Editor’s Note: More to story of shrinking middle class

Nolan Finley
The Detroit News

When Hillary Clinton unveils her economic plan at a Macomb County manufacturing plant Thursday, expect to hear a lot about income inequality and the shrinking middle class.

It is true that the middle class is shrinking: 32 percent of America is in the true middle class today, compared to 38 percent in 1979.

But that doesn’t mean that middle income earners are all getting poorer, according to research by economist Stephen Rose of the Urban Institute. A great number of them are falling out of the middle because they’re moving up the income ladder.

Rose finds that the upper middle class — those with annual incomes of between $100,000 and $350,000 a year—increased to about 30 percent of the population in 2014, from just 12 percent in 1979. That’s a remarkable expansion. The wealthy category has risen to 1.8 percent of Americans from 1 percent.

Other data suggest those classified as poor and working poor have increased by roughly 4 percent, but at least a portion of that growth can be attributed to a spike in the population of new immigrants, many of whom, while worse off than other Americans, are still doing much better than they were in their native countries.

Overall, incomes have been stagnant. And the stress on middle class families because Obamacare drove up their health care costs is considerable.

Making the rich and upper middle class poorer won’t solve those issues. That will take more vigorous economic growth and health care reforms that focus mainly on costs.