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Shrinking Middle Class - 2/13/15

America’s middle class is shrinking, at least if one defines the middle class as representing those families making between $35,000 and $100,000 per annum.  Most listeners are probably not surprised that the middle class is shrinking, but what may prove surprising is that some of this is for a welcome reason – many Americans have moved up into what might be considered the upper middle class. 

According to Alicia Parlapiano and her co-authors, for the most part, the move to the upper middle class is associated with older households, with more people working into their late 60s.  The move up is also associated with households with two adults rather than one.  For instance, in 2013, among married families with children, 13 percent were considered in the lower class, 44 percent in the middle class, and 43 percent in the upper class using the parameters stated earlier. 

By contrast, among families the children and only one adult, 48 percent were in the lower income group, 42 percent in the middle income group, and only 10 percent in the higher income group.  Education matters, too, though college graduates are less likely to be high income today than they were in 2000.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.