News
November 27, 2025
The American middle class is shrinking, and that’s OK | Allison Schrager
The good news is that Americans have never been richer. The bad news is that most of them don’t feel like it.
## The American Middle Class is Shrinking, and That’s OK
Americans are, on average, wealthier than ever before. This might sound like universally good news, a testament to economic progress and opportunity. However, a significant portion of the population doesn't feel the prosperity, leading to a growing sense of economic unease despite the overall positive trend. The American middle class, long considered the backbone of the nation, is shrinking, but according to economist Allison Schrager, this isn't necessarily a cause for alarm.
The shrinking middle class doesn't automatically equate to widespread economic hardship. Instead, it reflects a more complex shift in the income distribution. While some are undoubtedly falling out of the middle class due to economic hardship, a larger portion are actually moving up the income ladder. This upward mobility contributes to the decline in the middle class population, but it also signifies economic advancement for many families.
The problem lies in the disconnect between the objective reality of increasing wealth and the subjective feeling of financial security. While aggregate wealth has increased, the distribution of that wealth is uneven. The gains are heavily concentrated at the top, leaving many feeling left behind despite potential improvements in their own financial situations.
This feeling of being left behind can stem from various factors. Rising costs of essential goods and services, such as healthcare, education, and housing, can outpace wage growth, eroding purchasing power. The increasing cost of living, especially in desirable urban areas, puts a strain on household budgets, even for those who have experienced income growth.
Furthermore, comparing oneself to others, especially in the age of social media, can fuel feelings of inadequacy. The constant exposure to images of extreme wealth can create unrealistic expectations and contribute to a sense of relative deprivation.
The key takeaway is that focusing solely on the shrinking middle class as a sign of economic doom paints an incomplete picture. It's crucial to understand the underlying dynamics driving this shift, including upward mobility and the uneven distribution of wealth. Addressing the root causes of economic anxiety, such as rising costs of living and income inequality, is essential to ensuring that the benefits of economic growth are more broadly shared and that more Americans feel the prosperity that the data suggests is within reach.
Americans are, on average, wealthier than ever before. This might sound like universally good news, a testament to economic progress and opportunity. However, a significant portion of the population doesn't feel the prosperity, leading to a growing sense of economic unease despite the overall positive trend. The American middle class, long considered the backbone of the nation, is shrinking, but according to economist Allison Schrager, this isn't necessarily a cause for alarm.
The shrinking middle class doesn't automatically equate to widespread economic hardship. Instead, it reflects a more complex shift in the income distribution. While some are undoubtedly falling out of the middle class due to economic hardship, a larger portion are actually moving up the income ladder. This upward mobility contributes to the decline in the middle class population, but it also signifies economic advancement for many families.
The problem lies in the disconnect between the objective reality of increasing wealth and the subjective feeling of financial security. While aggregate wealth has increased, the distribution of that wealth is uneven. The gains are heavily concentrated at the top, leaving many feeling left behind despite potential improvements in their own financial situations.
This feeling of being left behind can stem from various factors. Rising costs of essential goods and services, such as healthcare, education, and housing, can outpace wage growth, eroding purchasing power. The increasing cost of living, especially in desirable urban areas, puts a strain on household budgets, even for those who have experienced income growth.
Furthermore, comparing oneself to others, especially in the age of social media, can fuel feelings of inadequacy. The constant exposure to images of extreme wealth can create unrealistic expectations and contribute to a sense of relative deprivation.
The key takeaway is that focusing solely on the shrinking middle class as a sign of economic doom paints an incomplete picture. It's crucial to understand the underlying dynamics driving this shift, including upward mobility and the uneven distribution of wealth. Addressing the root causes of economic anxiety, such as rising costs of living and income inequality, is essential to ensuring that the benefits of economic growth are more broadly shared and that more Americans feel the prosperity that the data suggests is within reach.
Category:
Politics