America's Income Gap Is Growing. Here's How You Can Leap It
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Surveys have confirmed what people have been saying for years: the middle class is shrinking. But does that mean America is going up in flames, ostensibly fueled by McDonald's grease and fast fashion? Turns out, there's reason to believe middle-class Americans aren't breaking budgets.
According to Pew Research, the middle class shrunk from 61% to 51% of the population from 1971 to 2023. Many middle-class Americans have been shed into the far ends of the income bracket.
It's easy to assume that members of the middle class have been falling further down the income ladder, the 1% are gobbling up ever-bigger portions of the American pie, and America's future looks grim.
But peer a little closer, and the magnifying glass reveals reason for optimism. Turns out, the wealth gap is growing, but so is typical household income.
Americans are falling forward
The middle class is shrinking -- but turns out, many are doing better financially. The following is a quick peek at the full class distributions.
Year | Lower income | Middle income | Upper income |
|---|---|---|---|
2023 | 30% | 50% | 19% |
1971 | 27% | 61% | 11% |
Data source: Pew Research Center.
During the past 50-ish years, the middle class has shrunk 11%. The percentage of people in the lower class (defined as earning less than two-thirds the median household income) has grown by 3%. More Americans are making less money, relative to their neighbors.
However, the percentage of people in the upper class (defined as more than double the median household income) has grown even more speedily, at 8%. Americans are diving headfirst into the upper crust, leaping the income gap.
But how are people leaping the gap? (Spoiler: It's not thanks to credit cards or cash back apps, no matter how much Mom swears by hers.)
Middle-class Americans are leaping the income gap
Despite mixed views of college, higher education remains strongly correlated with wealth.
The vast majority (87%) of Americans with bachelor's degrees are members of middle- or upper-class households. Only a little over half (63%) of those with only a high school diploma are members of middle or upper-class households. The difference is stark.
If you want to leap America's income gap, you may want to focus on higher education. Being employed helps, too. About half of unemployed people are technically part of the lower class. In contrast, only 1 in 5 Americans with jobs are lower income.
Everyone is earning more, inflation-adjusted
The rich are getting richer, and so is everyone else.
The wealthy are earning more than ever. According to Pew, incomes of upper-income U.S. households increased more than any other income bracket from 1970 to 2022.
But lower earners are making more, too. Lower- and middle-income households increased incomes 55% and 60% respectively, adjusted for inflation. That's a lot more income!
Good and bad incoming
The good news is, Americans are trending wealthier overall.
Unfortunately, it doesn't feel like it. Not when the Kardashians are throwing house parties on yachts, but many more Americans are throwing out their backs waiting tables. Sure, we have the internet now, but it's awfully hard not to open Instagram and think, where's my pool?
Which leads us to the bad news: the growing income gap will probably inflame sensitive topics like income class. We Americans like to judge ourselves relative to other Americans, after all.
It remains to be seen whether spenders can overcome modern challenges like social media and widening class divisions. Until then, higher education and employment remain some of the best predictors of the middle- and upper-income class. (Maybe that's why side hustles are trending?)
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