I’m often asked, “What has happened to the middle class?” The best answer I can think of puts the question into historical context, if only because so many folks are thinking back to their childhood.  

The end of World War II is a good place to start, because it marks the start of the baby boomer generation, the youngest of whom turned 60 in 2024. For many, the relatively good economic conditions after World War II mark an important and nostalgic period in American life. 

The U.S. standard of living has risen about five-fold since then. I prefer to measure this by looking at the time price of a good, or how many hours a worker would have to toil to purchase it (see https://www.superabundance.com/). The beauty of this approach is that it measures wages by what they can buy, peeling away changes in family consumption and different measures of inflation. 

One great example is gas prices. Most folks think gas is more expensive today than it was in 1950. In purely nominal, or inflated dollars, that is true. However, in 1950, it took the median worker about 10 minutes to earn enough money to buy a gallon of gasoline, while it takes the median worker under 5 minutes of work today (see https://humanprogress.org/are-gas-prices-really-the-highest-in-history/).  

Almost everything is cheaper today than it was in the 1950s and 1960s by that measure, though it is harder to measure quality differences.  

For example, popular belief suggests housing has become notoriously expensive. However, in 1950, the average home was 938 square feet, lacked air conditioning and about a quarter had no indoor toilets. The average price was $7,354. Now, the average home is worth around $281,000 but is over 2,200 square feet, and almost all homes have air conditioning and indoor plumbing.   

Buying a single square foot of housing in 1950 cost the median worker about 5 hours, 20 minutes. Today, that same square footage costs the median worker 5 hours, 16 minutes. The time price of housing shows how a quality measure like size can be deceiving on costs. It doesn’t do well on measuring the convenience of air conditioning or indoor plumbing. 

As another example, the price tag on newer cars might be eye-popping, but in 1950 more than 70 people died for every billion miles driven, while today that number is 13.4. In terms of time price and safety, cars are really the best they’ve ever been. 

We take for granted many of these quality improvements. That said, the biggest issue in the middle class involves changes to consumption, not earnings. In 1950, $6 of every $10 in family spending went to manufactured goods. About 48% of spending was on non-durable goods, mostly clothing and food, and more than 15% went to durable goods like housing, automobiles and home appliances. 

By the late 1960s, the average family saw their spending on manufactured goods decline to about half their annual income. Services, such as health care, recreation, food service and accommodations accounted for half of household spending. Today, services are 70% of spending (see https://www.iastatedigitalpress.com/rreg/article/id/18245/).  

In 2025, middle-class Americans might consider themselves financially stressed, but they are allocating much more of their spending to experiences rather than tangible goods, and buying a lot more health, safety and comfort than anyone before them. That is an unvarnished good.   

Still, being middle class isn’t just about the available consumption of the median worker. Other changes have taken place. Families are smaller than they were in 1950, people live longer and the scourge of childhood diseases, from polio to mumps, rubella and chicken pox, are tamed by vaccinations. More families work two jobs, a rapid change that took place in the 1970s. There is also a larger share of single-parent (mostly moms) families. Most particularly, the distribution of jobs seems to differ from 1950.   

The median occupation in Indiana pays $26.04 an hour, and the middle 10% of jobs in Indiana pay between $24.31 and $30.16 per hour. In 1950, wages were clustered closer to the average, so there was a larger share of people who might have considered themselves middle class because their earnings were closer to average (see https://www2.census.gov/library/publications/1952/demographics/p60-09.pdf).  

Some of this is due to stronger unions in 1950, and a larger share of people in factory work, where wages were more concentrated. Another reason might be that in today’s more flexible labor markets, households enter and exit jobs more frequently. 

A more important explanation is a large replacement of skills over the past 75 years. In 1950, only about one-third of American workers had finished high school and fewer than 1 in 20 had completed college.   

Along with life expectancy, the work life of the average worker was also a decade shorter in the 1950s than it is today. 

Educational attainment affects wages, but the largest effect comes over time—formal education complements experience. So, folks with a high school degree or lower tend to see their real wage top out in their 30s or earlier. People with a college degree or higher, on the other hand, tend to see wage growth through most of their careers. 

That does not mean we should diminish the concerns that many people have about changing standards of living. To be middle class today, nearly everyone will need to complete high school and spend substantial time in post-secondary schooling, and there’s no policy that will change that. 

Nationally, most kids in a cohort attend college, while here in Indiana we fall just short of half. That means most young Hoosiers today will not be in the middle class—a fact that should embarrass us. 

Also, the geography of the middle class is changing. Today, there are more very rich and very poor places, and more clustering of affluent and poor people in different places. This makes it seem as if the middle class is gone, when in fact it remains healthy.