The share of Americans in the middle class has declined over the past four decades, but not because families are falling behind.
Instead, the decline has been driven by a surge in upper-middle-income households, The Wall Street Journal reported late last month, citing a January report by the American Enterprise Institute.
The AEI study, written by economists Stephen J. Rose and Scott Winship, argued that claims of a "hollowed-out" middle class, often advanced by progressives, overlook a broader trend: millions of families have moved into higher income brackets as overall living standards improved.
Using an "absolute" measure based on purchasing power, the report found the share of families in the upper-middle class nearly tripled, rising from about 10% in 1979 to 31% in 2024. Meanwhile, the share of families below the middle class fell sharply, from 54% to 35%.
By 2024, more families were above the core middle-class threshold than below it for the first time on record.
The findings align with broader data showing a growing share of Americans entering higher income tiers. A separate Pew Research Center analysis found the share of households in an "upper-income" group rose from 11% in 1971 to 19% in 2023, reflecting stronger gains among higher earners, according to the Journal.
Pew classified upper income as those earning more than twice the median household income, or roughly more than $200,000 for a family of three in 2024. Although inflation-adjusted incomes grew substantially for all groups, they rose much faster for well-off families.
AEI defined upper-middle-class households as those earning roughly $133,000 to $400,000 annually for a family of three in 2024 dollars, underscoring how income growth has pushed more families into higher brackets.
"The shrinking core middle class is due to a booming upper-middle class," the authors wrote, adding that widespread gains across the income distribution have often been mischaracterized as economic decline.
The report contrasts its findings with widely cited analyses that define the middle class relative to median income, a method that can show a shrinking middle class even when incomes are rising.
By contrast, the AEI analysis found no broad downward shift. The share of families classified as poor or near-poor fell from about 30% in 1979 to 19% in 2024, while the lower-middle class declined from 24% to 16%.
Median family income also rose substantially. After adjusting for inflation and household size, incomes increased by more than 50% over the period.
Economists attribute much of the upward movement to wage growth outpacing inflation over time, particularly for college-educated and white-collar workers, along with increased workforce participation and dual-income households.
The expansion of higher-earning households has also helped shape the broader economy, fueling demand for higher-end goods and services while reshaping consumer spending patterns.
At the same time, rising costs for housing, child care, and college continue to strain some families, including higher earners, and contribute to persistent concerns about affordability.
The findings come amid ongoing political debate over wages, taxes, and the cost of living, with President Donald Trump and his allies arguing that economic growth, tax policy, and trade measures can continue to lift incomes. But critics point to persistent affordability pressures.
The AEI report suggests that, despite those concerns, long-term trends show broad upward mobility, even as higher costs for housing, education, and healthcare weigh on household budgets.
Michael Katz ✉
Michael Katz is a Newsmax reporter with more than 30 years of experience reporting and editing on news, culture, and politics.
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