Upper Middle Class a Big Winner

Robert Samuelson writes about economics and demographics for The Washington Post and for RealClearPolitics. Today's article chronicles the return of prosperity to the American middle class, and it appears at RCP. All income figures in constant, inflation-adjusted dollars.

The income of the median household (the one exactly in the middle) rose to a record $59,039; the two-year increase was a strong 8.5 percent. Meanwhile, 2.5 million fewer Americans were living beneath the government's poverty line ($24,563 for a family of four). The poverty rate fell from 13.5 percent of the population in 2015 to 12.7 percent in 2016.

If you take $100,000 as a crude threshold of being upper middle class, then the share of households above the threshold was about a quarter (27.7 percent to be exact) in 2016, up from about a fifth (19.4 percent) in 1990.

By contrast, upward movement at other income levels was slight. Take the new record median household income of $59,038 as an example of what's happening in the middle of the income distribution. If incomes were rising rapidly, there would be a large gap between today's incomes and those of the late 1990s. There isn't. Today's income is less than 1 percent higher than the previous record of $58,665 achieved in 1999.

The real story of the last couple of decades is the growth of the upper middle class, which has been thriving. Farther down the ladder, things haven't been nearly as good.