Visualizing The Dramatic Erosion Of America's Middle Class

To be sure, income inequality and the complete erosion of the middle class in America is something that we have discussed many times over the years, especially since the central planners have done nothing but accelerate the problem. While many often focus on the super rich during the income inequality discussion, a new study from the Urban Institute shows that one rung below the super rich, dubbed the "Upper Middle Class", has actually grown dramatically over the years (along with the rich) and has significantly contributed to the slow disappearance of the middle class.

To make a long story short, the report provides a stunning visualization of just how significantly the middle class has eroded from a population standpoint, as well as from an income standpoint.

First, here is how the report defines the different social classes that will be shown in the charts below.

This first chart shows that as a percentage of the total population, the Rich & Upper Middle Class combined were just 13% in 1979, while the Middle Class accounted for 38.8%. Fast forward to 2014, and the Rich & Upper Middle Class combined for 31.2% of the total population, while the middle class shrunk to just 32% of the population.

While the percentage of the Rich grew, what stands out the most is the dramatic increase in the Upper Middle Class from 1979 to 2014, and the gradual decline of the middle class.

And now the chart that everyone has been waiting for, the below shows which social class controls what percentage of the nation's total income. This is where we can see the definitive effects of income inequality coming into play, as the absolute erosion of the middle class can be seen very clearly in this chart. While the population has shifted some, the income gains have grown quite disproportionately.

In 1979, the Middle Class controlled 46.4% of the total national income, compared to the Rich & Upper Middle Class who controlled just 30%. In 2014, the Middle Class only controlled 25.8%, while the Rich & Upper Middle Class jumped to 63.1%!

This chart alone shows all we need to know regarding the income inequality discussion, and the demise of the middle class.

We'll leave you with the part of the paper's conclusion.

This study found that the proportion of the population in the upper middle class went from under 13 percent in 1979 to over 29 percent in 2014. The effect of this growth was magnified by the greater income differences between this group and the rest of the population. Although wealthier people always have a greater share of total income, this report documents a major shift in the distribution of economic resources. In 1979, the bottom three income groups controlled 70 percent of all incomes, and the upper middle class and rich controlled 30 percent. By 2014, this distribution shifted to 37 percent for the bottom three groups and 63 percent for the upper middle class and rich groups. The middle class alone saw its share of income decline from 46 percent in 1979 to 26 percent in 2014.

 

Any discussion of inequality that is limited to the 1 percent misses a lot of the picture because it ignores the large inequality between the growing upper middle class and the middle and lower middle classes.

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