December 20, 2015

NO ONE HAS IT HARDER THAN THEIR FATHER DID:

Yes, America's middle class has been disappearing....into higher income groups (Mark J. Perry, 12/17/15, AEI)

Scott Shackford wrote on the Reason blog recently that "The Middle Class Is Shrinking! Because They're Getting Rich!" and referred to the bottom chart above that was featured in the Pew Research Center's recent report titled "The American Middle Class is Losing Ground." However, as the title of Scott Shackford's blog post suggests, the share of middle class households is getting smaller for a good reason -- it's because they've moved up to higher income groups. Specifically, according to Shackford:

It is true that Pew's analysis shows that the number of households that fit within their categorization of middle class has shrunk by 11 percentage points since 1971 [from 61% to 50%]. It is true that the proportion of households that are classified as lower class has increased from 25% to 29%. But it is also true that the proportion of households that are classified as upper class has increased from 14% to 21%.

That is to say, part of the reason that the middle class is disappearing is that they are succeeding and jumping to the next bracket. And a greater number of them are moving up than moving down. Be wary of the assumption that the drop in the middle class is a sign of a crisis.

Referring to the Pew Research Center report, Warren Meyer pointed out recently on The Coyote Blog ("Are We Really Going to Sell Socialism in This Country Based on the Fact that the Middle Class is Getting Rich?") that "2/3 of the [middle-class] losses were because they moved to 'rich.'" That is, of the 11 percentage point loss in the share of middle-class households between 1971 and 2015, 7 percentage points represent the middle-class households who moved up to one of the two highest-income groups, which represents 7/11, or 64% of the shrinkage of middle-class households.

Posted by at December 20, 2015 8:03 AM

  

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