More families rising into upper middle class

Investment Analysis Clubs Macro Economic Trends and Risks
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https://www.wsj.com/economy/more-americans-are-breaking-into-the-upper-middle-class-bf8b7cb2?mod=hp_lead_pos1

More Americans Are Breaking Into the Upper Middle Class

Research shows that ranks of higher earners have grown markedly over last 50 years, while lower rungs of middle class have shrunk

By Rachel Louise Ensign, The Wall Street Journal, April 4, 2026

…
America’s middle class is becoming wealthier as more families scale the economic ladder into higher-earning groups. New research shows that the ranks of the affluent have grown markedly over the last 50 years or so, while the lower rungs of the middle class have shrunk.

In 2024, about 31% of Americans were part of the upper middle class, up from about 10% in 1979, according to a report released this year by the right-leaning American Enterprise Institute.

There is no single, standard definition of middle class, or upper middle class, and what counts as a hefty income in one city can feel paltry in another. The AEI report, by Stephen Rose and Scott Winship, classified a family of three earning $133,000 to $400,000 in 2024 dollars as upper middle class. Households earning more were categorized as rich. The analysis looked just at incomes, not assets such as stocks or real estate…

The authors found that more families now fall into the two highest-earning groups—upper middle class and rich—and fewer fall into the three lower-earning categories.

In 2024, about 19% of American families were considered “poor or near poor,” according to the AEI report, down from about 30% in 1979. The report defined that group as a family of three earning about $40,000 or less in 2024 dollars…

The report’s analysis used the federal poverty guidelines to determine which group a family fell into. The economists considered a family earning between five times and 15 times the poverty guideline to be in the upper middle class—thus their parameters of $133,000 to $400,000…

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Married (or cohabiting) households have higher combined incomes. In terms of taxes, Married Filing Jointly have significantly lower taxes for the same household income compared with singles (even cohabiting singles).

The increase of the incomes is good for the economy. But upper middle class families still manage to feel pressured due to the cost of buying a home and sending children to expensive colleges.

Wendy

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You can only get so many people into the top decile. All the AEI is doing is expanding the definition of the “upper middle class”.

Shoveling more money to the top of pyramid with tax cuts for the wealthy and more pain for the middle class has been going on for 40 plus years.

intercst

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Yes, all of the guidelines are relative. If you move a significant chunk of people out of poverty, the poverty line moves. Because they are always based on statistics. The bottom 10% is still the bottom 10% but the numbers change.

How do you define progress when the target moves. The bottom 10% is still the bottom 10%. Are they better off? And how do you measure that?

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Whether they can afford the trappings of a middle-class lifestyle (home ownership, non-working wife, health care, annual vacation, etc,) You know, the good-ole days of the 1950’s

Upper-middle-class now has the lifestyle of the middle.

A family earning the $85,000/yr median income is struggling in a lot of cities.

intercst

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True, but what we may be seeing is more of a change in the distribution curve. Rather than, say, a normal distribution we may have one with a positive skew (and a long tail to the high end, some kurtosis).

DB2

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The headline could just as easily have been “More Middle Class Americans being Pushed to Lower Middle Class”.

Or, as we have been saying on this board for years, Income Inequality Rises.

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Yep, but the news article with “facts” has another problem with its conclusion…the K economy only states there are 20% pushing consumption higher and higher. Does that mean 11%? of the upper middle class is deep in debt?

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Debt as a percentage of income decreases at higher income levels. Here are the numbers from November:

Income level   Debt payments/income
Under $50K        0.51
$50-100K          0.36
Over $100K        0.28

https://pro.morningconsult.com/trackers/u-s-consumer-income-debt-tracker

DB2

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The chart I copied is in constant 2024 dollars. So the real income is rising at all levels.
Wendy

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Food costs have decreased:

Value of a dollar:

Higher education costs have skyrocketed:

Annual Cost of College Tuition & Fees-public school
2025-26: $10,340
1969-70: $358

Annual Cost of College Tuition & Fees-private school
2025-26: $39,307
1969-70: $1,417

Much harder for the unwashed to obtain the training need for the rise in meritocracy.
A blue collar plumbing or electrical apprentice pathway or coding school may be a better choice today.

Healthcare has inflated like college:

Here is the approximate average spending per person during three years of the 1970s vs. three years during the 2020s (population figures are from Macrotrends):

  • 1970: $369 per person (U.S. population 200,328,340)
  • 2022: $13,214 per person (338,289,857)
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