The American middle class is shrinking, but not because households are sliding into poverty. According to new research from the nonpartisan American Enterprise Institute (AEI), the shift is driven by a surge in families climbing the income ladder.
Approximately 31% of U.S. households now qualify as upper middle class, making it the nation’s largest economic segment. This represents a roughly threefold increase since 1979.
"The whole distribution of Americans, from poor to rich, has done better over time," said Scott Winship, a senior fellow at AEI and co-author of the report. "To the extent that fewer people are within a fixed income range that we might think of as middle class, that's just because everybody's gotten richer over time."
AEI defines the upper middle class as households earning between $153,864 and $461,592 for a family of four. The study, which utilized U.S. Census data from 1979 through 2024, also found that the share of wealthy households has grown to 3.7%, a twelvefold increase over the same period.
Drivers of economic mobility
Increased income levels are largely attributed to the rise of dual-earner families and the professional advancement of women. In 1970, only 11% of women held college degrees; today, that figure has climbed to approximately 40%.
"The additional opportunities that women have are a big part of the story," Winship said. "People have chosen to work more and afford more things, rather than have a sort of traditional sole breadwinner, but then have less money to buy things."
Despite these gains, many Americans report feeling financial pressure. Recent polling indicates that a majority of citizens believe it is more difficult to purchase a home, secure a stable job, or raise a family than it was for previous generations.
Winship suggests this disconnect exists because individuals often focus on the rising costs of specific "big-ticket" items like housing, healthcare, and education. While these essentials have outpaced inflation, he notes that many other consumer goods have become more affordable over the decades.
Furthermore, the study does not account for regional cost-of-living disparities. Families in high-cost urban centers like New York City require significantly higher incomes to maintain the same standard of living as those in more affordable parts of the country.
As more households move into higher income brackets, consumer demand is shifting toward premium goods and services. This trend contributes to a "K-shaped" economy, where higher-income earners increase their spending while lower-income households remain constrained.
