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.
Here’s the breakdown, which clearly marks the changes in income distribution.
Pew defines the income groups this way:
The lower-income group is divided into lowest-income households (with income less than half the overall median) and lower-middle income households (with incomes from half to less than two-thirds of the overall median). In 2014, a lowest-income household lived on about $31,000 or less, and a lower-middle income household lived on about $31,000 to $42,000.19
In a similar fashion, upper-income households are divided into upper-middle income households (whose income is more than two and up to three times the overall median income) and highest-income households (with more than three times the overall median income). In 2014, an upper-middle income household lived on about $126,000 to $188,000, and a highest-income household lived on more than $188,000.
In some respects, the analysis reinforces the prevailing “rich get richer, poor get poorer” narrative of a nation riven by income inequality. Yet,
In at least one sense, the shift represents economic progress: While the share of U.S. adults living in both upper- and lower-income households rose alongside the declining share in the middle from 1971 to 2015, the share in the upper-income tier grew more.
It’s a complex story, influenced by demographic changes (education, participation of women in the workforce) as well as changes in the economy (declines in manufacturing employment, growth in services).
The report is primarily descriptive, though it has implications for policymakers. A finding that reinforces the Opportunity Washington priorities for shared prosperity relates to education.
As the U.S. economy increasingly rewards those with job skills, college-educated Americans have an economic edge over other adults, even when the costs of going to college are factored in. They have a growing earnings advantage over those with no more than a high school diploma. Even recently, when wages of college-educated adults have declined, those of less-educated adults have declined more, so college-educated adults preserved their advantage.
We would have preferred that Pew assessed “postsecondary training and education” rather than college-educated. Many highly-compensated jobs in today’s economy require training beyond high school, but not necessarily a traditional college education. As we’ve written,
By 2020, 70 percent of Washington jobs will require postsecondary education or training. Preparing our students for these opportunities requires high-quality education at every level.
Fivethirtyeight analysis here, which concludes:
All these trends — an aging workforce, income polarization, immigration and racial disparities — are important issues with major economic and social implications. So is the decade-and-a-half-long stagnation of middle-class incomes. But the full picture is more nuanced than the “death of the middle class” narrative so often heard on the campaign trail.
Right. As we hear more of this during the long election year, we will continue to focus on policy initiatives that expand opportunity, prepare Washingtonians for success in a changing economy, and promote prosperity in all parts of the state.