New Delhi: For decades, the idea of a vanishing American middle class has animated political debate in the United States. From progressive critiques of “trickle-down economics” to right-wing warnings about globalisation hollowing out jobs, the middle class has been cast as both victim and symbol of a faltering American Dream. But new data suggests a more complicated story, one that challenges both narratives.
A January 2026 study by economists Stephen J Rose and Scott Winship at the American Enterprise Institute (AEI) argues that the middle class is not disappearing so much as it is shifting upward. Tracking household incomes from 1979 to 2024 using inflation-adjusted benchmarks, the study finds that while the “core” middle class (defined as 250 to 500 per cent of the federal poverty guideline) shrank from 36 per cent to 31 per cent, this was largely because more families moved into higher income brackets. The upper-middle class, once just 10 per cent of households in 1979, now accounts for 31 per cent — making it the largest single group in the country.
Meanwhile, the number of Americans living below middle-class thresholds has fallen sharply, from 54 per cent in 1979 to 35 per cent in 2024. Poverty and near-poverty rates declined from around 30 per cent to 19 per cent. Median family incomes have risen by more than 50 per cent over the same period.
“The shrinking core middle class is due to a booming upper-middle class. Only the relatively worse-off parts of the middle class have shrunk, and by less than the upper-middle class has grown,” the authors noted. In other words, what looks like erosion may in fact be upward mobility.
This reading cuts against a dominant political consensus that claims capitalism is “rigged” or that middle-class standards of living are stagnant. Leaders across the spectrum continue to describe the middle class as “under siege”. Former US President Joe Biden argued that decades of trickle-down economics “hollowed out the middle class,” while Senator Bernie Sanders has warned that a majority of Americans are living paycheck-to-paycheck, squeezed by rising costs and wealth concentration. On the Republican side, President Donald Trump and his MAGA-allies have blamed trade deals, immigration and deindustrialisation for weakening middle-class livelihoods, with figures like JD Vance and Josh Hawley framing globalisation as a direct assault on American workers.
Yet, the AEI data suggest that these claims often overlook long-term gains in material well-being. Over the past half-century, incomes have risen across the distribution, aided by economic growth, expanded opportunities — especially for women — and a stronger social safety net. Even trends frequently blamed for middle-class decline, such as trade and immigration, have coincided with rising purchasing power. Over the past three decades, the economists noted that wages have also grown significantly in real terms.
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Facts vs Sentiment
If the data points to progress, public sentiment tells a different story. Surveys show nearly two-thirds of voters believe middle-class life is out of reach. A December 2025 Brookings report found that one-third of middle-income households struggle to afford basic expenses in major metropolitan areas across the US. Housing, healthcare and education costs have surged, eroding the sense of security traditionally associated with middle-class status.
This disconnect between statistical improvement and lived experience is at the heart of the debate. Even as more families cross into upper-middle income brackets, many do not feel affluent. High housing costs, expensive college education and rising healthcare expenses can stretch budgets even for households earning well into six figures. For families of colour, these pressures are often more acute. The Brookings analysis found that in 35 per cent of metro areas, less than half of African-American middle-class households can afford basic necessities, rising to 61 per cent for Latino households, while no metro area shows thisfor white middle-class families.
Recent political voices underscore the divide, with prescriptions varying sharply. In December 2025, Senator Josh Hawley warned fellow Republicans: “Do more for working class or we’ll lose”. US Secretary of State Marco Rubio, in February 2026, denounced outsourcing “millions of working and middle-class jobs”. Whereas Democrats like Alexandria Ocasio-Cortez argue that housing and healthcare costs are crushing the working middle class, and the cost of living is the worst in recent memory.
What unites these perspectives is the middle class as a shorthand for economic stability, upward mobility and a certain quality of life. But as the AEI study suggests, the category itself may be evolving. If more Americans are moving beyond traditional middle-class thresholds, the question is no longer just whether the middle class is shrinking, but whether its definition has failed to keep pace with economic change.
(Edited by Insha Jalil Waziri)