The Shrinking Middle Class

PEW posted a report on the shrinking middle-class. See link: PEW Report. The bottom line is:  “The national trend is clear—the middle class is losing ground as a share of the population, and its share of aggregate U.S. household income is also declining.”

The first question: how do they define middle-class? It is complicated. They start by basing the calculations on household income and family size. They state: In this report, “middle-income” Americans are defined as adults whose annual household income is two-thirds to double the national median, after incomes have been adjusted for household size. In 2014, the national middle-income range was about $42,000 to $125,000 annually for a household of three. Lower-income households have incomes less than 67% of the median and upper-income households have incomes that are more than double the median.”

According to PEW, a family of 4 is middle-class if their income is between $48,083 and $144,250.

Who is 'middle income' and 'upper income' in 2014?

They then point out that there are adjustments for cost of living. “That means the incomes of households in relatively expensive areas, such as New York-Newark-Jersey City, NY-NJ-PA, are adjusted downward, and the incomes of households in relatively cheaper areas, such as McAllen-Edinburg-Mission, TX, are adjusted upward. Incomes are also adjusted for increases in the prices of goods and services over time when analyzing changes in the status of households from 2000 to 2014.

But median incomes have declined for each group between 1999 and 2014.

Median incomes of the middle class and other tiers fell from 1999 to 2014

Another source who located U.S. Census Data gives us a picture of the median income trend line over time: Click here: Dave Manuel

-- U.S. Median Household Income Chart - 1975 - 2010 --

But the bigger question is whether the use of median income actually measures whether households have enough money to support a family today. Yes, it is good to know changes in household income over time but I have to wonder what it means when a family of 4 has a household income of $48,000. Is that enough to pay for rent, food, clothes, utilities, health insurance, health care, transportation, child care and taxes, in most places in the United States? And if not, then why are they considered middle class? Do we actually have fewer people in the middle-class than the PEW analysis shows? And that raises the larger question about the health of the U.S. economy.



Leave a Reply

Your email address will not be published. Required fields are marked *