Most Americans believe they are members of the middle class. But a new report has shed light on who really makes up this segment of society and how their numbers are shrinking. A paper published this week by RAND Corporation, a public policy research firm, explores the question of who the middle class is. Citing studies from Pew and Northwestern Mutual, the researchers noted that a vast majority of people in this country (between 70% and 89%) thought they were middle class. Additionally, black and Latinx individuals were less likely than their white peers to self-describe as part of the middle or upper classes.
But the ways in which people define the middle class can vary significantly. “For many Americans, the term evokes specific attributes, such as frugality and dedication to work,” the researchers wrote. “Others define it in relation to income; in the minds of many, middle class people are likely to have some retirement savings, own a home, and send their children to college. “Depending on how the middle class is actually defined, its members see their incomes decrease or decrease in number. Before 1987, the 60% of Americans who were in the middle of the income distribution nationwide accounted for more than half of the nation’s income. By 2019, that number had fallen at 45%, a sign that middle-income Americans are earning less than their counterparts decades ago. COVID-19 and the middle class AND COVID-19 can make everything worse. Because the COVID-19 pandemic has caused job losses in industries that pay lower wages, the unemployment situation could make the upward movement even more difficult. In addition, the researchers argued that companies may seek to invest more in robotics. a and automation to reduce the risks that a future pandemic could pose to productivity. “The massive restructuring of the economy resulting from the pandemic will likely lead to further declines in the middle class and a disproportionate entry into the lower class,” they wrote. To count how many people are in the middle class and find out what they earn, the researchers took a different approach. They first looked at the median income of households of various sizes. The middle class was then defined as the households that generated no less than 75% of that median income and no more than 200% of it. Here’s how those limits were broken for households of different sizes: Family size 75% of median income (lower threshold) Median income 200% of median income (upper threshold) 1 $ 26,965 $ 35,953 $ 71,907 2 $ 38,134 $ 50,846 $ 101,691 3 $ 46,705 $ 62,273 $ 124,546 4 $ 53,930 $ 71,906 $ 143,813 5 $ 60,295 $ 80,394 $ 160,788 According to these calculations, only 51% of the US are in the middle class. And that number has decreased: between 2007 and 2017, the middle class contracted by 2.7%. Most of those people (almost 2%) joined the upper class, while almost 1%, or some 26 million people, belonged to the lower class. “For most of those who drop out of the middle class, moving to the upper class may seem like good news,” the researchers wrote. “However, this hollowing out of the middle class is simultaneously accompanied by a growing rigidity in the social class.” His research found that people who belong to the lower class are less and less likely to move up the income ladder, especially since the middle class had declined since the 1970s.