Pew Study Explores the Sharp Edges of the Wealth Gap

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December 10, 2015; Sacramento Bee

A Pew research study released on Wednesday shows an increasingly sharp divide in the economy. While there was growth both in upper income households and low-income households, the middle class has been shrinking and now constitutes less than half of the country’s population. In 1971, the middle class accounted for 61 percent of the population, but the decline since then has been steady.

A Gallup survey this past spring found that 51 percent of U.S. adults see themselves as middle or upper middle class, with 48 percent saying they are part of the lower or working class. This is an enormous decline from the 63 percent that self-identified as middle class just seven years ago. This article points out that despite this change in self-identification, politicians are not adapting to the numbers of people who see themselves in that lower realm and, instead, are holding course on their rhetorical addresses to the middle class.

This leads Patrick Egan of New York University to suggest that there may be more openness in the public to policies of redistribution. “Americans are always kind of reluctant to embrace open-class warfare,” Egan said. But “if more Americans are under the idea of placing themselves at the bottom, you’ll see politicians follow.”

All three tiers of income, by the way, have lost ground since 2000—primarily because of the Great Recession in late 2007 to mid-2009, according to Pew—but upper-income households saw the smallest decline through 2014.

Growth in the upper income bracket, according to Pew, has exceeded growth in lower income bracket from 4 percent of the population in 1971 to 9 percent in 2014. Most of that increase has occurred recently. To define the terms, a three-person household would have to have an income of at least $188,000 to qualify for this bracket. On the other end of the spectrum, those in the lowest bracket increased from 16 percent in 1971 to 20 percent this year. In this bracket, a three-person household would be one making less than $31,000.

“The distribution of adults by income is thinning in the middle and bulking up at the edges,” writes Pew—and, of course, the racial demographics still apply.

Middle-income adults in 2015 were more likely to be white (67%) than lower-income adults (52%) but less likely than upper-income adults (77%). Middle-income adults in 2015 were less likely to be black or Hispanic than lower-income adults, but more likely than upper-income adults.

We would love to hear from readers about the implications of this information for their work in communities.—Ruth McCambridge