The term ‘middle class’ is ubiquitous in economics, sociology and politics. Yet, most of the receivers don’t know what it means! The term originated as a requirement to fill the void between the wealthy upper class and the poor lower class. We attempt to understand the concept quantitatively and will use a US viewpoint.
There is no single definition for the household income range required to qualify as middle-class. The first approach was to form intuition about middle-class income. Because of this, it varied from individual to individual. To some, it was $24,000 to $96,000, whereas to others, it was $20,000 to $200,000.
The second method was to divide into income quintiles (5 sets of 20%) and give the top 20% to the upper and the bottom 20% to the lower class. The remaining (middle) three quintiles (20% to 80%) are middle class.
Pew Research Center follows a different definition. It takes the median national household income for a family of four and constructs the middle-class income range to be between 67% and 200% of it. For example, if the median household income is $70,000, the middle class becomes between $47,000 and $140,000. But why is it shrinking?
The Pew Research Center found that between 1971 and 2021, the middle income decreased from 61% to 50%. Below is a closer view of the data.
| Median Income of households | 1971 | 2020 | % increase |
| Upper-income | $130,008 | $219,572 | 69% |
| Middle-class | $90,131 | $59,934 | 50% |
| Lower-income | $20,604 | $29,963 | 45% |
The data suggests that the growth rate of the upper class was faster, and the lower class was slower than the middle. This would mean expansion of the top and bottom brackets, naturally, at the expense of the middle.
| Share of adults | 1971 | 2020 |
| Upper-income | 25% | 29% |
| Middle-class | 61% | 50% |
| Lower-income | 14% | 21% |
References
Middle Class: Wiki
How the American middle class has changed in the past five decades: Pew Research Center
Steven Pressman, Defining and Measuring the Middle Class, Working Paper 007, American Institute of Economic Researcher.
