Over the past couple of weeks, there has been an endless series of media spots about some Pew Research data demonstrating, beyond the shadow of a doubt, that the middle class is shrinking.
A common headline played off the rich are getting richer. theme:
Pretty dire, right?
Not so fast.
Digging deeper into the Pew numbers paints a different picture…
A driving force behind the proportional income shift is that the worker ‘mix’ is changing .
True, the proportion of American workers falling in the middle-income group is declining.
Roughly 60% of workers used to be middle-income … that percentage has slipped to about 50%.
That change is illustrated below: the sum of the blue bars (upper & lower incomes) has pulled even with the gold bars (middle-income).
Take a moment and stare at the above chart.
Yes, the percentage of middle-income workers is declining … but both lower and upper brackets are increasing in the mix.
Let’s drill down on the numbers …
A key point that’s being missed by the mass media is that a larger percentage of workers who are being “squeezed out of the middle class” are, in fact, migrating upward to the upper class.
In rough numbers, about 5 million workers who used to be middle-income slipped down to lower-income status.
But, over 20 million formerly middle-income workers got ‘promoted’ to the middle-income classification.
That sounds pretty good, doesn’t it?
We want middle-income folks to earn higher incomes, right?
While the above empirical evidence is comforting, there are some storm clouds on the horizon
Drilling even deeper, note that there are 3 industries –- retail, transportation and construction — where more workers are slipping into low-income status than are being propelled to the upper -income category.
Unfortunately, these jobs are the bulk of the the jobs added over the past couple of years.
And, over the next decade, the service sector – think, the 3 industries identified above — will provide 95% of all the new jobs. Source
Further, of the 15 occupations with the most projected job growth in the U.S.:
- Only four typically require a bachelor’s degree
- Eight require no formal education credentials
- Nine offer median annual wages under $30,000.
Maybe the situation is dire after all..