Scott Winship counters a popular misconception about the American middle class.
It’s a common refrain: The middle class is hollowing out; Americans overall are increasingly falling short financially while a few are getting exceedingly rich. There’s even a scoreboard of inequality. We’ve persuaded ourselves that many families can no longer achieve the American middle-class dream the way their parents once did. It’s a political hot button, too — both parties claim to be fighting to preserve Middle America.
But there’s another, much better way the middle class can shrink — when everyone moves up and gets richer. A nation can become so much richer that the ranks of the poor, the working class and the middle class all thin out. The “hollowing out” message requires a curious definition of progress: By its logic, if everyone’s income doubles, the same number of families fail to reach the middle class as in the past.
Thinking about the middle class in this way obscures progress because it mixes inequality with people’s living standards, and those are two different things. In a recent report, we measured class using constant, inflation-adjusted thresholds. The “core” middle class shrank, but so did the classes below the middle — the poor, the near-poor and the lower middle class.
In 1979, 36 percent of families were in the middle class. At first, it looks ominous that by 2024, a smaller number — 31 percent — could claim that status. But it’s only worrisome if you overlook that over the same period, the upper middle class grew to 31 percent of families from 10 percent. Meanwhile, the number of Americans falling short of the middle class — once more than half — dropped to 35 percent of all families.
The traditional middle class shrank because so many families became better off over time, not because more people fell short.
