Working Middle Class Struggling in Shifting Economy

Read the full U.S. News & World Report article on how the middle class is shrinking by some measures, and how many households that consider themselves middle class are finding it harder to afford everyday expenses.

While many Americans still identify as middle class, rising costs have made it harder for many households to achieve the financial security once associated with that status.

There is no universal definition of the middle class. People may define it based on income, assets, occupation or a combination of those factors.

The Pew Research Center defines middle-income households as those that earn two-thirds to double the U.S. median income for their household size.

The size of the middle class has changed significantly over time. The Pew Research Center also found that the share of U.S. adults living in middle-income households fell from 61% in 1971 to 51% in recent years, while the shares in both lower- and upper-income households increased.

Now, many people talk about the post-COVID-19 world as having a K-shaped economy. That refers to the fact that some people have seen their financial situations improve markedly in recent years, while others have fallen further behind. If this pattern continues, it could mean a smaller middle class in the years to come.

“I think the term middle class almost masks the struggle of the working middle class,” says Heather Black, vice president of 211 system strategy at United Way Worldwide. 

She says that since COVID-19, her organization has seen a shift in the number of people dialing 2-1-1 to request assistance referrals. People who had never called before were now in need of help.

It’s not that people aren’t (working), but they are not able to keep up with the cost of living,”

Heather Black, vice president of 211 system strategy at United Way Worldwide

The acronym ALICE®, which stands for Asset Limited, Income Constrained, Employed, describes some families who might seem to be in the middle class but do not actually make enough to cover all their basic needs.

“It’s not that people aren’t (working), but they are not able to keep up with the cost of living,” Black says. The United Way recorded 13 million interactions on its 211 line last year, which resulted in 19 million referrals. “What we find is that the top needs are the most basic of things.”