Back in 1995, Scott and I wrote a paper for American Experiment titled “The Truth About Income Inequality.” It was somewhat famous in its time, and CSpan televised a debate between me and then-Congressman Martin Sabo on the issue. One of the many points we made in that paper was that the “shrinking middle class” was a myth. It was true, by arbitrary definition, that the number of people in the “middle class” had declined, but that was solely because people were moving into the “upper class.” The shrinking middle class was a good thing.
Now our friend Mark Perry has updated that analysis and put it in visual form. It is featured in today’s Unleash Prosperity Hotline:
This chart can’t be circulated enough to demonstrate that the US middle class is only “disappearing” because middle-class households are moving up into higher-income groups.
The share of US households earning $100,000 or more (in constant dollars) has more than tripled from 13%… pic.twitter.com/1BCUlcf01P
— Mark J. Perry (@Mark_J_Perry) April 4, 2025
You could draw the boundaries pretty much anywhere you want, and the chart would look essentially the same. Over the decades, the number of American households with high incomes (in constant dollars) has grown, while the number with low incomes has shrunk, as has the number in the middle.
Of course there are ups and downs in the economy, and middle-income households have been hurt by poor government policies–as have upper and lower-income households. But as long as our economy is mostly-free, we will continue to grow more prosperous. And the freer the economy, the faster we will grow.
