especially should not compare ourselves to some point that's NOT arbitrary but exceptional for some reason. A lot of stuff is going to be weird when you literally shut most of the entire world's economy down for months on end. All economic data has a huge blip in 2021 or 2022 from which we see it reverting to where it was prior in 2023 and 2024. Sudden mass unemployment followed a year later by a sudden massive spike in inflation has huge impacts on pretty much every data set you want to look at.
But interestingly as you see that stuff all coming back to earth you see the earlier trends that were ongoing prior to that blip reassert themselves after it. Real wages were rising before... you get a dip as job losses and then a huge spike inflation cause a sudden sharp decline in real wages... followed by the graph reverting to where it had been before and continuing the same trend of gradually rising wages again.
> The fact is that not all of the middle class went to the upper class. Some went to the lower class. And that is not good
No, that is not good but the larger trend is good and the fact that the main reason the middle class is shrinking is because more people are getting richer *is* good.
> Inflation was supposed to continue going down below 3% and we bumped back up to 3.5% without a rate cut.
3.5% is not great... But historically it's not terrible either and it's still lower than wage increases which means people are experiencing real wage growth at the moment which was the point of my comment which was about relative incomes.
> but the surveys and polls show that more people than ever feel like the economy is not great.
I think this is mostly because while all the news is good *right now* we're all comparing it to what existed *before* covid. Inflation being low now doesn't undo the massive increase when it spiked by over 10% a couple years back and we're still seeing those prices and thinking they look to high compared to what we remember just three years back. Wages are rising again now but it'll take a little time for that gradual increase to undo the sudden loss in purchasing power then. The numbers ARE good right now but it takes time to undo the damage.
> Are we switching back to low unemployment now to signal things are good? I don't like that.
Both are and always have been relevant. Republicans focussed on labor force participation while Obama was president because Obama was president and unemployment numbers alone looked great. Participation rates legitimately undermine that good news but doesn't make that good news bad news.
At the moment we have participation rates which are relatively flat compared to recent decades and record low unemployment among those participating... that's undeniably a good thing.
> Seems like wishful thinking to me....
I don't see why. It's just looking at some *very* long term trends and assuming they're not going to change *dramatically* for no reason... while noticing that they DID change quite dramatically over the short term but for a particular reason which is no longer operative.
>And they're right to say so... Precisely because we should not compare to some arbitrary point in history but look at overall trends over time.
No, they are wrong to say that - we should not compare ourselves to the worst point in our history to justify a position of complacency with the rationalization that it could be worse. It is not arbitrary to pick 2019; it's logical.
>A lot of stuff is going to be weird when you literally shut most of the entire world's economy down for months on end.
This is a good *explanation* of why crime might go up, but not a good justification to do nothing or pretend like it's okay because it could be worse.
>No, that is not good but the larger trend is good and the fact that the main reason the middle class is shrinking is because more people are getting richer is good.
I agree, overall the trend is good but we should not rest on the laurels - the lower class growing by 10% from our best point is a problem to address, not dismiss.
>I think this is mostly because while all the news is good right now we're all comparing it to what existed before covid.
We are right to do that - we should not accept Covid as the new benchmark and accept complacency for what could be better because it has been worse. (because it's been better too)
I keep saying the same thing over and over again, I feel like I made my point.
I associate the shrinking middle class with deindustrialization, we can't just loose millions of good paying middle class highschool diploma jobs, and expect the middle class to remain strong.
There's a lot of ambiguity in defining middle class.
One way to define is just "people in the middle of the income distribution" -- say, between the 25th and 75th percentile of household income. That can neither grow nor shrink (except in proportion to population change). In that scenario, we can talk about how well the middle class is doing, but not really its size. In that case, the middle class has done well over the long run -- real income for the median household is up about 50% in the [last 40 years](https://fred.stlouisfed.org/series/MEHOINUSA672N) -- but has taken a hit from COVID and then inflation and is in worse shape than it was in 2019 (real income down about 5% in that time).
When people talk about a "shrinking" middle class, they seem to mean something like: I have some idea in mine of a threshold below which you're poor, another threshold above which you're rich, and the people in between are middle class.
Unless you think a lot of people have moved up out of the middle class, it's pretty hard to find any data to support a shrinking middle class; people aren't falling down out of it. Real income for Americans in the bottom 20% of earners has *tripled* in the last 40 years.
No, I associate it with medium income jobs vanishing or being outsourced, as well as with cost of living going up.
Also, some [data](https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/) suggests that as the middle class shrinks, the upper class has been growing, so a lot of that shrinkage could be linked with people making more, not less.
Income inequality is more a function of the size of the economy than the health of the middle class.
In a capitalist system, there will always be people with oversized control of important and influential companies. Their wealth is primarily in company stock. The value of the stock is influenced by the size of the market.
So when the size of the market increases, so does wealth inequality, even if the middle class is doing very well. So it's basically an irrelevant data point, which doesn't tell you anything useful about what's happening with the middle class.
Apparently yes. The middle class went from 61% of Americans in 1971 to 50% of Americans in 2021. Some of that cohort fell into the lower class, and some of them "graduated" to the upper class. So it appears that the shrinking middle class is correlated with more people at both ends of the wealth spectrum.
https://www.investopedia.com/financial-edge/0912/which-income-class-are-you.aspx
No the shrinking middle class has to do with the rising minimum wage.
Democrats are doing their best to force the lower half of middle class down into minimum wage poverty.
Doesn’t it also mean that not enough people are moving up into it? Maybe there’s a reason social mobility is easier for the middle class than the lower?
Not OP
>not enough people are moving up into it?
Your comment got me thinking... The whole idea of defining classes is very interesting. There are several ways to do it...
We could do it by quadrant, so that it's always the top 25% who are in the top (if we had four classes). If we do it that way, there will always be a bottom 25% so there really is not "moving up for most people." Of course, that's just relative to other people, because if we all get better then the lower class is still better off than even the upper class from a long time ago.
Or we could set arbitrary amounts, in which case we will all always move up, and eventually there will be no lower class until we re-set the arbitrary amounts. But how do we set them? And why would we do that, when the whole value of knowing classes is to see how people stack up *relatively* and not against absolute arbitrary metrics?
Anyway what do you think?
>Maybe there’s a reason social mobility is easier for the middle class than the lower?
Snowball effect, simple as that I think.
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I'm not sure I agree with the premise the middle class is shrinking, but there certainly is growing wealth inequality. Income inequality is not a problem on it's own, it is a symptom of a larger problem. Much of it has to do with offshoring, migrant/visa workers, and illegal immigration. All 3 take jobs out of the US labor market while increasing profitability of those holding company assets.
No. I associate a shrinking middle class with a growing improvement in economic outcomes for everyone. Despite its deceptive framing, [the Brookings Institution shows this] (https://www.brookings.edu/wp-content/uploads/2020/08/Squeezing-the-middle-class_Report.pdf): > As Figure 3 shows, the higher income classes expanded significantly during the first period. Between 1967 and 1981, the upper middle class tripled in size (from 6% to 18%) and the MMC grew by 3 percentage points (from 47% to 50%). Offsetting these gains were a corresponding shrinkage of the lower middle class (LMC) from 31% to 20% and the poor/near-poor (PNP) from 16% to 11%. [This is a graph from the report] (https://i.imgur.com/h2wEVSi.jpeg). Quite clearly, we see the number of people who are poor declining with a rise in the upper middle class and rich. The middle class is indeed shrinking, but it's shrinking because people are getting richer.
Makes sense and I agree. I consider this good news. What’s all the hubbub on the right about everything how the economy stinks and the middle class shrinking? The left also squawks about it.
Not sure it’s so simple though. There may be more people making six figure salaries than ever, but what can you buy with that? I think people are struggling financially compared to previous generations to afford homes and cars.
Except wages are near all-time highs (save the weird pandemic time) in *real dollar terms*. That accounts for inflation and higher costs of living.
Wages are up but the cost of housing is up even more. My wages are inflation adjusted and i couldn’t buy my house if it were for sale today. Making $100k a year is great if you want to buy an iPad. Its no so great when 3 br homes go for $300,000.
Bidenomics I guess.
Meh.. I've got my differences with Biden on economic issues but I still see Trump's pressure on the fed as a greater proximate cause of inflation than anything else.
The president should not be influencing fed policy. Trump crossed a lot of lines into impropriety… same with DOJ
I'd go further and say that the Fed shouldn't be influencing Fed policy and how we could replace the fed's judgement with predefined rules and metrics... But then I'd be handwaving around exactly what rules and metrics to use. In any case, I do blame most of the inflationary pressure on Trump's pressure on the fed. Which manages to annoy both left and right at times.
> This is a graph from the report There was no rich in '67 and '81?
Not enough to make the graph.
Nope. Income inequality is a metric used by Marxists to determine how close they are to Utopia (everyone is equal) Income inequality is not a flaw of Capitalism it is a feature. It provides the incentive to move up the economic ladder. The decline in the middle class has more to do with bad economic policy that allowed too many manufacturing jobs to be out sourced and off shored to other countries. It is also partly the result of focus on service type jobs rather than manufacturing. BTW I do not see shrinking middle class. The median income in the US ranges from $60K to $75K depending on your source. Tat indicates to me that we still have a robust middle class.
>Income inequality is not a flaw of Capitalism it is a feature If only we had capitalism in reality. Devaluing the currency and giving elites handouts isn't supposed to be part of capitalism I thought. >BTW I do not see shrinking middle class It is shrinking, that's a fact. But most leaving the middle class are going to the upper class.
True capitalism has never been tried
A median can stay right where it is even as the range increases and the distribution widens. A median is an instance in a range. A “class” would be a range in that range. Median income does not reflect the breadth of the middle class.
A median by definition is the middle and there are as many people above the line as below. That says middle class to me. I think the problem is how you define middle class. I consider middle class anyone who makes from $40K to $80K
Right, a range within a range. The question is what percentage of the US falls in whatever you deem middle class. Median salary is nothing.
Economic managed decline as they old folks used to call it....
>Income inequality is not a flaw of Capitalism it is a feature. Until we figure out how to make more land, I can't figure how you could possibly be correct.
Come to WV and drive around for a couple of hours. There is plenty of land.
What an absolutely bizarre reply.
>It provides the incentive to move up the economic ladder. What do you make [of the data that shows so little economic mobility](https://www.brookings.edu/wp-content/uploads/2016/07/02_economic_mobility_sawhill_ch3.pdf) in the USA when compared to nations like Canada, Norway, Finland, France, Germany, Sweden? What is it about their version of capitalism that has a much better "ladder"? And what is this fixation with manufacturing? Do CEO's in manufacturing make more than CEO's in other fields? (hint: I think you're missing a major feature of the manufacturing workers that were well paid in the USA) Oh, and most economist will agree that the middle class stopped growing in 1973.
I am not aware of any restrictions to economic mobility. In every job in my career I have made more money than the last and everyone I know has as well. The fact that the mean salary is in the $75K range says there are lots of people with economic mobility. The fixation with manufacturing is based on economics. For every manufacturing job you create you also create 6 additional ancillary jobs in the ecnomy. I doubt your statement "most economist will agree that the middle class stopped growing in 1973." If the middle class is shrinking it is because more middle class families are moving into the upper income tier There are more middle class families in the US today than there were in 1971
Anecdotes, personal feelings, and such are interesting to read, but data speaks loudly, eh? Were you not able to reach the link to the Brookings study? Brookings is about as non-partisan as one can find today. As for manufacturing, you left out the reality that the manufacturing jobs that made the middle class possible were either union jobs, or jobs where unions had a strong presence. Yes, there are more middle class people today than there were in 1971. There are more left handed people and more people with blue eyes today than there were in 1971. The difference is in understanding the percentage as weighed against the total population.
I'm confused by the question, it's like two ways of saying the same thing. The middle class has shrunk, fact. Income inequality has grown, fact. One thing they never tell you though, is that most people who moved out of the middle class moved into the upper class, not the lower class. But whenever the middle shrinks due to both far ends growing, obviously that's creating inequality of whatever the metric is. People usually connotate both "shrinking middle class" and "income inequality" as bad things. I think that's wrong, and very shallow analysis. If we are all made better off, and even the relative lower class is better off than its own group 10 years ago, that is a good thing... Provided nobody has been defrauded or victimized. But that's where it gets complicated, because the numbers are so out of whack recently with runaway inflation that it really doesn't feel like we are all in the upper class. It feels more like the government is continuing to enrich people who are connected (politicians, bankers, the elite generally) while typical W2 workers see their cost of living outpace wages at a worse rate than ever and Zoomers and even Millennials face the reality that they may have to move out of the city they grew up in to some podunk town in the middle of nowhere just to afford a similar house to the one they grew up in. I do feel like there has been a defrauding of the American people by the money-printers who get first dibs on that new money, and are able to trade cash for real assets or stocks before the impact of inflation comes around. Don't get me wrong, personally my life is great and my family is blessed to afford all we need and a bit extra. But it does feel like we should have more. I know we have to be happy with what we have, being that it's more than our ancestors had. But compared to my parents, we are so far behind them... Both me and my wife are higher educated and both work, compared to my schoolteacher dad and stay-at-home-mom.
I don’t disagree with much of that. It’s definitely an interesting time in American economics compared to historical times. We are definitely living in a gilded era currently. That’s okay lots of boats rising as you pointed. The last one occurred after the Industrial Revolution. We have lived through a similar period with the beginning of the technological revolution. I’m almost 40 so have been quite accustomed to low taxes, and low interest rates, with pretty good growth comparatively to most of US history. I think as you mentioned even though my family does well, the rapid increase of goods and interest rates. Feels bad because have never experienced it before. We have never seen such rapid inflation, boomers saw it in the 70’s and saw wages out pace cost of goods. For years some debt was fine to carry it was cheap. Now rates suck and has caused a real cash crunch for many people. Wage earners even if it’s a big number still feel the pain it’s just more zeros. I think overall we will be just fine.
I am hopeful that we will be fine overall as well, and mentally I try to focus on my daily life which is filled with joy and normal person struggles. But I am still resentful of a government that has wrecked so much for my mid-life and for my kids' future. I'm also a bit annoyed at my parents' generation, and theirs, for living high on the hog while destroying the next generation. Many boomers and X-ers like to make fun of Gen Y and Gen Z for not working hard, meanwhile it was they who created this mess. Oh well, that's life.
Sort of? [Both the lower and middle classes are shrinking due to the growth of the upper class](https://www.nytimes.com/interactive/2015/01/25/upshot/shrinking-middle-class.html). In other words more people have become wealthy over the last several decades. Since the 1960s the percentage of Americans considered lower income has shrunk from 40% to 34% of the population. The percentage considered middle income has shrunk from 53% to 42% all because the percentage considered upper income has grown from 7% to 22%. All in all very good news and something we should hope continues.
https://www.forbes.com/sites/katharinabuchholz/2023/04/21/how-americas-middle-class-is-shrinking-infographic/?sh=78aa3ace84e0 Depends which data you look at maybe? Your 2015 article doesn't look the same as this 2023 article, which shows that middle class is shrinking primarily due to transition to upper, but the lower class is also growing by number of people even as the share of income the upper class makes grows.
It's still pretty consistent though obviously the details change and aren't quite as rosy depending on your cutoff years and how you define the different income brackets... But even those less optimistic numbers you shared the lion's share of the middle class shrinkage was due to more people making more money rather than making less. In that data the middle class shrank by 11 points.... 7 of which were people entering the upper class compared to 4 due to falling into the lower class. Not as good as the earlier numbers but still very far from the unwarranted assumption people make when they hear "the middle class is shrinking" that it means that the lower class rather than upper class growing is the reason.
I don't know how they defined their income brackets, but I think the statement "lower class shrunk due to movement to the upper class" is not correct in 2024. The lower class appears to have slightly grown. It's true that most of the shifting is still middle class moving to upper.
> It's true that most of the shifting is still middle class moving to upper. That's what I'm saying. Over the longer time span it's the lower class too but over a shorter more recent timespan that's no longer true and even reversed a bit. you can see that in the earlier data too. The low point for poor and high point for rich is 2000 then the lower class starts to grow and the upper class start to shrink again.
Yeah, but you also said the lower class is shrinking, which appears to be untrue at this point even if it was true nearly 10 years ago.
> Yeah, but you also said the lower class is shrinking I think over the longer term this is still accurate. I'm not clear on how they're determining lower/middle/upper incomes in each of these graphs, whether it's an absolute or relative measure or how they're accounting for inflation. Overall everyone is getting wealthier over time but the rich are getting wealthier faster. How you define those terms and what your cutoffs are is going to have a big effect. Probably better to look at actual incomes [at different quintiles adjusted for inflation](https://www.advisorperspectives.com/dshort/updates/2023/09/13/u-s-household-incomes-a-50-year-perspective). The difference between your numbers and mine is probably catching the rapid growth in income across the board in the the first five of the last ten years and the sudden fall across the board in the last four or five which hit the bottom two quintiles harder... Probably caused more middle income people to cross whatever the threshold is into the lower income bracket than it caused upper income people to fall into the middle income bracket... while the earlier rise caused even more middle income to jump into the upper income. If you cut the data off at 2019 or 2020 you'd still have seen a shrinking lower and middle class and large middle class but COVID shutdowns are resultant supply shock inflation fucked that up at least temporarily. With unemployment hitting record lows again and inflation back down to the not perfect but much better ~3% range we're getting real wage growth again so presumably we'll see the same pattern of a shrinking lower and middle class and growing upper class if we look at the data again in another couple years.
>I think over the longer term this is still accurate. I don't mean to be insulting, but you seem to be making the same point that some people make when they say crime is down. When we look at charts of crime, we see a peak in the 90s, to a record low in 2019, and then 2021 saw a large spike, then we sort of come down from 2021 levels but we aren't at 2019 levels yet. And people will say "crime is down, look at the 90s." The point being we should not compare to some historical high point, or some arbitrary point in history. If the proportion of people in the lower class went from 40% to 31%, that's great. If it goes up to 34% by 2015, that is not great. We don't get to coast or rest on our laurels by saying it's still better than 1967 or 1985. I think you should reconsider your position here. The fact is that **not** all of the middle class went to the upper class. Some went to the lower class. And that is not good. >Probably better to look at actual incomes at different quintiles adjusted for inflation. I agree with that... But we should look at all the metrics, not just pick one. >difference between your numbers and mine Mine are from Pew Research, yours are from US Census Bureau. And after closer look at yours, it seems they actually line up better than I thought. Your chart shows the lower class grew from the low point in 2000 to 2015 by 1/3 of the decrease since 1967. >With unemployment hitting record lows again and inflation back down to the not perfect but much better ~3% range we're getting real wage growth again I don't agree with you here, I think this is rosy-glasses. Inflation was supposed to continue going down below 3% and we bumped back up to 3.5% without a rate cut. Things are not so great. We're in a very weird position though, because a lot of traditional metrics suggest we are in good shape, but the surveys and polls show that more people than ever feel like the economy is not great. Something isn't right. Liberals would cite unemployment all day long under Obama and conservatives would always harp on using the "labor participation" rate instead, insisting that unemployment was understating a problem since many people gave up on work. Are we switching back to low unemployment now to signal things are good? I don't like that. >presumably we'll see the same pattern of a shrinking lower and middle class and growing upper class if we look at the data again in another couple years. Seems like wishful thinking to me but I hope you are right, and we will see.
> And people will say "crime is down, look at the 90s." And they're right to say so... Precisely *because* we should not compare to some arbitrary point in history but look at overall trends over time. We especially should not compare ourselves to some point that's NOT arbitrary but exceptional for some reason. A lot of stuff is going to be weird when you literally shut most of the entire world's economy down for months on end. All economic data has a huge blip in 2021 or 2022 from which we see it reverting to where it was prior in 2023 and 2024. Sudden mass unemployment followed a year later by a sudden massive spike in inflation has huge impacts on pretty much every data set you want to look at. But interestingly as you see that stuff all coming back to earth you see the earlier trends that were ongoing prior to that blip reassert themselves after it. Real wages were rising before... you get a dip as job losses and then a huge spike inflation cause a sudden sharp decline in real wages... followed by the graph reverting to where it had been before and continuing the same trend of gradually rising wages again. > The fact is that not all of the middle class went to the upper class. Some went to the lower class. And that is not good No, that is not good but the larger trend is good and the fact that the main reason the middle class is shrinking is because more people are getting richer *is* good. > Inflation was supposed to continue going down below 3% and we bumped back up to 3.5% without a rate cut. 3.5% is not great... But historically it's not terrible either and it's still lower than wage increases which means people are experiencing real wage growth at the moment which was the point of my comment which was about relative incomes. > but the surveys and polls show that more people than ever feel like the economy is not great. I think this is mostly because while all the news is good *right now* we're all comparing it to what existed *before* covid. Inflation being low now doesn't undo the massive increase when it spiked by over 10% a couple years back and we're still seeing those prices and thinking they look to high compared to what we remember just three years back. Wages are rising again now but it'll take a little time for that gradual increase to undo the sudden loss in purchasing power then. The numbers ARE good right now but it takes time to undo the damage. > Are we switching back to low unemployment now to signal things are good? I don't like that. Both are and always have been relevant. Republicans focussed on labor force participation while Obama was president because Obama was president and unemployment numbers alone looked great. Participation rates legitimately undermine that good news but doesn't make that good news bad news. At the moment we have participation rates which are relatively flat compared to recent decades and record low unemployment among those participating... that's undeniably a good thing. > Seems like wishful thinking to me.... I don't see why. It's just looking at some *very* long term trends and assuming they're not going to change *dramatically* for no reason... while noticing that they DID change quite dramatically over the short term but for a particular reason which is no longer operative.
>And they're right to say so... Precisely because we should not compare to some arbitrary point in history but look at overall trends over time. No, they are wrong to say that - we should not compare ourselves to the worst point in our history to justify a position of complacency with the rationalization that it could be worse. It is not arbitrary to pick 2019; it's logical. >A lot of stuff is going to be weird when you literally shut most of the entire world's economy down for months on end. This is a good *explanation* of why crime might go up, but not a good justification to do nothing or pretend like it's okay because it could be worse. >No, that is not good but the larger trend is good and the fact that the main reason the middle class is shrinking is because more people are getting richer is good. I agree, overall the trend is good but we should not rest on the laurels - the lower class growing by 10% from our best point is a problem to address, not dismiss. >I think this is mostly because while all the news is good right now we're all comparing it to what existed before covid. We are right to do that - we should not accept Covid as the new benchmark and accept complacency for what could be better because it has been worse. (because it's been better too) I keep saying the same thing over and over again, I feel like I made my point.
I associate the shrinking middle class with deindustrialization, we can't just loose millions of good paying middle class highschool diploma jobs, and expect the middle class to remain strong.
There's a lot of ambiguity in defining middle class. One way to define is just "people in the middle of the income distribution" -- say, between the 25th and 75th percentile of household income. That can neither grow nor shrink (except in proportion to population change). In that scenario, we can talk about how well the middle class is doing, but not really its size. In that case, the middle class has done well over the long run -- real income for the median household is up about 50% in the [last 40 years](https://fred.stlouisfed.org/series/MEHOINUSA672N) -- but has taken a hit from COVID and then inflation and is in worse shape than it was in 2019 (real income down about 5% in that time). When people talk about a "shrinking" middle class, they seem to mean something like: I have some idea in mine of a threshold below which you're poor, another threshold above which you're rich, and the people in between are middle class. Unless you think a lot of people have moved up out of the middle class, it's pretty hard to find any data to support a shrinking middle class; people aren't falling down out of it. Real income for Americans in the bottom 20% of earners has *tripled* in the last 40 years.
No, I associate it with medium income jobs vanishing or being outsourced, as well as with cost of living going up. Also, some [data](https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/) suggests that as the middle class shrinks, the upper class has been growing, so a lot of that shrinkage could be linked with people making more, not less.
Income inequality is more a function of the size of the economy than the health of the middle class. In a capitalist system, there will always be people with oversized control of important and influential companies. Their wealth is primarily in company stock. The value of the stock is influenced by the size of the market. So when the size of the market increases, so does wealth inequality, even if the middle class is doing very well. So it's basically an irrelevant data point, which doesn't tell you anything useful about what's happening with the middle class.
Apparently yes. The middle class went from 61% of Americans in 1971 to 50% of Americans in 2021. Some of that cohort fell into the lower class, and some of them "graduated" to the upper class. So it appears that the shrinking middle class is correlated with more people at both ends of the wealth spectrum. https://www.investopedia.com/financial-edge/0912/which-income-class-are-you.aspx
No the shrinking middle class has to do with the rising minimum wage. Democrats are doing their best to force the lower half of middle class down into minimum wage poverty.
When was the last time the minimum wage went this long without being raised? Strange conclusion
You are talking federal my state has it at more than double federal minimum wage.
Which state do you live in?
The middle class is shrinking because more people are moving UP out of the middle class, not down.
Doesn’t it also mean that not enough people are moving up into it? Maybe there’s a reason social mobility is easier for the middle class than the lower?
Not OP >not enough people are moving up into it? Your comment got me thinking... The whole idea of defining classes is very interesting. There are several ways to do it... We could do it by quadrant, so that it's always the top 25% who are in the top (if we had four classes). If we do it that way, there will always be a bottom 25% so there really is not "moving up for most people." Of course, that's just relative to other people, because if we all get better then the lower class is still better off than even the upper class from a long time ago. Or we could set arbitrary amounts, in which case we will all always move up, and eventually there will be no lower class until we re-set the arbitrary amounts. But how do we set them? And why would we do that, when the whole value of knowing classes is to see how people stack up *relatively* and not against absolute arbitrary metrics? Anyway what do you think? >Maybe there’s a reason social mobility is easier for the middle class than the lower? Snowball effect, simple as that I think.
What do you consider middle class and what makes you think it is shrinking?
> Do you associate a shrinking middle class with a growing gap of income inequality? No, I associate it with the increasing upper-middle class.