The American Dream is dead … err, not really.

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.

Oh my.

Maybe the situation is dire after all..



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