Middle class is larger but holds less than 50 percent of the wealth
BUSINESS RECORD STAFF Dec 10, 2015 | 8:45 pm
1 min read time
255 wordsAll Latest News, Banking and FinanceMore American households make up the middle class than 40 years ago, yet they comprise a smaller share of overall wealth, according to an analysis of government data by Pew Research Center, MarketWatch reported.
In early 2015, 120.8 million adults were in middle-income households versus 70.3 million in lower-income and 51 million in upper-income households, according to Pew Research.
However, the share of income held by middle-income families has plunged to 43 percent of households in 2015 versus 62 percent in 1971; lower-income households have remained stable while the share of income held by upper-income households has surged to 49 percent this year from 29 percent in 1971.
“The hollowing of the American middle class has proceeded steadily for more than four decades since 1971,” researchers Richard Fry and Rakesh Kochhar said.
The past 15 years have been particularly brutal for the middle class. In 2014, the median income of these households was 4 percent less than it was in 2000. Their median wealth — that is, their assets minus their debts — fell by 28 percent from 2001 to 2013, due in part to the housing market crisis and the Great Recession of 2008.
Pew defines middle-income households as those with an income that is two-thirds to double that of the U.S. median household income, after incomes have been adjusted for household size. For a three-person household, the middle-income range earned a minimum of $41,869 a year versus $125,609 a year for a higher-income household. Lower-income households have incomes less than two-thirds of the median.