Is the American Middle Class “Disappearing”?

The Wall Street Journal on Wednesday published a front-page chart that tells a big story about the great American middle class. In a new study for the Urban Institute, Stephen Rose found that, despite what we hear from politicians on the left and right, the middle class is not disappearing. As you can see from the chart based on his research, the share of U.S. households whose annual incomes are defined as Middle Class and Lower Middle Class ($30,000 to $99,999, adjusted for inflation and other factors) has indeed been shrinking. But as the chart also shows, the reason is not because they have been falling into poverty or near poverty, but because millions of households have graduated into the Upper Middle Class. This has important policy implications. Critics of trade, for example, have argued that trade agreements over the years have decimated the middle class by shipping millions of manufacturing jobs overseas. There are so many reasons why this is wrong, which I unpack in Chapters 3 & 4 of Mad about Trade, including a chart on p. 41 that tells the same story. (Mark Perry, in his blog for the American Enterprise Institute, comes to the same sound conclusion.) We are still right to be concerned about slow wage and productivity growth in recent years, but let’s not be frightened into adopting anti-trade policies that will make it even harder for Americans to move up.

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