The Pew Research Center recently released a demographic study with very significant implications for our country.
The report finds that over the last fifty years, the share of people living in the middle class decreased from 61% to 50%. Using their formula, presently, the median income for this group ranged from $56k to $156k annually. Lower income households would have income under $56k while upper income households would have greater than $156k.
Also, the share of aggregate income for this group has fallen from 62% in 1970 to 42% in 2020. Interestingly, the share of the higher level group rose from 29% to 50% over the same period. Although it is good that some members of the middle class have moved up, the overall wealth of the group has decreased substantially. It is better to have all people generally improve together. The lower income group has increased and their income share has dropped a little, although it has been relatively stable, probably due to government entitlement programs. That has its own economic implications.
In addition, Pew statistics show the generations behind the baby boomers are having trouble with the younger generations actually losing income share. That is not the normal pattern of American development.
This is a dangerous situation. The middle class and the values they represent are the foundation of a society. In a healthy economy, the middle class should expand. This study documents the continuing trend of wealth inequality in the U.S. In fact, the wealth gap may be the greatest on record.
Historically, societies that have reached this level of disparity, colloquially, between the have and the have nots, have encountered social and economic turmoil as a result. Persistent inflation will hurt everyone, especially the middle and lower income groups. Along with our aging population, the investment consequences are dramatic.
FYI, the report has a lot of information with breakdowns on age, education, marriage and more.