About
half (52%) of American adults lived in middle-class households in 2016
according to Rakesh Kochhar. This was virtually unchanged from the 51% who were
middle class in 2011. But while the size of the nation’s middle class remained
relatively stable, financial gains for middle-income Americans during this
period were modest compared with those of higher-income households, causing the
income disparity between the groups to grow.
From
1971 to 2011, the share of adults in the middle class fell by 10 percentage
points. But that shift was not all down the economic ladder but an increase in
the share of adults who are upper income. A sign of economic progress.
Financially,
middle-class households in the U.S. were better off in 2016 than in 2010. The
median income of middle-class households increased from $74,015 in 2010 to
$78,442 in 2016, by 6%. Upper-income households (where 19% of American adults
live) fared better than the middle class, as their median income increased from
$172,152 to $187,872, a gain of 9% over this period. Lower-income households
(29% of adults) experienced an income gain of 5%, about the same as the middle
class. (Incomes are adjusted for household size, scaled to reflect three-person
households, and expressed in 2016 dollars.)
The
median income of middle-class households in 2016 was about the same as in 2000,
a reflection of the lingering effects of the Great Recession. The median income
of lower-income households in 2016 ($25,624) was less than in 2000 ($26,923).
Only the incomes of upper-income households increased from 2000 to 2016, from
$183,680 to $187,872.
The
widening income gap between upper-income households and middle- and
lower-income households this century is the continuation of a decades-long
trend. In 1970, the first year covered by earlier Pew Research Center analyses,
the median income of upper-income households was 2.2 times the income of
middle-income households and 6.3 times the income of lower-income households.
These income ratios increased to 2.4 and 7.3 in 2016, respectively.
A
recent Pew Research Center analysis also found that the wealth gaps between
upper-income families and lower- and middle-income families in 2016 were at the
highest levels recorded. Although the wealth of upper-income families has more
than recovered from the losses experienced during the Great Recession, the
wealth of lower- and middle-income families in 2016 was comparable to 1989
levels. Thus, even as the American middle class appears not to be shrinking
(for now), it continues to fall further behind upper-income households
financially. This mirrors the long-running rise in income inequality in the
U.S.
The
period from 2011 to 2016 encompasses much of the economic expansion following the
Great Recession of 2007-09. But the recovery has been slow. It may help explain
the lack of movement of adults into upper-income households during this period.
US’ gross domestic product (GDP) per capita did not return to its pre-recession
peak (near the end of 2007) until the latter half of 2013. Likewise, the median
income of U.S. households took until 2016 to return to where it stood prior to
the start of the Great Recession in December 2007.
“Middle-income”
Americans are adults whose annual household income is two-thirds to double the
national median, after incomes have been adjusted for household size. In 2016,
the national middle-income range was about $45,200 to $135,600 annually for a
household of three. Lower-income households had incomes less than $45,200 and
upper-income households had incomes greater than $135,600 (incomes in 2016
dollars).
Only
graduated taxes and other income distribution measures can help change the
inequalities of a capitalist system that focuses on “free markets, free trade”.
With Trump this reversal will not occur, although he is no proponent of free
trade and free markets. It will only happen if Bernie Sanders, Elizabeth Warren
or AOC are in leadership of the U.S. system.
Reference:
1.
Rakesh Kochhar, The American middle class is stable in size, but losing ground
financially to upper-income families, www.pewresearch.org/
2.
Todd Bishop, What’s happening to America’s middle class: The numbers behind one
of the country’s key trends www.geekwire.com
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