Friday, December 11, 2015

Beyond Shrinking American Middle Class

Pew Research recently published analysis of census data from 1971 to 2015. They discovered that American middle class shrank from 61% in 1971 to 50% in 2015. Shrinking middle class has been in the headline for last few days.

What defines middle class ?

Pew's middle class definition is based on income. middle-income” households are defined as those with an income that is 67% to 200% (two-thirds to double) of the overall median household income, after incomes have been adjusted for household size. For 2014, a middle income household earns between $41869 to $125608 for a family of 3.

From the news it sounded that the sky was falling. The truth is more middle class households move up to upper class. The real problem is that median income is decreasing, the lower class is growing, the gap between upper and lower class is growing.

The silver lining in this study is this, for every ethnic group, for every age range,  household with married couple with best education does the best. Highest percentage of households in upper class, least percentage of household in lower class. 

What does this delineate?

Education matters. This finding clearly rebuts the Goldman Saches' research that investment in college education is not worth it. Because of the advancement in technology, college education will be even more important.

Nuclear family matters. Study after study has shown the clear benefits of traditional nuclear family - live longer, happier, and make a good living.  

Those who are  educated with bachelor's degree or higher and married have about 50% of chance to reach upper class (top 20%) by mid 40s!  Despite all the problems we have in this country, it is still the land of opportunities, the land for people who work hard to get a better life. Count our blessings!

Note - 
1) Pew research original report can be found here .
2) Anecdote evidences show that college graduate with engineer degrees walk into middle class rank right out of college, a good percentage of them become upper class, especially those work in high tech companies.