For years, you have heard about the dwindling middle class in the United States, Canada, the United Kingdom, and other developed nations. Because of greedy corporations, we’re told, the middle class is disappearing and becoming poorer. All we need is more taxation and bigger government to create prosperity!
But is this true?
The American Enterprise Institute (AEI) released this chart to suggest that the middle class is really diminishing…because they’re getting richer.
Also, from AEI’s Mark Perry:
There has been a shrinkage of America’s middle class over time (by either measure above), but it’s not a story of economic gloom and doom, characterized by a “widening gap between what Americans earn and the housing they can afford” but rather a positive story of economic prosperity and upward mobility that has gradually but consistently lifted millions of lower-income and middle-income US households into higher income groups over time. The fact that nearly 28% of US households annually earn $100,000 or more runs counter to the widespread narrative of an American middle-class in decline and deserves much greater attention as evidence of a dynamic and prosperous America with significant income mobility.
Not so fast. American families are getting poorer. A family making $35,000 in Jan 1968 had the buying power equal to $247,804 in Dec 2016. So much for Americans getting richer.
to quote the graph: “inflation-adjusted 2016 dollars”