The pathway to the upper middle class remains open, with millions of American families moving up the income ladder even as public perception grows more pessimistic, according to a new report.
Researchers at the American Enterprise Institute (AEI) found that while the “core” middle class has shrunk slightly over the past several decades, it has not been hollowed out. Rather, more Americans are ascending into the upper middle class than at any point in modern history.
Using an absolute definition of class based on purchasing power rather than relative comparisons, the study found that the share of families in the upper middle class tripled, rising from about 10% in 1979 to roughly 31% in 2024. Over that same period, the share of Americans who are poor or near-poor dropped dramatically, from more than half of families to roughly one-third.
The findings challenge the common narrative of a collapsing middle class. The study argues that many claims about a “hollowed-out” middle class rely on relative definitions that automatically shrink the middle as incomes rise. By contrast, when measuring what families can actually afford, the data show broad gains across the income distribution.
“Decrying a shrinking or hollowed-out middle class is just a gloomy way of saying the upper-middle class has boomed,” the researchers concluded.
Median family income, adjusted for inflation and household size, has risen more than 50% since the late 1970s. At the same time, wage growth, particularly over the long term, has outpaced price increases, helping push more families into higher income brackets.
Today, the upper middle class, defined in the study as families of three earning roughly $133,000 to $400,000 annually, accounts for nearly a third of U.S. households. Even more striking: for the first time on record, more American families are above the middle-class threshold than below it.
Despite rising incomes, many Americans who now fall into the upper middle class do not feel wealthy. Families earning well into six figures increasingly describe themselves as “average,” squeezed by rising housing costs, education expenses, and a broader cost-of-living crunch.
Randy Shilling, a Texas resident whose household earns around $220,000 a year, said, “I view myself as an average Joe,” despite having $3 million saved for retirement, he told the Wall Street Journal. Laura Shields, 46, told the Journal that she only began feeling financially comfortable in the last 10 years. She and her husband bring in approximately $240,000 per year, but have a son nearing college age. They fear that loans are the only answer, wiping out their progress.
Those concerns are not unfounded. The median home price in the United States now exceeds $400,000, while college tuition continues to climb, often nearing $40,000 per year.
That disconnect helps explain why, even amid measurable economic progress, pessimism persists. Surveys show that a large majority of Americans still feel burdened by a high cost-of-living.
Still, AEI’s researchers argue that the broader trend is clear: economic growth, expanded opportunities, and a stronger safety net have combined to lift more Americans into higher-income tiers over time.
Importantly, income gains were not limited to the top. The research found that earnings increased across nearly the entire income distribution, with even lower-income households significantly better off than their counterparts decades ago.
None of this means inequality hasn’t grown; it has, particularly at the very top, the study finds little evidence that gains for higher earners came at the expense of others. Instead, the data suggests a more complex picture: an America where the middle class is evolving, not evaporating, and where upward mobility remains a defining feature of the economy.
.png)
.png)
