The Middle Class is a relatively new concept in human history. For most of it, virtually everyone was poor, with just a few rich people at the top. But the Industrial Revolution changed that. It brought about a novel concept.....economic growth. As economies grew, the big winners were the poor. Their standard of living steadily improved, and the middle class was born. In the US, it arose largely without government intervention. For example, workers at Ford Motor Company made twice on an inflation-adjusted-after-tax basis in 1915 than they did in 2010. And this was before unions. Wages rose and prices fell because of gains in productivity, not because some bureaucrat or union official mandated it.
So here we are now in the 21st century. Is the middle class disappearing? Most certainly in every economic slowdown the middle class takes a hit. But like previous sluggish economies, we will recover from this one. But will the middle class recover with it?
First of all, if we are to look at the middle class ten years ago, and compare it to today, the people in it will have changed. Many of the poor have moved into it, and others have moved up to a higher income. That is the miracle of a vibrant market economy. Of course some may have failed and fallen. There are no guarantees. But in general, the middle class is alive and well. For example in 1967, the average real (inflation adjusted) income for the middle class (the 14th to 16th percentile for income distribution) was $43,000. In 2007 it was $61,000*. That is a 42% jump in their standard of living!
And how about their ability to move up and out of the middle class? More good news. In 1967, only one in twenty had real incomes of $100,000 or more. In 2005, one is six families did. In short, there are many today who are claiming that there is a "disappearing middle class". Don't believe it. The middle class is alive and well, and will do even better as the economy recovers.
* For examples see https://www.census.gov/hhes/www/income/data/historical/people/
Table P-7; Median & Mean Income; All Races
