Edward Conard

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Urban Institute Reports Decline of Middle-Class Comes Entirely From Rising Incomes

Despite reports that income inequality is hollowing out the middle class, a new study by the Urban Institute shows that all of the decline comes from income growth. Since 1979, the population living in households earning more than $100,000 per year has risen from 13% to 31%—an astonishing increase. This 18 percentage point increase offsets a 18 point decline in the population living in households earning less than $100,000 per year. This decline in the population earning less than $100,000 per year has occurred across all income levels.

Urban Institute_share of each class as percentage of population

And this decline has occurred despite a large influx of Hispanic immigrants who earn middle- and lower middle-class incomes on average. A recent Pew study for example, which claims the middle class is “falling behind financially,” reports that 29% of the population was lower-incomes, 50% was middle-income and 21% was upper-income in 2015 compared to 25% lower-, 61% middle-, and 14% upper-income in 1971—an apparent 11 percentage point decline in middle-incomes. But 3 of the 4 point rise in lower-incomes (29-25%) stems from Hispanic immigration. Setting that aside, of the remaining 8 percentage point decline in the population earning middle incomes, 7 of those 8 points came from an increase in incomes.

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