Is the Middle Class Moving Up?

[Jack Hays]

Can it be true that the middle class is gaining wealth? The surprising answer is maybe so.




Is the middle class moving up?


Despite perceptions to the contrary, living standards for most people have been steadily rising.

• Robert J. Samuelson
• ·
• 19 hours ago

It turns out that the middle class isn’t stagnant after all.
You know the conventional wisdom. The richest 1 percent of Americans have siphoned off all the income gains of recent decades. Everyone else is treading water. The claim has been repeated so often that it’s taken on the aura of truth. The reality is different: Living standards for most income groups have improved, especially for the upper middle class, which has more than doubled in size.
We know this from a new study by economist Stephen Rose of the Urban Institute, a think tank. Rose subdivided the population into five economic classes. The poor and the near-poor had annual incomes from $0 to $29,999; the lower middle class, from $30,000 to $49,999; the middle class, from $50,000 to $99,999; the upper middle class, from $100,000 to $349,999; and the rich, $350,000 and up. He then examined how each group had fared between 1979 and 2014.
Here’s what he found. There was a gradual and broad-based shift of Americans from poorer to richer status. Productivity gains have translated into higher living standards more than is generally believed. . . .

 

[Gimmesometruth]

Oh...you meant to ask....is the upper middle class making economic gains?

A: Yes.


In 1979, the middle class controlled a bit more than 46 percent of all incomes, and the upper middle class and rich controlled 30 percent. In contrast, in 2014 the rich and upper middle class controlled 63 percent of all incomes (52 percent for the upper middle class and 11 percent for the rich); the middle class share had shrunk to 26 percent; and the shares of the lower middle class, poor, and near-poor had declined by half.

 

[Ahlevah]

Oh...you meant to ask....is the upper middle class making economic gains?

A: Yes.


In 1979, the middle class controlled a bit more than 46 percent of all incomes, and the upper middle class and rich controlled 30 percent. In contrast, in 2014 the rich and upper middle class controlled 63 percent of all incomes (52 percent for the upper middle class and 11 percent for the rich); the middle class share had shrunk to 26 percent; and the shares of the lower middle class, poor, and near-poor had declined by half.

Wealth for much of the middle class in recent decades has consisted of home equity. Even though housing prices have recovered in many parts of the country, the Great Recession destroyed the equity and credit of millions of families and pushed them into becoming renters:

The report, America’s Rental Housing: Expanding Options for Diverse and Growing Demand, finds that 43 million families and individuals live in rental housing, an increase of nearly 9 million households since 2005 – the largest gain in any 10-year period on record. And the share of all US households that rent rose from 31 percent to 37 percent, the highest level since the mid-1960s.

America's Rental Housing 2015: Record Number of Renter Households Face Severe Affordability Problems (Press release from the Joint Center for Housing Studies, Harvard University)

And, to be frank, many Americans simply don't save. They've been conditioned over the years to take on debt and spend, and it's difficult to gain wealth that way. Besides home equity, members of the middle class depended on pensions to provide a comfortable retirement, but so-called defined benefit pension plans have largely gone the way of the Dodo without being replaced by savings:

Most Americans are falling short of the amount of savings required for a comfortable retirement ― if they are saving at all. The most common responses to the question of what people have saved for retirement across all age groups are “I don’t have retirement savings” and “less than $10K,” breaking down as follows:

One-third of Americans report they have no retirement savings.
23% have less than $10,000 saved.

1 in 3 Americans Has No Retirement Savings

Unfortunately, many of them will either be working until they drop dead or the highlight of their typical retirement day will be an episode of The Dr. Oz Show punctuated by a trip to the mailbox.