The Shrinking Middle

By Bernat Ivancsics

Among the posts published on the Pew Research Center’s end-of-the-year listicle is a recent study by the center on how the American “middle class” is losing ground.

According to the numbers, 2015 turned out to be a tipping point in the distribution of wealth in the United States: for the first time since 1971, “medium income” earners have now become a minority as compared to “low income” and “upper income” earners. Current statistics show a slightly less than 50% share for those households that earn between $24,000 and around $160,000 annually. This wide range of income is based on the number of people living in the household, their state address, college degree, and various other factors. A single-person household could earn around $30K and still qualify as “middle class” while a single parent nurturing three children with an income of $60K might end up as an “upper low income” earner.

The study is comprehensive enough to calculate a variety of factors when classifying its multiple categories and distribution plots. From the charts and the descriptions, we can read a fair amount on how the lower class increased to almost one-third of the entire population, while the upper class more than doubled to hold over 20 per cent of the demographic share.

What the study fails to elaborate is to highlight the skewness of the actual wealth distribution. Just how poor is the lower class today and how rich is the very rich? In terms of wealth, it may turn out that the upper few per cent of the population amounted more capital than what the middle class has lost during the last four decades. And if the overall capital is increasing in the United States, how much of that is “real value” and how much speculation?

 

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