The American middle class isn't just shrinking. It's being pulled upward.
A growing share of U.S. households has moved into higher income brackets over the past four decades, reshaping how economists interpret everything from consumer spending to wage growth. According to a study by the American Enterprise Institute's Stephen Rose and Scott Winship, the upper-middle class has more than tripled in size, rising from 10% of families in 1979 to 31% in 2024.
At the same time, the share of families below the core middle class has dropped sharply, from 54% to 35%. The researchers define the upper-middle class as households earning between $133,000 and $400,000 in 2024 dollars for a family of three, with incomes above that threshold categorized as rich.
If that shift is accurate, it could help explain why consumer spending appears increasingly concentrated among higher earners. Moody's estimates that roughly half of consumer spending comes from the top 10% of households, defined as those earning at least $250,000 annually. But if more households now fall into higher income tiers, that spending may reflect a broader base than previously assumed.
Even so, the gains have not been evenly distributed. Bank of America economists warned earlier this year that "income-based divergence in spending and wage growth persists," pointing to a deepening divide that goes beyond a simple split between the rich and everyone else. What once appeared to be a two-tier economy has evolved into what the bank describes as a "trifurcation," with widening gaps separating high-, middle-, and lower-income households. The economists wrote that "income-based divergence in spending and wage growth persists," expressing concern that a new K-shaped split is emerging between high and middle-income households, alongside the existing gap between middle and lower-income groups.
Other data reinforces that divergence. The Federal Reserve Bank of Atlanta's wage growth tracker shows that higher earners have consistently outpaced others since at least 2021. In January of that year, wages for workers in the 75th percentile rose 14.6%, compared with a 3.4% increase at the median and a 2% decline among those in the 25th percentile. By March 2026, wage growth for top earners remained near 14%, while workers in the bottom quartile were still seeing declines of 1.4%.
Rising asset values have further widened the gap. "Everybody is doing better, but the upper-income households are especially," Richard Fry, a senior researcher at Pew, told the Wall Street Journal. "This group has also experienced particularly big gains in wealth thanks to rising home prices and a stock market that increased in recent years."
Still, income categories don't fully capture how households perceive their own financial standing. Many families that now qualify as upper-middle class describe themselves as comfortable rather than wealthy, often anchored in white-collar professions.
That raises a longer-term question about whether the shift will hold. As generative artificial intelligence begins to reshape knowledge work, the durability of high-paying white-collar jobs is far from certain, leaving open the question of whether today's upward mobility will prove lasting.
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