Rubén Weinsteiner
The
middle class, once the economic stratum of a clear majority of American
adults, has steadily contracted in the past five decades. The share of
adults who live in middle-class households fell from 61% in 1971 to 50%
in 2021, according to a new Pew Research Center analysis of government
data.
The
shrinking of the middle class has been accompanied by an increase in
the share of adults in the upper-income tier – from 14% in 1971 to 21%
in 2021 – as well as an increase in the share who are in the
lower-income tier, from 25% to 29%. These changes have occurred
gradually, as the share of adults in the middle class decreased in each decade from 1971 to 2011, but then held steady through 2021.
The
analysis below presents seven facts about how the economic status of
the U.S. middle class and that of America’s major demographic groups
have changed since 1971. A related analysis examines the impact of the coronavirus pandemic
on the financial well-being of households in the lower-, middle- and
upper-income tiers, with comparisons to the Great Recession era. (In the
source data for both analyses, demographic figures refer to the
1971-2021 period, while income figures refer to the 1970-2020 period.
Thus, the shares of adults in an income tier are based on their
household incomes in the previous year.)
How we did this
This report analyzes data from the Annual Social and Economic Supplements (ASEC) of the Current Population Survey
(CPS) to study how the economic status of the American middle class has
changed since 1971. It also examines the movement of demographic groups
in and out of the American middle class and across lower- and
upper-income tiers from 1971 to 2021.
The CPS is the U.S. government’s official source for monthly estimates of unemployment; the ASEC, conducted in March each year, is the official source for its estimates of income and poverty.
The COVID-19 outbreak has affected data collection efforts by the U.S.
government in its surveys, limiting in-person data collection and
affecting the response rate. It is possible that some measures of
economic outcomes and how they vary across demographic groups are
affected by these changes in data collection. This report makes use of updated weights released by the Census Bureau to correct for nonresponse in 2019, 2020 and 2021.
Who is middle income or middle class?
In
this analysis, “middle-income” adults in 2021 are those with an annual
household income that was two-thirds to double the national median
income in 2020, after incomes have been adjusted for household size, or
about $52,000 to $156,000 annually in 2020 dollars for a household of
three. “Lower-income” adults have household incomes less than $52,000
and “upper-income” adults have household incomes greater than $156,000.
The
income it takes to be middle income varies by household size, with
smaller households requiring less to support the same lifestyle as
larger households. The boundaries of the income tiers also vary across
years with changes in the national median income. Read the methodology for more details.
The
terms “middle income” and “middle class” are used interchangeably in
this analysis for the sake of exposition. But being middle class can
refer to more than just income, be it the level of education, the type
of profession, economic security, home ownership, or one’s social and
political values. Class also could simply be a matter of
self-identification.
Household incomes have risen considerably
since 1970, but those of middle-class households have not climbed nearly
as much as those of upper-income households. The median income of
middle-class households in 2020 was 50% greater than in 1970 ($90,131
vs. $59,934), as measured in 2020 dollars. These gains were realized
slowly, but for the most part steadily, with the exception of the period
from 2000 to 2010, the so-called “lost decade,” when incomes fell across the board.
The
median income for lower-income households grew more slowly than that of
middle-class households, increasing from $20,604 in 1970 to $29,963 in
2020, or 45%.
The rise in income from 1970 to 2020 was steepest
for upper-income households. Their median income increased 69% during
that timespan, from $130,008 to $219,572.
As a result of these
changes, the gap in the incomes of upper-income and other households
also increased. In 2020, the median income of upper-income households
was 7.3 times that of lower-income households, up from 6.3 in 1970. The
median income of upper-income households was 2.4 times that of
middle-income households in 2020, up from 2.2 in 1970.
The
share of aggregate U.S. household income held by the middle class has
fallen steadily since 1970. The widening of the income gap and the
shrinking of the middle class has led to a steady decrease in the share
of U.S. aggregate income held by middle-class households. In 1970,
adults in middle-income households accounted for 62% of aggregate
income, a share that fell to 42% in 2020.
Meanwhile, the share
of aggregate income accounted for by upper-income households has
increased steadily, from 29% in 1970 to 50% in 2020. Part of this
increase reflects the rising share of adults who are in the upper-income
tier.
The share of U.S. aggregate income held by lower-income
households edged down from 10% to 8% over these five decades, even
though the proportion of adults living in lower-income households
increased over this period.
Older Americans and Black adults
made the greatest progress up the income ladder from 1971 to 2021. Among
adults overall, the share who were in the upper-income tier increased
from 14% in 1971 to 21% in 2021, or by 7 percentage points. Meanwhile,
the share in the lower-income tier increased from 25% to 29%, or by 4
points. On balance, this represented a net gain of 3 percentage points
in income status for all adults.
Those
ages 65 and older made the most notable progress up the income ladder
from 1971 to 2021. They increased their share in the upper-income tier
while reducing their share in the lower-income tier, resulting in a net
gain of 25 points. Progress among adults 65 and older was likely driven
by an increase in labor force participation, rising educational levels and by the role of Social Security payments in reducing poverty.
Black
adults, as well as married men and women, were also among the biggest
gainers from 1971 to 2021, with net increases ranging from 12 to 14
percentage points.
On the other hand, not having at least a
bachelor’s degree resulted in a notable degree of economic regression
over this period. Adults with a high school diploma or less education,
as well as those with some college experience but no degree, saw sizable
increases in their shares in the lower-income tier in the past five
decades. Although no single group of adults by education category moved
up the income ladder from 1971 to 2021, adults overall realized gains by
boosting their education levels.
The share of adults 25 and older who had completed at least four years
of college stood at 38% in 2021, compared with only 11% in 1971.
Progress
up the income ladder for a demographic group does not necessarily
signal its economic status in comparison with other groups at a given
point in time. For example, in 2021, adults ages 65 and older and Black
adults were still more likely than many other groups to be lower income,
and less likely to be middle or upper income.
Married adults
and those in multi-earner households made more progress up the income
ladder from 1971 to 2021 than their immediate counterparts. Generally, partnered adults have better outcomes on a range of economic outcomes than the unpartnered. One reason is that marriage is increasingly linked to educational attainment, which bears fruit in terms of higher incomes.
Married
men and women were distributed across the income tiers identically to
each other in both 1971 and 2021. Both groups nearly doubled their
shares in the upper-income tier in the past five decades, from 14% in
1971 to 27% in 2021. And neither group experienced an increase in the
share in the lower-income tier.
Unmarried men and women were
much more likely than their married counterparts to be in the
lower-income tier in 2021. And unmarried men, in particular, experienced
a sizable increase in their share in the lower-income tier from 1971 t0
2021 and a similarly large decrease in their share in the middle-income
tier. Nonetheless, unmarried men are less likely than unmarried women
to be lower income and more likely to be middle income.
Adults
in households with more than one earner fare much better economically
than adults in households with only one earner. In 2021, some 20% of
adults in multi-earner households were in the lower-income tier,
compared with 53% of adults in single-earner households. Also, adults in
multi-earner households were more than twice as likely as adults in
single-earner households to be in the upper-income tier in 2021. In the
long haul, adults in single-earner households are among the groups who
slid down the income ladder the most from 1971 to 2021.
Despite
progress, Black and Hispanic adults trail behind other groups in their
economic status. Although Black adults made some of the biggest strides
up the income tiers from 1971 to 2021, they, along with Hispanic adults,
are more likely to be in the lower-income tier than are White or Asian
adults. About 40% of both Black and Hispanic adults were lower income in
2021, compared with 24% of White adults and 22% of Asian adults.
Black
adults are the only major racial and ethnic group that did not
experience a decrease in its middle-class share, which stood at 47% in
2021, about the same as in 1971. White adults are the only group in
which more than half (52%) lived in middle-class households in 2021,
albeit after declining from 63% in 1971. At the top end, only about
one-in-ten Black and Hispanic adults were upper income in 2021, compared
with one-in-four or more White and Asian adults.
The relative
economic status of men and women has changed little from 1971 to 2021.
Both experienced similar percentage point increases in the shares in the
lower- and upper-income tiers, and both saw double-digit decreases in
the shares who are middle class. Women remained more likely than men to
live in lower-income households in 2021 (31% vs. 26%).
Adults
65 and older continue to lag economically, despite decades of progress.
The share of adults ages 65 and older in the lower-income tier fell
from 54% in 1971 to 37% in 2021. Their share in the middle class rose
from 39% to 47% and their share in the upper-income tier increased from
7% to 16%. However, adults 65 and older are the only age group in which
more than one-in-three adults are in lower-income households, and they
are much less likely than adults ages 30 to 44 – as well as those ages
45 to 64 – to be in the upper-income tier.
All other age groups
experienced an increase in the shares who are lower income from 1971 to
2021, as well as a decrease in the shares who are middle income. But
they also saw increases in the shares who are upper income. Among adults
ages 30 to 44, for instance, the share in upper-income households
almost doubled, from 12% in 1971 to 21% in 2021.
There
is a sizable and growing income gap between adults with a bachelor’s
degree and those with lower levels of education. In 2021, about
four-in-ten adults with at least a bachelor’s degree (39%) were in the
upper-income tier, compared with 16% or less among those without a
bachelor’s degree. The share of adults in the upper-income tier with at
least a bachelor’s degree edged up from 1971 to 2021, while the share
without a bachelor’s degree either edged down or held constant.
About
half or a little more of adults with either some college education or a
high school diploma only were in the middle class in 2021. But these
two groups, along with those with less than a high school education,
experienced notable drops in their middle class shares from 1971 to 2021
– and notable increases in the shares in the lower-income tier. In
2021, about four-in-ten adults with only a high school diploma or its
equivalent (39%) were in the lower-income tier, about double the share
in 1971.