America's Wealth Grows While Middle Class Resentment and Misery Deepen

The phrase "shrinking middle class" has become a political rallying cry claimed by both parties, from JD Vance at a firefighters' union rally to Joe Biden blaming trickle-down economics. The data, it turns out, tells a radically different story. It's not because Americans are getting poorer. They're getting richer, much richer. The real puzzle isn't poverty. It's why prosperity and misery are rising at the same time.

The Measurement Problem That Distorts Everything

Most studies purporting to find a shrinking middle class are prone to a variety of measurement and analytical problems. The biggest is the difficulty of defining "middle class." Economists often default to methods that calculate income brackets relative to the median income in a given year, but such analyses purport to find a shrinking middle class even as incomes across the board rise significantly.

Rose and Winship instead set an absolute marker for different income groups, based on multiples of the federal poverty level in 2024. That methodological choice changes everything. Rather than measuring who sits in the middle of a moving income distribution, it anchors the analysis to fixed real-dollar thresholds, making comparisons across decades far more meaningful.

Five Income Tiers, One Dramatic Shift

The Winship-Rose framework divides American families into five tiers, each defined by a multiple of the federal poverty line:

• Poor or near-poor: less than 150% of the poverty line
• Lower-middle class: 150% to under 250% of the poverty line
• Core middle class: 250% to under 500% of the poverty line
• Upper middle class: 500% to under 1,500% of the poverty line
• Rich: 1,500% of the poverty line and higher

To give a sense of what those numbers mean, the income thresholds that divide the five classes for a family of three were $40,000, $67,000, $133,000, and $400,000 in 2024 dollars.

The percentage of Americans who were poor or near-poor, those below 150% of the poverty line, plunged from 29.7% to 18.7% over the period from 1979 to 2024. The percentage of lower-middle-class families, from 150% to under 250% of the poverty line, shrank as well, from 24.1% to 15.8%. Both declines point in the same direction: upward mobility, not stagnation.

The Core Middle Class: A 13% Decline That Isn't What It Looks Like

We hear about a shrinking middle class, but it's shrinking because the ranks of the rich and the upper middle class are growing. According to an analysis by the economists Scott Winship and Stephen Rose, the core middle class, defined as households with incomes from 250% to under 500% of the poverty line, shrank from 35.5% of families in 1979 to 30.8% in 2024. That may not look like much at first glance, but that's a 13% decline.

Measured this way, the story of the past 50 years is steady progress out of the core middle class and into the upper middle class. Families didn't fall out of the middle class because their circumstances worsened. They graduated out of it because their incomes rose.

The Upper-Middle Class Explosion

The most striking number in the entire analysis sits at the top of the income distribution. During the same period, the share of upper-middle-class and rich Americans exploded. In 1979, 10.4% of families were upper middle class, with incomes from 500% to under 1,500% of the poverty line. By 2024, the percentage had almost tripled, to 31.1%, and the percentage of the rich, those with incomes of 1,500% of the poverty line and higher, went from a microscopic 0.3% to 3.7%, a more than tenfold increase.

As Rose and Winship write, "For the first time in American history, more families in 2024 were above the core middle class threshold (35%) than below it (34%)." That single sentence inverts the entire conventional political narrative about American decline.

The AEI report notes that from 1979 to 2024, adjusted median family income rose 52%. Even families at the 10th percentile of the income ladder are nearly 30% better off than they were in 1979.

Why Prosperity Breeds Resentment

The income gains are real. So is the frustration. There has been tremendous growth in income and wealth in the U.S. in the last half century, even for poorer and middle-class households. But because of the nature of that growth, as well as the changing structure of the national economy, a lot of the people who have benefited also believe that the economy isn't working for them.

The explanation lies partly in what prosperity now costs. Americans face stresses their forebears didn't, such as badly distorted markets that raise costs for housing, healthcare, and higher education. Earning more in absolute terms doesn't insulate families from the feeling of losing ground when the price tags on the most consequential goods, a home, a degree, a hospital visit, are rising faster than incomes.

The result is that immense numbers of Americans live lives that would look extraordinarily prosperous compared with previous generations. For all their justified complaints about housing affordability, Americans on average live in larger and more luxurious homes than Americans in generations past. Yet the gap between what is achievable and what feels achievable has become the defining source of political tension.

There is also a structural dimension to the resentment. There has been tremendous growth in income and wealth in the U.S. in the last half century, even for poorer and middle-class households. However, because of the nature of that growth, as well as the changing structure of the national economy, a lot of the people who have benefited believe that the economy is not working for them. The gains from the knowledge economy and financial markets have not been evenly distributed in ways that feel tangible to families navigating daily expenses.

Politicians on Both Sides Are Getting It Wrong

The political class has not caught up with the data. As president, Joe Biden claimed "trickle-down economics hollowed out the middle class." More recently, Senator Elissa Slotkin asserted at the progressive Center for American Progress that "the middle class is shrinking. That's not a political statement; that's a fact. In the years after World War II, the middle class exploded. But over the last 50 years, the share of Americans in the middle class has fallen by nearly 20 percent." Populists on the right have embraced the same declensionist view; Vice President JD Vance declared that powerful elites had "hollowed out our middle class and sent us into foreign wars."

Claims that the middle class is "shrinking" and especially that it has hollowed out are not helpful for understanding changes in material well-being. The data from the Winship-Rose analysis, drawn from the Census Bureau's Annual Social and Economic Supplement, tells a more complex and ultimately more optimistic story, one that neither party's narrative accounts for.

What the Numbers Still Cannot Explain

The income data captures a genuine and significant improvement in American living standards. The idea that the economy is rigged and zero-sum is leading to a rise in populism in both parties. The result would probably be less trade and more price controls, which would mean a slower-growing economy, or even one that is shrinking.

The numbers on income tiers don't measure wealth inequality, the concentration of assets, the cost of college debt, or whether the path upward from lower income tiers is still as open as it was in 1979. The wealth gap between upper-income and lower- and middle-income families has grown wider this century. Upper-income families were the only income tier able to build on their wealth from 2001 to 2016, adding 33% at the median. Middle-income families saw their median net worth shrink by 20%, and lower-income families experienced a loss of 45%.

That divergence, between income gains and wealth gaps, is where the resentment lives. A family that earns more than their parents did but can't afford to own a home in the same neighborhood, or fund retirement without stock market exposure, may be statistically upper-middle class and emotionally economically precarious at the same time. The headline number says America got richer. The lived experience says the richness doesn't always feel real. Both things are true, and that tension is the defining economic contradiction of this era.