A new study by the American Enterprise Institute (AEI) reveals that the upper middle class has become the largest income group in the United States, with about 31% of households now classified in this category. This marks a roughly threefold increase in the share of upper middle-class households since 1979, primarily due to income gains over recent decades.
The AEI research, based on U.S. Census data from 1979 through 2024, shows that while the middle class is shrinking, the shift is not due to rising poverty but rather upward economic mobility. More households previously in the “core” and “low” middle class have moved into higher income brackets, resulting in the upper middle class surpassing other income groups.
AEI defines the upper middle class as households earning between $153,864 and $461,592 annually for a family of four. The study also notes that the share of wealthy households — those earning above that range — now makes up 3.7% of U.S. households, a 12-fold increase since 1979.
Factors Behind Income Growth
One key driver of this shift has been the rise in dual-earner families and increasing professional opportunities for women. The proportion of American women with college degrees rose from about 11% in 1970 to approximately 40% today, contributing to higher household incomes. This trend has allowed more families to move upward economically, expanding the upper middle class.
Scott Winship, AEI senior fellow and study co-author, explained that the overall improvement in income across all groups means fewer households remain in the traditional middle-class income range, as many have simply grown wealthier over time.
Economic Perceptions and Challenges
Despite these income gains, many Americans report feeling financially stretched. A CBS News poll found that most respondents believe it is harder to afford housing, secure good jobs, and raise a family today compared to previous generations. This disconnect appears to stem from rising costs in essential categories such as housing, education, and health care, which have outpaced inflation.
Winship noted that while many key expenses have surged, other goods and services have become more affordable, complicating public perceptions of economic well-being. He added that individuals tend to view their personal finances more positively than broader economic trends, helping explain the mixed feelings about financial security.
Why it matters
This shift toward a larger upper middle class reflects significant changes in American income distribution and consumer behavior. As more households climb the income ladder, demand is increasingly skewed toward higher-end goods and services, influencing market trends and economic policy considerations. Understanding these dynamics is crucial for addressing persistent economic challenges amid overall income growth.
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