White House: The American middle class is shrinking

By David Rohde
January 13, 2012

In a speech in Washington on Thursday, the chairman of President Obama’s Council of Economic Advisers said that the American middle class has been shrinking since 1970. Princeton University economist Alan Krueger said the American middle class shrank from 50.3 percent of American households in 1970 to 42.2 percent in 2010. Krueger defined the middle class as households with annual incomes within 50 percent of the national median income. Here is a table presented describing his findings.

 

Later in the speech, Krueger cited well-known studies describing growing income inequality in the United States. His claim about a shrinking middle class, though, appears to be new. While researchers have in the past argued that the middle class is shrinking, both Democratic and Republican administrations have generally steered clear of giving an exact definition of the middle class. Apparently fearing that an exact definition could backfire on them if the economy performs poorly, administrations have vowed to defend the middle class but avoided specifics. Given the central role that the state of the middle class will play in the 2012 presidential campaign, all of that may be different this year. To me, that’s a step forward.

8 comments

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I’ve studied long term household income data from US Census. The data shows that the %’s of lower income households ($100k/yr) has increased. The Census doesn’t attempt to define middle class, but I think the income bands cited above are reasonable. (Census date measures income in constant 2007 dollars.)

Net net, households are becoming more prosperous.

My study can be found at http://unrepentantcapitalist.blogspot.co m/, see the August 21, 2010 posting.

Posted by jambrytay | Report as abusive

That’s 2% drop per 10 years. Not good but not alarming.

Posted by Quan | Report as abusive

it appears my original posting got garbled, let me try again.

I’ve studied long term household income data from US Census. The data shows that the %’s of lower income households ($100k/yr) has increased. (Census date measures income in constant 2007 dollars.)

Net net, households are becoming more prosperous.

My study can be found at http://unrepentantcapitalist.blogspot.co m/, see the August 21, 2010 posting.

Posted by jambrytay | Report as abusive

what’s up reuters’ moderator?

The data shows that the %’s of lower income households ($100k/yr) has increased.

Posted by jambrytay | Report as abusive

okay, one more try:

I’ve studied long term household income data from US Census. The data shows that the % of lower income households ($100k/yr) has increased.

Posted by jambrytay | Report as abusive

So let’s just put everyone on level ground, shall we? Then we will see exactly what socialism really means. Or perhaps you could look at the European nations which are now having trouble with that theory, that is, level ground, and ask them how they are doing. Our nation was built upon anyone being able to make money, and the small to large companies employ Americans. Let us NOT allow the government to be the largest employer. Otherwise, you will only see and vast majority with hands out for lattes and cigarettes.

Posted by Savant55 | Report as abusive

The data shows that the income curve has flattened, with the center “hump” in the curve shrinking. In other words, the middle of the distribution is decreasing as a percentage of the population.

It is interesting that, if you place the “lower income” threshold at $100,000. per year, the lower income threshold is about double the US household median income.

Just as a matter of brutal fact, for those of you who are not “lower income”, this country belongs to that lower income group. You have no property rights, no residence rights, no citizenship rights that are not granted by them. Ownership is merely a name on a piece of paper. That name can be changed. Participation in the political system is an “entitlement” just as subject to change as any other “entitlement”.

Caution is advised. Promoting the benefits of allowing a capitalist system would be wise. Disparaging class based remarks are just plain stupid and antagonistic.

This country is not run by, or for the benefit, of organizations.

Posted by txgadfly | Report as abusive

Seems reasonable! I can’t think of a more reasonable definition for “middle class”…
I don’t like the “sawn-off” graph though. BEWARE THE COLLAPSED AXIS… Vertical bars are NOT in proportion.

> “That’s 2% drop per 10 years. Not good but not alarming.”
That’s not the point! The main point here is that this is a consistent movement in fundamental measurements of American income mobility. This change has real-world consequences…
http://www.ted.com/talks/view/lang/en//i d/1253

Posted by matthewslyman | Report as abusive