The prevailing media narrative after years of mounting economic inequality is that the middle class is being hollowed out. But Scott Winship, a senior fellow and the director of the Center on Opportunity and Social Mobility at the American Enterprise Institute, has argued in a recent New York Times op-ed and a series of other papers that progressives are missing the point and that in fact the middle class is shrinking because all workers are doing better and the upper middle class, in particular, has boomed. Spotlight spoke with Winship recently; the transcript of that conversation has been lightly edited for length and clarity.
Scott, you have several studies out looking at specific middle class populations, but why don’t we start with the paper you published in January that makes the larger point, and which was the basis for your piece in the New York Times.
My co-author, Steve Rose, and I came up with the idea to do the paper; he’s written about the topic in the past. We both are concerned about claims that are increasingly made from both sides of the aisle that the middle class is becoming hollowed out. And when people say that they’re referencing research such as a study from the Pew Research Center, that has found that the middle class has shrunk and the group that makes more than the middle class has grown as well. Sometimes people talk about a barbell economy or something like that.
We've been frustrated because the way that you get that result is if you define the middle class in terms of what the median household makes, the household that's right in the middle. In the Pew analyses, the middle class makes between two thirds of the median and twice the median. And the problem with that is that if everybody's income uniformly doubles over time and everybody is much better off in absolute terms, that measure would show the middle class hasn't grown at all and you're no better off than when you started. Steven and I think there's some merit to that measure, but it sort of hides changes in absolute living standards because it's mixed in with changes in inequality. And we think you should focus on each of those things separately.
So, in our analyses, we define the middle class differently. We said we're going to define it as a fixed set of thresholds that change over time as the cost-of-living increases but otherwise don't change. If you have two and a half times the federal poverty guideline in 2025 or you have less than five times that guideline, we say you're middle class. And then we just look over time and see how the number of people who are below middle class, middle class or above middle-class changes when you do that.
The middle class does shrink, but the group that's poorer than middle class also shrinks and the entire movement is upwards and the upper middle class actually doubles in size. That first paper was an attempt to show that a lot depends on how you measure things just in terms of purchasing power and absolute living standards and that the whole distribution has moved up over time. And so, we could say the middle class shrunk, but it only shrunk because the upper middle class boomed.
And what was the time period, Scott?
We looked between 1979 and 2024.
And I guess this doesn't speak to what I assume is the widening gap between the bottom and the top.
We do address that. That wasn't the focus of what we did, but we've got a couple charts in there on inequality. The easiest way to express what happened there is at the 95th percentile, that's families who are better off than 95% of the population between 1979 and 2024, their incomes basically doubled over that period. If you go down to the median, their incomes grew by about 50%. So, it’s quite a bit of difference, though, on the other hand, a 50% increase is not insignificant—it’s about $10,000 over that period.
And even if you drop down to the 10th percentile, which is poorer than 90% of Americans, their income rose by about 30%. So, you see gains across the board, much bigger gains at the top. And rather than a story of the rich getting richer and the poor getting poorer, it's kind of the richer and everybody else getting better off, though not to the same extent.
A very different narrative. So, then you decided to look at this on a local level, I guess, starting with Chicago?
That's right. Right around the time that the January report came out, I happened on an older analysis that a group at the University of Illinois in Chicago put together and I could tell it was the exact same false narrative. They looked at a map of Chicago, and they showed that between 1970 and I believe 2017, the number of middle-class communities in Chicago had declined by a lot. The number of less than middle class communities had ballooned and the number of richer-than-middle-class communities had also increased. So again, this hollowing out effect. And having just done this paper with Steve, I kind of had a feeling that it was reflecting the same dynamics.
I'd also been experimenting with A.I. quite a bit at the time. And so, I decided, well, let's just put A.I. on the task. After a little bit of going back and forth with it, we managed to replicate their numbers. And then I said, let's define the middle class in this other way where instead of tying it to the typical income in the metro area in Chicago, we're just going to define it in terms of fixed amounts that will adjust for the cost of living again and see what happens. And when you do that, it's a very similar story—the number of middle-class communities falls, but the number of poorer-than-middle-class communities also falls. And the really striking thing is that you get this boom in communities in Chicago that are doing better than middle class.
The local analyses are trickier because people move over time and I got some pretty valid critiques of that, and my response was, hey, I'm just doing the same thing that this Chicago group was doing. And then after that report came out, the publication Vital City in New York City was interested in doing similar analyses, which I’ve recently done. And again, you get basically the same story if you define the middle class in such a way that if everybody does better over time, you don't see any improvement and then you get this hollowing out. But if you define it in terms of a fixed definition of the middle class that’s only adjusted for the cost of living, then you get this movement into better-than-middle-class communities.
And how does this change the dynamic for policymakers, Scott, given that this narrative is so much different that they're hearing on a daily basis?
That's one of the things that I've personally gotten most concerned about the last few years. There's this kind of vibe session narrative that you can marshal statistics to say the economy's doing well, but actually that's only true of people at the top. And these numbers are not really about the last five years—they’re about what's happened over the last 15 years. We wanted to reinforce that over the longer run, the economic story in America is still very positive. We have economic problems that have developed more recently, like inflation and higher prices, but over the very long run, things look very solid and we expect that'll continue.
One question we get a lot is that if our numbers are right, why do people apparently feel differently? It's a complicated question. One of the most important dynamics is that consumer sentiment seems to be about how people think other people are doing. And by that, what I mean is if you ask people in Gallup surveys for instance, how many of them think that the economy is doing badly, it varies over time. But basically, you get about 40% to 50% who say the economy is doing poorly.
But in the very same surveys, when the same people are asked about their own personal finances, only about 20% of people say that they're doing poorly. People have this impression that everybody else is doing bad, but actually the typical person on these surveys says that they're doing pretty well.
Finally, any other localities that you're looking at or planning to go into at this point?
I’ve done some analyses privately for a group that includes results for the 10 biggest cities in the country. Part of what's been interesting about this project is seeing what AI can do because now that I've got the basic method down, it is pretty easy to look at any city in the country. But as of right now, I'm sort of trying to move away from the middle class and get some other things off of my plate.