After more than four decades of serving as the nation’s economic majority, the American middle class is now matched in number by those in the economic tiers above and below it. In early 2015, 120.8 million adults were in middle-income households, compared with 121.3 million in lower- and upper-income households combined, a demographic shift that could signal a tipping point, according to a new Pew Research Center analysis of government data.1
The American middle class continues to 'hollow out'.
The hollowing of the American middle class has proceeded steadily for more than four decades. Since 1971, each decade has ended with a smaller share of adults living in middle-income households than at the beginning of the decade, and no single decade stands out as having triggered or hastened the decline in the middle.
While the share of adults in upper- and lower-income tiers grew as the middle declined, a larger increase was seen in the upper-income households.
Meanwhile, the far edges of the income spectrum have shown the most growth. In 2015, 20% of American adults were in the lowest-income tier, up from 16% in 1971. On the opposite side, 9% are in the highest-income tier, more than double the 4% share in 1971. At the same time, the shares of adults in the lower-middle or upper-middle income tiers were nearly unchanged.
The plight of the middle class increasingly has become a political talking point, with both parties selling their plans to give this group of Americans an economic boost, but the decline has been consistent and continuous through the leadership of both Republicans and Democrats.
Based on the definition used in this report, the share of American adults living in middle-income households has fallen from 61% in 1971 to 50% in 2015. The share living in the upper-income tier rose from 14% to 21% over the same period. Meanwhile, the share in the lower-income tier increased from 25% to 29%. Notably, the 7 percentage point increase in the share at the top is nearly double the 4 percentage point increase at the bottom.
Significant trends noted in the report:
- Households in all income tiers experienced gains in income from 1970 to 2014. But the gains for middle- and lower-income households lagged behind the gains for upper-income households.
- The 68% gain in wealth enjoyed by the middle class from 1983 to 2007 was nearly entirely depleted by the economic downturn of 2007-2009.
- Upper-income households also lost wealth during the recession but recouped more by 2010 than those in middle-income households.
- The difference in wealth building between the upper and middle classes is attributable to the disproportionate role housing plays in middle class portfolios: "The crash in the housing market that preceded the Great Recession was more severe and of longer duration than the turmoil in the stock market."
- Adults 65 and older saw the upward mobility, with a smaller share of the lower-income tier in 2015 than 1971, in part due to rising Social Security benefits.
- Adults ages 18 to 29 were less fortunate, with a significant rise in their share in the lower-income tiers.
- Women have fared better than men, likely to higher participation in the labor market over the past four decades, their education attainment rising faster than among men, and a narrowing of the wage gap.
- The data divided along racial lines indicates that white and black Americans advanced, whereas Hispanic Americans experienced a downward trend; however, black Americans are "still more likely to be lower income and less likely to be upper income than whites or adults overall."