![]() When we include taxation, it becomes clear that roughly 80% of America is failing to support the “middle-class” lifestyle.Īs we discussed recently, Harvard Business Review noted:: Most importantly, and what is often not included in the analysis, is the standard of living gets “paid for” on an “after-tax” basis. Or rather, what does it take to buy a house and a car and feed two kids? The question is how much income it takes to maintain a “middle-class” lifestyle. As with the PEW Research data looking at incomes alone obfuscates the most important part of income analysis. That dotted black line is the most important. Source: Census Bureau Chart: Real Investment The Census Bureau clearly shows the problem in the “mean household income data” through 2021. These changes have occurred gradually, as the share of adults in the middle class decreased in each decade from 1971 to 2011, but then held steady through 2021. At the same time, there was an increase in the share who are in the lower-income tier, from 25% to 29%. The shrinking of the middle class is accompanied by an increase in the share of adults in the upper-income tier which increased from 14% in 1971 to 21% in 2021. According to Pew Research, the share of adults who live in middle-class households fell from 61% in 1971 to 50% in 2021. ![]() However, the American middle class has continued to contract over the past five decades. When “baby boomers” reminisce about the “good ole days,” they are referring to when being middle-class was normal. There was a time when a large portion of Americans belonged to the “middle class.” It meant you could afford a decent living standard, such as owning a house and a car and had savings in the bank. ![]()
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