Yes, income inequality has risen dramatically over the past 35 years, but something else surprising has happened. The size of the upper middle class is expanding as Americans migrate up from the ranks of the middle class and the poor, according to a new analysis from the Urban Institute.
Economist Stephen Rose uncovered this finding by defining how much income families needed in 1979, just before inequality really took off, to be counted as rich, upper middle class, middle class, lower middle class, or poor. He anchored his class divisions largely around incomes relative to the federal poverty level. For example, he set the income floor for the upper middle class at five times the poverty level. He then used U.S. Census Bureau survey data to estimate the share of American families falling into each income tier in 1979 and in 2014, with incomes adjusted for inflation.
His analysis shows that 29 percent today fall under his definition of upper middle class, which is inco