Pew study finds shrinking middle class is an economic minority

A recent Pew study found the presently shrinking middle class is now in the minority, as those between poor and well-off are becoming fewer and farther between. It’s a phenomenon that’s been observed and lamented for some time.

Fewer people able to be middle class anymore

The term “middle class” can be construed any number of ways, but it’s generally taken to mean the middle third of the range of incomes. Granted, the definition can get a little arbitrary, but more or less it means people who aren’t poor but also aren’t rich.

The dividing line between middle class and poor, according to a recent study by the Pew Research Center, is a household income of $48,347 for a family of four, according to the Los Angeles Times. The dividing line between middle class and upper class is $145,041 for same.

However, what Pew’s research found is that the middle class no longer makes up 50 percent of the population. The upper and lower classes accounted for 121.3 million people, compared to 120.3 million in the middle class. In 1971, according to Pew’s data, about 61 percent of the population were middle class.

A shrinking demographic

The middle class even gets bad news from the government. Real wages, according to According to the Brookings Institute, U.S. Census data found incomes relative to central price inflation (CPI) shrank by more than 10 percent since 1999. Additionally, between 2008 and 2014, real median household income shrank every year save one.

Unfortunately, the shrinking middle class isn’t really news at this point, since it’s an ongoing news item that’s been reported on for years.

An ominous macroeconomic trend for the past few decades has been wage stagnation. The Economic Policy Institute found – using Department of Labor data – that real wages, or pay relative to the purchasing power of that amount of money, rose only 15 percent between 1979 and 2013 for the bottom 90 percent of income earners. Granted, the bottom 90 percent of income earners is a very wide group; to give one the idea of the skew produced by upper-class income earners, wages for the typical non-supervisory worker rose slightly less 9 percent in the period between 1973 and 2013.
The dissipation of earning power for most Americans has been a documented phenomenon for some time; those in the middle are now, at least according to Pew, fewer than those at the top and those on the bottom.

Getting more for less

The shrinking middle class has had clear beneficiaries. The EPI found productivity, or the output of goods and services across the economy, rose by almost 74 percent among typical, non-supervisory employees, meaning that class of worker is 8 times more productive than their counterparts in 1973, but only earn 9 percent more.

The middle class isn’t alone either; minimum wage workers have perhaps the most stagnant wages. Real minimum wages, meaning relative to purchasing power, have actually fallen; a minimum wage earner in 1968 earned the equivalent of $9.58 in 2013, though the actual minimum wage in 2013 was $7.25. There have been repeated calls for a national minimum wage of $10 per hour, though there has been no progress on that front. A few isolated cities have raised theirs to more than that amount, such as Seattle’s $15 per hour minimum wage, but little progress has been made beyond that.

Keywords: shrinking middle class, middle class, wage stagnation

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