The Myth of the Middle-Class Squeeze

Economist Bruce Meyer of the University of Chicago publishes research showing (once again) that what "everybody knows" is wrong. Pundits and politicians repeat over and over: The poor are getting poorer. The middle class is shrinking. The economy is worse for families than ever before. Except it's not true.

His research paper demonstrates widespread improvement over the last thirty years in the
material well-being of American families. Improvement is seen in the middle of the distribution
and among those near the bottom. After appropriately accounting for inflation, taxes, and
non-cash benefits, he shows that median income rose by more than 50 percent over the past three
decades. This increase is considerably greater than the gains implied by official statistics—
official median income rose by only 14 percent between 1980 and 2009.

Figure 3: Median Income and Consumption, 1980-2009