Why Is The Middle Class Vanishing? Here's What We Know

Once upon a time, the U.S. had a middle class to be envious of. But in recent years the number of people considered middle class has shrunk. According to the Pew Research Center, 61% of adults were considered to live in a middle-class household in 1971. As of 2021, that number had shrunk to just 50%. As increasing amounts of U.S. adults are pushed out of this income bracket, more are being pushed into different income tiers altogether. The upper-income tier experienced the most significant growth, with 21% of the adult U.S. population belonging to an upper-income tier household compared to just 14% in 1971. At the other end, 29% of U.S. adults belonged to the lower-income tier in 2021 compared to 25% in 1971.

While the fact that increasing expense costs often outpacing worker pay has pushed more and more Americans out of what was once the middle class, another element of the problem is the accumulation of wealth at the top tier of incomes. While post-pandemic inflation, in particular, helped to fuel a more rapid disparity between worker pay and general essential expenses, upper-income households have experienced the steepest rise in income since 1971 among the three income tiers. This has left those still in the middle and lower-income tiers disproportionately burdened by the increasingly high prices for everything from housing to weekly groceries. As the middle class increasingly shrinks, there are some important things to keep in mind.

You might be surprised to learn that what income qualifies as middle class depends entirely on the state you live in. While a late 2024 report from the Journal of Consumer Affairs found that the median minimum household income necessary to be considered middle-class in America is $75,225 (with a maximum income of $125,375), that number can and does change state by state. At the high end are three states that all require a minimum income of over $100,000 in order to qualify as middle class (Massachusetts, New Hampshire, and New Jersey). On the other end of the spectrum, Mississippi has the lowest minimum annual income required to be considered middle class at just $49,712. This has to do with a number of factors including available wages and cost of living, but it's worth noting just how different the middle class can look depending on your geographic area.

With all of this in mind, it is still getting more expensive to be considered middle class every year, regardless of where you live. There was a 60% increase in the middle incomes of the middle-class income tier from 1971 to 2022. Meanwhile the higher-income tier experienced a 78% increase. As the gap grows between middle and upper tier incomes, the larger societal issues of wealth inequality will become more and more important. While many consumers simply want the price of eggs to come down (which won't be happening anytime soon) the larger economic implications of a shrinking middle class will make eggs the least of their concerns.

A significant factor in determining a household's income tier is connected to the country' s ongoing racial disparity. According to the Pew Research Center, both Black and Hispanic adults are more likely to be in the lower-income tier than White or Asian adults. In 2021 about 40% of Black and Hispanic adults were considered lower income compared to just 24% of White and 22% of Asian adults. It's also worth noting that Black adults were the only racial group that did not experience a decrease in their share of the middle class, with about 47% of Black adults belonging to the middle class tier in both 1971 and 2021. However, this stagnation is indicative of the lack of Black and Hispanic adults in the upper-income tier. While 25% of White adults and 31% of Asian adults belong to the upper-income tier, just 10% of Hispanic adults and 12% of Black adults do.

It's also important to realize that as households move out of the middle income tier, the middle class' income share shrinks. As of 2020, middle class income only accounted for 42% of the country's aggregate income. This is a stark decline from 1970, when the middle class comprised 62% of the country's income. This leads to even more significant income disparities. Many of these disparities fall along geographic and even educational lines. Specifically, both the adults with only a high school diploma and the adults with less than a high school education have experienced significant declines in their share of the middle class.