WGBH CPB
The Economic Impact of a Changing Middle Class

What Happens When the Middle Class Shrinks?

The purchasing power of the middle class isn’t what it once was.

As the data that’s been presented demonstrate, the American middle class is shrinking. What’s more, the wealth gap between high-income and low-income households is growing.

To many economists, rising income inequality is troubling because the rich tend to invest rather than spend their income, and the poor can’t spend what they don’t have. With fewer people in the middle spending their money, the economy will suffer.

Photo of a four-person African American family in front of a sturdy brick house.

Examine the following graph and table, noticing the changes and trends for household income and population in each of the tiers over the dates shown. Use this information to answer the questions below. Source: Pew Research Center

Percent of combined U.S. Household Income Held by Each Tier, 1970–2014

Line graph showing share of combined household income by lower, middle, and upper income tiers, 1970–2014.

Click to enlarge.

Line graph showing share of combined household income by lower, middle, and upper income tiers, 1970–2014. The line for middle income starts at 62 percent and declines gradually each 10-year period through 2010. The endpoint in 2014 reads 43 percent. The line for upper income starts at 29 percent in 1970 and increases gradually each 10-year period through 2010. The endpoint in 2014 reads 49 percent. The line for lower income starts at 10 percent in 1970 and remains level through 1990. It drops to 9 percent in 2000 and remains level through the endpoint in 2014.

U.S. Adult Population by Income Tier,
in millions, 1971–2015

 

Year
Lower
Middle
Upper
All
2015
70.3
120.8
51.0
242.1
2011
68.0
117.6
46.6
232.2
2001
57.6
111.2
38.3
207.0
1991
50.1
102.1
31.0
183.2
1981
42.4
94.8
24.6
161.7
1971
33.2
80.0
18.4
131.6