In our 1995 American Experiment essay “The truth about income inequality,” John and I looked at the issue (“income inequality”) from a variety of perspectives. The data are out of date, but the song remains the same, only more so.
We started down the track that culminated in the essay as we defended the success of the Reagan era. Among the knocks on the beneficence of the Reagan era that we addressed was the claim of a “disappering middle class.” In our essay we showed that the “disappeared” had ascended into the upper ranks of the income data. “In other words,” we argued, “the middle class hasn’t declined, it has become more prosperous.” The true story was one of success.
The current version of the “disappearing middle class” is a “hollowed-out middle class.” Stephen Rose and Scott Winship responded to this shibboleth in the AEI essay “The Middle Class Is Shrinking Because of a Booming Upper-Middle Class.” The abstract summarizes their analysis:
Using an absolute definition of the middle class, we find that the “core” middle class has shrunk, but only because more families have become upper-middle class over time. The upper-middle class boomed from 10 percent of families in 1979 to 31 percent in 2024, and its share of income doubled. The share of families whose income left them short of the core middle class fell from 54 percent to 35 percent.
Their conclusion comports with our long-ago analysis.
John and I found the terms of the argument regarding “income distribution” to be misleading. Government distrubtion of cash factors into the income data. However, properly understood, income isn’t distributed, it is earned. Differences in family income largely reflect differences in how many members of a family actually work — and how hard they work. That proposition is a key to understanding income data.
AEI published the Rose/Winship essay this past January. I was reminded of it by Rachel Ensign’s April 4 Wall Street Journal story “More Americans Are Breaking Into the Upper Middle Class.” Ensign also tracked the explosion in the population of the wealthy in her March 24 story “They’re Rich but Not Famous—and They’re Suddenly Everywhere.”
