"The complaint is encountered constantly that America’s middle class is shrinking. And it’s true; America’s middle class is indeed shrinking. But it’s shrinking not because middle-class Americans are becoming poor; it’s shrinking because middle-class Americans are becoming rich. No one has been as resolute in documenting this fact as has American Enterprise Institute economist Mark Perry (who, full disclosure, was in the late 1980s one of my research assistants at George Mason University).
Take a look at this graph that Mark included in this recent post at his superb blog, Carpe Diem. It shows that the percentage of middle-income American households fell from 53.8 in 1967 to 51.2 in 1977 and then to 41.3 in 2017. (Middle-income households are defined as those whose annual incomes are between $35,000 and $100,000 when measured in constant 2017 dollars.)
This fact, taken alone, seems ominous. But it’s not ominous at all. Over the course of these same 51 years the percentage of high-income American households – those earning annual incomes of more than $100,000 (again, measured in constant 2017 dollars) – more than tripled. It went from 9.0 percent in 1967 to 13.9 percent in 1977 and then, by 2017, to 29.2 percent.
The percentage of poor American households over the past half-century fell from 37.2 to 29.5."