The Decline of the American Middle Class: Evidence from the Consumer Expenditure Surveys 1988–2015

Abstract

In 2010, the US Department of Commerce, commissioned by the White House Middle Class Task Force, recommended six indicators that define the middle class: having one’s own home, a car or two in the carport, taking a family vacation every year, sending kids to college, and having some retirement savings. We used the Consumer Expenditure Survey (CE) data to estimate the size of American middle class in selected years from 1988 to 2015 using three empirical variations of this definition and to test if there were upward or downward trends during these years. We found that the size of the American middle class was definitely on the decline between 1988 and 2015 for all three definitions. Multivariate analyses show that variations in total household annual expenditure and sociodemographic variables could not explain the decline. In fact, adjusting for these controls made the decline of the middle class over time more severe.