Census data show the American middle class is shrinking, which is great news. That’s because millions of Americans who used to make do on middle-class salaries have become high-income earners.
In 1967, just 10 percent of U.S. households earned $100,000 or more in 2018 dollars. Middle-income households, making between $35,000 and $100,000 a year, represented 54 percent of Americans. Thirty-six percent were considered low-income, earning under $35,000 in 2018 dollars.
By 2018, the share of high-income earners had tripled. Currently, 30 percent of households gross more than $100,000 a year. That’s more than 39 million households. Middle-class earners now account for 42 percent of the country. This isn’t just a case of the rich getting richer. The number of low-income households shrank to 28 percent.
This research comes from Mark Perry, a scholar with the American Enterprise Institute.
Americans don’t just have more money. They have access to better stuff. Consider automobiles. The cars available in 1967 can’t compare with today’s vehicles, which are safer, perform better and include categories of vehicles not yet envisioned in 1967. The first passenger car with an airbag didn’t come out until 1973. The first minivan didn’t hit the market until 1983.
Think about telephones. In 1967, a “mobile” phone meant finding a pay phone on a street corner. Today, most people carry a phone in their pocket. In 1969, the first computer-to-computer message was sent. Computers were the size of small houses. Today, you can email anyone in the world from your smartphone, which fits in your palm. A modern smartphone has more computing power than NASA had available when it put a man on the moon.
There have been similar advances in medicine. A doctor built the first whole-body MRI scanner in 1977. The first artificial heart transplant was performed in 1982. Robotic machines, first used in 1987, make some surgeries much less invasive, which increases recovery time.
The list of technological improvements with reduced costs — in televisions, dishwashers, refrigerators, air conditioning — could go on and on.
Not everything has gotten cheaper, of course. Most notably, the costs of health care, education and housing in some urban areas have skyrocketed. Those are all areas with high levels of government involvement. That’s no coincidence. In their efforts to help, politicians have made things in those areas more expensive.
If politicians want to help the average American, they should get out of the way. As these numbers show, upward mobility and private-sector innovation remain alive and well.