Chances are that you consider yourself to be in the middle class—nearly everyone in the United States does. But, it can be tricky to define the middle class, as people’s perceptions of their social class can vary widely.
You may define it by income level or wealth, or regard it as a function of occupational status and educational attainment. You also can consider it a state of mind or a set of aspirations reflected in your actions and choices. However you define it, the middle class is often associated with the following set of characteristics:
- A college education
- Professional or managerial occupation
- Owning a home
- Living in a suburban or urban area
- Two or more cars
- A relatively high income, but not in the top 5 percent
The middle class represents the American Dream—the belief that anyone, no matter their background or station in life, can succeed through hard work and determination. The American Dream has been a powerful motivator for people throughout our history. It is what drew millions of immigrants to our shores in search of a better life. And, it is what has inspired generations of Americans to strive for a better future. Our recent history is replete with examples of rags-to-riches stories of fortunes made in the land of opportunity, including Andrew Carnegie, John D. Rockefeller, Henry Ford, and Bill Gates.
Who was in the Middle Class in 2020?
Many organizations in both the public and private sectors have worked hard to define and measure income levels throughout time. Although the U.S. government doesn’t have an official definition of middle-class income, the Pew Research Center considers a household to have “middle-income” if it’s between 67% and 200% of the median household income. The median income is the level at which half of the population earns more and half earns less. The U.S. Census Bureau found that the 2020 median income for all households was $67,521. Using $67,521 as the base, the Pew definition of middle income would include households earning between $45,239 and $135,042.
But that range does vary by the size of the household. To be considered part of the middle class in 2020, a single American must have earned between $22,792 and $68,036. A two-person household must have earned between $50,966 and $152,138, a three-person household must have earned between $60,072 and $179,320, and a four-person household must have earned between $71,751 and $214,182.
Who was in the Middle Class in 1975?
To help us understand what these ranges signify over the last several decades, let’s look back to the mid-1970s and compare these figures to the present. In 1975, the median income for all households was $11,800, which equals $51,762 in 2020 dollars. To be considered part of the middle class in 1975, a single American must have earned between $14,125 and $42,164 in 2020 dollars, while a two-person household must have earned between $32,832 and $98,006, a three-person household must have earned between $41,391 and $123,554, and a four-person household must have earned between $46,581 and $139,048. Overall incomes have risen over time, as you can see. But, let’s take a look at how household size has changed in comparison to income.
Between 1975 and 2020, the number of households of any size grew by 178 percent. Single-person households grew by 247 percent, while two-person households grew by 203 percent, three-person households grew by 156 percent, and four-person households grew by 141 percent. In other words, the most rapid growth in the U.S. population of wage earners occurred in lower-middle-class households. Pew Research Center analyses indicate that the proportion of American adults who reside in middle-income households has dropped from 61% to 51% over the last four decades. Since 1971, this reduction has proceeded at a gradual but steady rate, with each decade ending with a smaller percentage of people living in middle-income homes than the previous one.
Measuring the Cost of Living
In the same period, the cost of living has outpaced earnings. Soon after its creation by Congress in 1884, the Bureau of Labor Statistics (BLS) started to collect data on Americans’ cost of living. It was only a century ago, in 1921, that the United States government began tracking a national Consumer Price Index (CPI), which was based on the cost of living in big cities. The CPI is still the most-quoted indicator of living costs today, documenting how costs have fluctuated over time. The CPI adjusts for inflation by tracking changes in the prices of a “market basket” of goods and services that Americans purchase, such as rent, food, transportation, and medical care. The BLS publishes a separate CPI for each major metropolitan area, which is then used to calculate cost-of-living differentials for specific regions.
The relationship between earnings and the cost of living was largely different in the past. Incomes grew faster than prices up until the early 1970s, giving workers more buying power year after year. But then something changed: Incomes began to stagnate while prices continued to rise rapidly. From 1975 through 2020, inflation-adjusted median earnings increased by 30%. At the same time, the dollar had an average inflation rate of 3.55% per year between 1975 and 2020, producing a cumulative price increase of 381.06%. This means that prices in 2020 are 4.81 times higher than average prices since 1975, according to the Bureau of Labor Statistics consumer price index.
The American Dream is Getting Crushed
The rules that once led to success are no longer working. Hard work and determination are not enough to guarantee a place in the middle class. The economic inequality that has characterized America for the past several decades has only grown wider in recent years, and the middle class has shrunk accordingly. The trend toward increased inequality is not unique to the United States. It is occurring in most developed countries. But the U.S. has been experiencing it at a much faster rate. The top 1% of Americans now own more wealth than the bottom 90%. This concentration of wealth means that there is less opportunity for upward mobility. The rules that once favored the middle class have been rewritten to favor the ultra-rich. And, as the middle class has shrunk, the power of the ultra-rich has grown.
The American Oligarchy has Returned
The concentration of income at the top is not just a recent phenomenon. It is strikingly similar to the income distribution of America in the early 20th century when the country was known as the “land of opportunity.” The period from roughly 1880 to 1920 was marked by rapid economic growth and increased opportunity for upward mobility. But it was also a time when the gap between the rich and the poor was widening. By 1920, the top 1 percent of Americans earned nearly 20 percent of all income—more than double their share in 1880.
This concentration of income at the top continued into the mid-20th century, but it began to reverse in the 1970s. The top 1 percent’s share of income declined throughout the 1970s and 1980s, before reaching its lowest level since the early 20th century in 1988. Since then, however, it has been on the rise again. A 2016 Pew Research Center report found that 51 percent of adults in the U.S. say they are either “lower middle class” or “poor.” This is the highest share of Americans who have self-identified as low-income since the 1970s.
Today’s ultra-rich, well-connected class of individuals control the country, frequently disregarding middle-class values and the majority of citizens’ preferences. America’s political and economic systems have transitioned from a democracy to an oligarchy, in which power is held by wealthy elites. We admire the ultra-rich as shining examples of the American Dream, but they’ve redefined the rules in their favor and shut out everyone else.
The Rules for Getting Ahead Have Changed
The rules of the economy have changed, and the playing field is now tilted in favor of those at the top. The wealthy use their power to influence government policies that benefit them at the expense of the rest of society. They have rigged the system to keep themselves at the top while everyone else struggles to get by. The country is now governed by a small group of wealthy individuals who use their economic and political power to protect their interests. This new class of oligarchs has amassed its fortune through a combination of inherited wealth, income from investments, and high-paying jobs. They have used their economic power to buy political influence, which they use to further their interests. Big-tech robber barons and Wall Street bankers have replaced the Rockefellers and the Morgans as the new American oligarchy.
For most of our history, the United States was a democracy—a government of, by, and for the people. But, over the past several decades, we have seen a dramatic shift away from democracy and toward oligarchy—a form of government in which power is held by a small number of wealthy elites. The oligarchy has manipulated the rules of the economy, deregulated industries, signed trade deals that favor corporations over workers, and slashed taxes on the wealthy. Our economy has become increasingly unequal and our government has become less responsive to the needs of ordinary citizens. The result is an economy that works for the oligarchy and leaves everyone else behind.
We Must Level the Playing Field
The American middle class is facing a crisis. But it is not just an economic crisis. It is also a crisis of confidence. Many middle-class Americans no longer believe that they can achieve the American dream. They do not think that their children will be better off than they are. And they are increasingly skeptical of the institutions that have long been seen as the pillars of upward mobility in America: education, hard work, and entrepreneurship. Income inequality is a problem that is not going away. And it is one that we need to start talking about if we want to find a way to fix it.
The American dream is still attainable, but it requires a different approach than it did in the past. In an oligarchy, the individuals at the top have a disproportionate amount of influence and power. This means that traditional methods of achieving the American dream, such as hard work and determination, are not enough. To level the playing field and achieve the American dream, it is important to understand how the current oligarchy functions and learn the new rules for success. By understanding the systems in place that favor the oligarchy, it is possible to level the playing field for the middle class. By working together, we can build a country that ensures opportunity for all, not just the privileged few. We can create a more just and democratic society in which everyone can prosper.
Community Wealth Building in an Oligarchic Society
In an oligarchic society, wealth and resources are concentrated in the hands of a few. This often leaves the majority of people feeling left out and disenfranchised. But there is something we can do about it. We can build community wealth. Community wealth is created when everyone in a community has access to the resources they need to thrive. It is based on the idea that we are all connected, and that what benefits one member of the community benefits all members of the community. When we work together to create community wealth, we create a more just and equitable society for all. To build community wealth, we need to level the playing field and create opportunities for everyone to participate. We need to ensure that everyone has a voice in decision-making and that the resources of our community are used for the benefit of all.