The Strategist

American Middle Class is Losing Ground

12/10/2015 - 15:11

According to the Research Center Pew Research, share of middle class in the entire US population is now less than 50%. The reduction was triggered by increase in number of the poorest and the wealthiest segments of the nation.

According to Pew Research center, the middle class, which was the economic mainstay and the majority of American society for nearly half a century, now found itself in the minority. For example, in 1971, the middle class was significantly greater than higher and lower together class composed together - 80 million against 51.6 million or 61%. In early 2015, the first had already receded their positions - 120.8 million against 121.3 million, or 49.9%. The US middle class includes adult citizens who have an annual household income ranging from $ 42 thousand up to $ 126 thousand.

Pew Research experts note that decline of the middle class is one of the signs of economic polarization. The study shows that the middle class not just shift into higher or lower layers, but become either very rich or very poor, and it is about growing stratification. For example, in 2015, 20% of adult Americans have been included in the group of individuals with the lowest revenue, while the figure was 16% in 1971. Yet, experts note that as many former middle class people have now moved into the very rich category, total income of households has grown considerably. To compare, the highest income of households was 29% in 1970. By 2014, it has jumped by 49%. During the same period, number of households with average income has decreased from 62% to 43%.  

Pew Research also notes fall in average income of middle class Americans. In the period of 2001 to 2013, average size of this class’ state size decreased by 29% due to the recession of 2007-2009 and the crisis on the real estate market. If we take the period from 1970 to 2014, we will see that incomes of higher, middle and lower classes have grown. Yet increasingly they grew still have the upper class, and less active - have the lowest. Thus, the upper classes’ average income increased by 47% in 44 years, having amounted to about $ 174 thousand. At the time, the middle class’ income rose just by 34%, to $ 73 thousand. Representatives of the lower class could rise the bar just by 28%, to $ 24 thousand.  

In contrary, the latest Credit Suisse report announced that China's middle class has reached the mark of 109 million people, which is the largest absolute index in the world. The middle class in China covers representatives of the adult population owning a state of more than $ 28,000.