The Vanishing Middle
How the American Dream Got Out of Reach
This is the second article in a three-part series about the new Gilded Age, our disappearing middle class, and reasons for hope in the future, which coincides with the third season of HBO’s hit television show, The Gilded Age, from Bradley Schurman from
and Brie Abramowicz from .
The American middle class—once the cornerstone of national prosperity—has steadily eroded since the 1970s due to stagnant wages, soaring costs in housing, education, and healthcare, and a shift toward shareholder-first capitalism. While today's inequality rivals that of the Gilded Age, restoring broad-based prosperity is possible through deliberate political choices and renewed public investment.
WASHINGTON, D.C. — President Franklin Roosevelt, the architect of the Progressive Era, once said, "The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” And for much of the 20th century, that held true, with the American middle class standing as the bedrock of national prosperity. Strong social protections were the norm.
Born out of the rubble of the Gilded Age excesses that caused the Great Depression, and the destruction of the Second World War, the middle class emerged as more than an income bracket. It was a promise that if you worked hard and followed the rules, you could expect a decent life. It was the American Dream, which included a stable job, a home, a college education for your children, affordable healthcare, and a secure retirement.
Today, that promise is broken, and that dream is fading into memory.
The Magnificent Middle
In the summer of 1965, a young General Motors assembly line worker could walk into a Chevrolet dealership in Detroit, put down cash for a brand-new Impala, and drive it home to the modest three-bedroom house he'd bought on a single income. His wife stayed home with their two children. They had health insurance through the company, were saving for the kids' college education, and his pension was growing steadily toward a comfortable retirement. They were living the American Dream, not as an aspiration, but as a daily reality.
The postwar decades brought extraordinary gains. Between 1947 and 1973, worker productivity and median wages moved in near-perfect tandem. Income growth was broadly shared. A single income could support a family, buy a home, and build wealth. In 1960, the typical American home cost roughly two times the median household income. Public college tuition was low enough that many students could work part-time and graduate without debt. Employer-sponsored health insurance expanded rapidly. These were the core components of a stable, upwardly mobile middle class.
Since the 1970s, the middle class has faced a steady squeeze. Wages have stagnated, while the costs of housing, education, and healthcare have soared. The result is a growing disconnect between the work people do and the lives they can afford to live. That disconnection has profound consequences—not just for individuals and families but also for the economy, society, and democracy.
Fifty-nine years later, that same man’s grandson works two jobs—one at a warehouse and another driving for a rideshare company—and still can't afford the rent on a one-bedroom apartment in the same Detroit neighborhood where his grandfather once raised a family. He has a college degree and $43,000 in student debt. The house his grandfather bought for $18,000 in 1965 (about $170,000 in today's dollars) now costs $340,000.
Wages Flatline, Costs Explode
The defining feature of the modern middle-class squeeze is the decoupling of productivity and pay. Since 1973, productivity has increased by approximately 74 percent. Median hourly compensation, however, has grown by just 9 percent. Economic growth has largely benefited those at the top. According to the Economic Policy Institute, annual wages for the top 1% have increased by 181.7% since 1979, while wages for the bottom 90% of earners have grown by only 43.7% in the same period.
At the same time, essential costs have surged. Take housing. In 1960, the median home price was about twice the median income. In 2024, it was 4.7. In cities like Los Angeles, San Francisco, and Austin, it exceeds 7 or 8. Saving for a down payment now takes the average young adult more than a decade in many metro areas. And once they buy, the monthly mortgage consumes a far greater share of income than it did a generation ago.
The rental market offers little relief. Rents have risen faster than wages for most of the past two decades. Nearly half of renters now spend more than 30 percent of their income on housing. That’s the threshold the federal government defines as “cost-burdened.” The result is less money for savings, retirement, education, or emergencies.
Then there’s college. Tuition at public four-year universities has increased by more than 2,500 percent since 1970. In 1970, a student could pay for a year of in-state tuition with a summer job at minimum wage. Today, even working full-time year-round at the federal minimum wage wouldn’t cover tuition, fees, and living expenses. As costs have risen, so has debt. The average borrower today graduates with more than $38,000 in student loans. The total outstanding student debt in the U.S. has surpassed $1.6 trillion.
Healthcare, too, has become an increasingly heavy burden. The average annual premium for employer-sponsored family coverage is over $21,000, up from around $6,500 in 2000. A quarter of that cost is typically paid by the worker, with rising deductibles and out-of-pocket expenses added on. In 1980, healthcare made up 9 percent of U.S. GDP. By 2020, that share had doubled. And while healthcare now eats up a larger portion of household income, it does not necessarily yield better outcomes. The U.S. continues to rank poorly among peer nations in measures like life expectancy, maternal mortality, and infant health.
Life on Delay
These cost pressures have reshaped the basic milestones of adulthood. Young adults marry later, have children later, and buy homes later, or not at all. In 1970, the median age of first marriage was 22 for men and 20 for women. Today, it’s over 30.2 for men and 28.6 for women. The average age of first-time mothers is now just under 30, the highest ever recorded. Many cite economic reasons for waiting: the need to pay off student loans, save for a down payment, or find job stability.
This trend reflects a real shift in economic feasibility. It takes longer today to build the foundation that previous generations could expect by their mid-twenties. A college degree no longer guarantees upward mobility, and for many, it guarantees debt instead.
Two incomes are now required to maintain the standard of living that one income could once provide. In the 1950s and 60s, a single wage earner could often support a family and buy a home. Today, most middle-class households rely on two full-time incomes and still struggle to stay ahead. The rise in dual-income households masked wage stagnation for a time, but the underlying pressure remains. Without new sources of income to tap, families are now leaning on debt, reducing savings, and cutting back on essentials.
Policy by Design
Something began to shift in the early 1970s, which was subtle at first. The oil shocks of 1973 and 1979 sent tremors through the economy. Inflation soared. Factories that had hummed with prosperity began to close. And in boardrooms and faculty lounges, a new philosophy was taking hold.
Milton Friedman, the University of Chicago economist whose ideas would reshape American capitalism, argued that corporations had only one responsibility: to maximize profits for shareholders. "The social responsibility of business," he declared in his 1970 essay, "is to increase its profits." It was a radical departure from the post-war consensus that companies owed something to their workers and communities.
By the 1980s, this philosophy had found its political champion in Ronald Reagan, who promised that the benefits of tax cuts and deregulation would "trickle down" to ordinary Americans. The metaphor was seductive, but the reality proved different.
Corporate executives, who in 1965 earned 21 times more than their average worker, now earn more than 300 times as much. Union membership, which had given workers a collective voice in the post-war boom, fell from 30 percent of the workforce in the 1970s to under 10 percent today, according to the Federal Reserve. Each percentage point lost represented thousands of families whose bargaining power simply evaporated.
A Gilded Echo
The economic pressures facing the middle class today echo those of the Gilded Age. Then, as now, the economy was growing, but the benefits were concentrated. Industrialists grew fabulously wealthy while workers faced low wages, long hours, and dangerous conditions. The wealth gap grew, political power consolidated at the top, and public frustration boiled over into labor unrest and political reform.
Today’s inequality rivals that of the late 19th century. The top 1 percent of U.S. households now hold over 31 percent of the nation’s wealth, while the bottom 50 percent hold just 2.6 percent. Wealth is increasingly inherited rather than earned, passed down through housing, education, and access to social capital. For a growing share of Americans, birth determines destiny.
This has implications far beyond economics. A healthy democracy depends on a robust middle class. When prosperity is widely shared, people are more likely to believe in the system and participate in civic life. When inequality grows too extreme, trust in institutions erodes, polarization deepens, and populist appeals gain traction.
Restoring Balance
The story of the American middle class is not one of inevitable decline. It is a story of choices—political choices, economic choices, moral choices. The same democratic energy that built the New Deal and won World War II can rebuild the middle class for the 21st century.
We know what the elements of that reconstruction might look like: progressive taxation that ensures prosperity is shared, not hoarded; labor laws that give workers genuine bargaining power; public investment in education, infrastructure, and research; healthcare and housing policies that treat these as rights, not commodities.
The question is not whether we know how to rebuild the middle class. The question is whether we have the political will to do so. Because the stakes could not be higher. A healthy democracy depends on a robust middle class. When prosperity is widely shared, people believe in the system. When it concentrates at the top, faith in democratic institutions erodes, polarization deepens, and the center cannot hold.
In the end, the story of the middle class is the story of America itself—a nation that promised its citizens not aristocracy or plutocracy but something revolutionary: a society where merit mattered more than inheritance, where hard work was rewarded, and where each generation could expect to live better than the last.
That promise has been broken, but it need not remain so. The American Dream is not a relic of the past but a renewable resource, waiting to be claimed by those bold enough to fight for it. The only question is whether we still believe in it enough to do the work required to make it real again.
If you found this article insightful, share it with your network and invite them to subscribe to and .
 | A guest post by
|