The Shrinking Middle Class

We are hear a lot about "the shrinking middle class".

It is popular line for politicians and it is often accompanied by an argument that there is too much income inequality in the United States.

The truth is that the middle class is shrinking.

However, it is because a large share of the middle class has been moving upwards into upper class incomes.

The share of American households that earns $150,000 per year or more has increased from 5.2% of the population to 33.8% today.

And those in the lower income class have also been shrinking. More and more of those in the lower income class have moved to the middle class in the last 50 years.

There has been a decided trend in upward mobility in incomes over the last 50 years.

Source:https://x.com/DominicJPino/status/1988292199495463133

Yes, this data is adjusted for inflation.

It also is measuring household family income.

For additional context, consider the poverty rate in the United States.

Although there was no official measure, it is estimated that 80% of the population lived in poverty in 1900 and 60% in the 1930's.

The official poverty rate calculated by the Census Bureau in 2024 was 10.4% which is about as low as it has ever been.

Bear in mind that the official poverty measure (OPM) also does not consider non-cash benefits such as food stamps, Medicaid, housing subsidies and the child tax credit in its calculation.

These government benefits did not even exist before the mid-1960's.

Source: Source: https://www.census.gov/content/dam/Census/library/visualizations/2025/demo/p60-287/figure1.pdf

It is true that there are more two-earner families today than there were in 1967. However, the percentage of two-earner households has not changed appreciably in the last 30 years. 

It also has to be considered that there are also items that the typical family spends money on that have increased faster than the general inflation rate.

That would include big items such as housing, medical care, child care and education costs.

Therefore, incomes do not go as far today as they did in 1967.

However, a big reason that incomes do not go as far as they did 30, 40 or 50 years ago is that our demands and expectations are higher in our daily lives.

There are many more ways we can spend our money.

There were no cell phone plans to pay for or streaming subscriptions.

Cars did not have power windows, air conditioning, moon roofs or navigation systems.

A number of families only had one car.  A three-car garage was almost unheard of except in the toniest suburb.

Houses did not have granite countertops and four bathrooms.

Look at how the size of the average new home has changed over the years.

From less than 1,000 square feet in 1950 to 2,500 square feet in 2021 until inflation and higher interest rates has forced home builders to downsize to maintain some semblance of affordability in the last couple of years.

Source: Google AI

The same thing has occurred with apartments.

This is an interesting graphic that I saw recently on how the 2 bedroom, 1 bathroom apartment that was the first home that Mrs. BeeLine and I lived in after we got married, has all but disappeared in Montgomery County, Maryland.

Before World War II that was all there was.

It is undoubtedly the same most everywhere else in the country.

Source: https://x.com/bobbyfijan/status/1986525803891552550

You can see how big a factor that expectations play in all of this by considering this survey that the financial services company Empower did last year on the "Secret to Success".

The research survey polled 2,204 American adults ages 18+ on their views on what they believed it took to be financially successful.

Look at the massive differences in what amount of annual income it was believed was necessary to be financially successful by generation.

Source: https://www.empower.com/the-currency/money/secret-success-research

This is how each generation looked at the same question regarding net worth.

Source: https://www.empower.com/the-currency/money/secret-success-research

The younger generations are also complaining that they can't possibly do as well as their parents did.

However, Federal Reserve data shows that Millennials and Gen Z are both earning greater inflation-adjusted incomes than previous generations did at the same ages.

Gen X has also done better although recent years have seen that income advantage declining.

Credit:https://x.com/roberthorrocks/status/1988762822248132697

Could there be a larger disconnect?

This might also explain why we see the dissatisfaction we do with younger voters who seem to believe that their lives would be better with socialism.

A Cato Institute survey earlier this year found that 62% of Americans under age 30 had a favorable view of socialism.

Even more troubling was the finding that 34% of those under age 30 had a favorable view of communism.

Who is going to tell these young people that there is no way they are ever going to earn $600,000 per year under communism?

The bottom line in all of this is there should be some place in the discussion of a shrinking middle class for consideration of the idea that the expectations of some might need to shrink a little bit as well.

We have had it so good for so long many people (especially the young) have never known hardship.

They do not understand delayed gratification.

They have not had to live through really tough times.

This post on X puts it in perspective.

I don't know anyone who would want to do this if they did not have to

However, at times you may have to. Or be forced to do it by circumstances.

Sadly, if young voters continue their infatuation with socialists and communists, they may find out how their grandparents or great grandparents lived.

At that point it will not be the middle class that will be shrinking, it will be everyone but the political class.

This fact has been proven true over and over throughout history.