Yes — The Middle Class Is Shrinking, but Mostly Because People Are Moving Up

The claim that "the middle class is shrinking" has become a frequent refrain across the political spectrum. Before accepting that narrative at face value, it's important to ask: shrinking in what sense—fewer people counted as middle class, less ability to build wealth, or reduced purchasing power?

A New Benchmark Changes the Picture

Economists Stephen Rose and Scott Winship offer a useful reframing. Most studies define middle-class status relative to the national median, which lets the cutoff rise automatically as the country grows richer. Rose and Winship instead benchmark middle-class status to fixed purchasing power. That method shows whether families are materially better off over time rather than simply moving relative to a shifting median.

What the Data Show

Using the fixed-purchasing-power approach, the core middle class does shrink modestly. Crucially, that contraction results from upward movement: since 1979, the share of Americans classified as upper-middle has roughly tripled—from about 10% to roughly 31%—while shares in the lower-middle and poor categories have fallen significantly. In short, many households have moved up in material terms.

Why the Shrinkage Feels Real

Cultural Fragmentation. Middle-class identity has never been only an income range; it has also been a social identity and a source of civic pride. As prosperity and choices expanded—more media channels, platforms, lifestyles and ways of living well—fewer institutions sustain a single cultural mainstream. That fragmentation can feel like loss: upward mobility may no longer bring the same social affirmation it once did.

Policy-Driven Cost Pressures. At the same time, many households face real cost pressures concentrated in sectors where government intervention has most heavily shaped supply and competition. Housing, health care, and higher education—three of the largest household expenses—are highly regulated and subsidized. Rules that limit who may supply these services, constraints on new supply, and regulatory complexity tend to raise prices and restrict options. These are policy problems, not evidence that economic mobility has stalled.

Policy Implications

Recognizing that upward mobility is real does not justify populist remedies that could blunt growth. Rose and Winship rightly urge skepticism toward policies sold as "middle-class restoration" when they reimpose uniformity or protect favored industries. Protectionist trade barriers, cartel-like favoritism for politically connected firms, and other heavy-handed interventions can undermine the dynamics that have expanded material prosperity.

As the commentary on this debate notes, political rhetoric about a "hollowed-out" middle class often implies downward mobility that the data do not support.

More families moving into the upper middle class is a genuine success. Policymakers should focus on addressing regulatory failures that raise costs—especially in housing, health care, and higher education—rather than pursuing measures that risk sabotaging ongoing upward mobility.

Originally published on Reason.com. Copyright 2026 Creators.com.