Pew Research has released new analysis showing the decline of Americas middle class, whereby Americans in middle-income households have lost significant ground since 1970 and for the first time have become the minority at 49.9% of the population (see below graphic).
Meanwhile, America’s middle class has fallen further behind upper-income households financially, with the upper class now holding a larger share of aggregate household income than ever before in the 44-year period examined (see next chart).
The share of aggregate income held by America’s middle class has also plunged, from 62% in 1970 to 43% in 2014 (see next chart).
And according to Pew, there is also a growing disparity in the median wealth (assets minus debts), with upper-income families increasing the wealth gap from three times that of middle-income families in 1983 to nearly seven times as much in 2013 (see next chart).
Older generations have also gained at the expense of the young:
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.
Worse, these trends are likely to persist, with Pew Research noting that Americans have experienced “a demographic shift that could signal a tipping point”.
Certainly, with automation expected to render many middle-class jobs obsolete, and increase returns to the owners of capital, my money’s on the ongoing decline of the middle-class.
