A new Pew study explores shifts over time in the proportion of American adults who are middle class under a particular set of assumptions.
Pew blogs about it here: www.pewsocialtrends.org/…
The full study can be found here:www.pewsocialtrends.org/…
David Jarman’s excellent treatment of the subject for Daily Kos can be found here:
www.dailykos.com/…
That study defined middle class as between 2/3rds and 2X the median household income in a given year, after adjustment for household size. That seems like an excellent definition (not the only one possible, of course) for demarcating the middle class in a given year, but potentially weaker in comparison across decades.
An alternative definition of middle class, based on share of the pie
I wondered how the results would differ under a different definition of middle class, one where the first definition was used to define the middle class in 1970, but the bounds of the middle class in later years were defined by holding constant the share of per capita GDP received in household income at 1970 levels (adjusted for household size).
There are a number of reasons why this is not the perfect way to look at this, nonetheless, I think there is inherent value in the thought experiment, and perhaps even some explanatory value vis-a-vis popular economic angst.
The US is more than twice as rich today as in 1970
In 1970 (Q3), per capita GDP (in 2009 dollars), was $23,159 which rose by Q3 of 2015 to $51,006. Thus America is, in some sense, 2.2x as rich per person as in 1970. Here is a link to the FRED data series those data points are taken from: research.stlouisfed.org/...
Per Pew’s definition, in 1970 a 3 person household was at the lower edge of the middle class, with an income 2/3rds the median, if household income was $31,480 (in 2014 dollars). More than 20% of American adults are still below this household income level in absolute terms today, despite the much richer country in which we live.
The middle class, disinherited:
In terms of a definition in which middle class status is defined by maintaining a constant relative share of “the pie” the picture is bleaker. The middle-class has been largely disinherited. In order to have the same share of per capita GDP as a household at the bottom of the middle class in 1970 a 3 person household in 2015 needed a household income of $69,332.
This is significantly more than the median income for such a household in 2015 and fewer than half of US adults live in households making this much (adjusted for size). Based on the foregoing and the 60th percentile ranking of this income among all households, I estimate that roughly 60% of adults in the U.S. are now low-income by the standard share of societal wealth in 1970.