The Shrinking Middle-Income Class: A Multivariate Analysis

Deindustrialization, a decline in union membership, maturation of baby-boomers, shorter working hours and increasing numbers of families headed by women and blacks have all been cited as causes of the "shrinking of the middle class." Simultaneously testing these hypotheses, we find that the decline in union membership and fewer annual hours of work are the most important factors explaining the shift towards the lower-income class. The increase in the service sector had little impact. The major cause of movement into the upper class is the increasing number of two-income families.