The Facts Behind A Disappearing Middle Class

Today, a number of media outlets have been discussing the disappearing middle class. The report was released by the Pew Research Center and notes, in 2015 21% of households comprise the top two income tiers, with Pew defining as more than twice the nation’s median income or at least $126,000 a year for a three-person household, which is up from 14% in 1971. For the bottom two income tiers, a three-person household earning $42,000 a year or less, in 1971 25% of households were in the lower two earning tiers versus 29% in 2015. The media outlets failed to provide detail around the cause behind this change.

Below is select commentary from the website Political Calculations and the author’s article, Solving the Mystery of the Disappearing U.S. Middle Class, which provides detail behind this shrinkage in the middle class. With the ranks of both the lowest and highest income earning American households simultaneously increasing as the ranks of middle income earning Americans have become depleted. But who were the biggest winners and losers?”

“The biggest winners since 1971 are people 65 and older. This age group was the only one that had a smaller share in the lower-income tier in 2015 than in 1971. Not coincidentally, the poverty rate among people 65 and older fell from 24.6% in 1970 to 10% in 2014. Evidence shows that rising Social Security benefits have played a key role in improving the economic status of older adults. The youngest adults, ages 18 to 29, are among the notable losers with a significant rise in their share in the lower-income tiers.”

“What the Pew Research Center’s analysts were seeing in the ‘hollowing out’ of the U.S. middle class wasn’t the result of some nefarious cause, but rather the inevitable result of the changing age demographics of the U.S. population. More specifically, the differences in the size of the living population of the U.S. by generation. The chart below shows the number of Americans born, whose births were registered, in each year from 1909 through 2004, while also indicating their generational grouping.”