How is the middle class changing?

The middle class is one of the most talked about groups in the US. Politicians across the political spectrum bring up the middle class often when discussing potential legislation or when trying to persuade voters. But even aside from the claims made on the campaign trail, the American middle class has changed in some key ways since 2000.

Since then, the middle class is older, and less likely to be married. Those in the middle class are working less and earning less money. And government programs are playing a larger role in the economic well being of those in the middle 20% of the US.

What is the middle class?

To understand the middle class, it is necessary to first define what it means to be “middle class” in America. If all American households are divided up by their total income into five groups, the middle class would be the middle 20% of income-earners. By defining it in this way, the middle class will always be a fifth of the total population in the US. As of 2019, that means it's about 29.9 million households belong to the group.

The middle class is getting older and is less likely to be married

The middle 20% shares some key demographic characteristics with the general population. Like the American population, those in the middle are getting older. From 2000 to 2019, the average age for heads of families increased from 47 to 49 years old.

A higher share of non-elderly middle class families are not married, going from 50% in 2000 to about 55% in 2019. Across all families, the share of unmarried non-elderly families stayed the same at about 43% for 2000 and 2019.

The middle class is working less and earning less money

From 2000 to 2019, the share of middle class families participating in the labor force decreased from about 67% to about 63%

Those members of the middle class who are working are earning less as of 2019 than they were in 2000. The average wage income fell about 7%, from $39k to $36k, in 2019 dollars.

This may be due in part to the fact that the average number of hours worked per week has also dropped, from about 43 to about 40 hours per worker.

More people in the middle class are receiving government support to make ends meet

Of the total income earned by the middle class, the percent of income from government transfers has grown from about 18% in 2000 to about 28% in 2019. This means that despite falling wage income, total income for the middle class increased from $67,044 to $72,868 due to government transfers. This trend holds true for the country as a whole: on average, transfers accounted for about 17% of total income in 2017, up from about 12% in 2000.

More of middle class income is coming from government programs such as Social Security, Medicare, Medicaid, Supplemental Nutrition Assistance Program (or SNAP, otherwise known as food stamps), and unemployment insurance. Government transfer from those programs to middle class families increased by about 57% from 2000 to 2019.

The increase in transfers to the middle 20% may be driven by the demographic changes we’re seeing in this cohort. An older population means that a greater share is receiving payments from Social Security and Medicare. These two programs drove about a third of the increase in transfers to the middle class.

Transfers to the middle class are also increasing in part due to an increase in healthcare costs. Family spending on healthcare increased about 53% from 2000 to 2019.

Government spending on healthcare for the middle class, including through programs such as Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), has also increased. Medicare payments increased from an average of $2,666 to $4,958 from 2000 to 2019. Medicaid spending more than doubled, from $1,699 to $4,350. Meanwhile, employer-sponsored healthcare declined 17% during the same time.

Other income-based assistance programs to families and individuals have also increased. The average payment from SNAP, often referred to as food stamps, more than tripled from 2000 to 2019. The average payment through the Temporary Assistance for Needy Families increased by about 10% over the same period.

The middle class is affected by the same demographic changes affecting the population generally, namely an aging population and a decrease in marriages. This cohort is working less and earning less. However, the government is maintaining the middle class’ standard of living through more transfers of tax dollars through government programs and through lower taxes.

Methodology

USAFacts combined IRS tax data with Census data to produce a variety of demographic and financial statistics by income and family type.

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