Honey, I Shrunk the Middle Class: Pandemic Widens Wealth Gap

For years, the middle class has been getting squeezed by growing wealth at the top of the economy and growing poverty at the bottom, but the pandemic seemed to accelerate that trend in the past year. According to the Pew Research Center, just 17% of the global population now falls into the category of middle income, while 61% are poor or low income and 22% are upper or high income.

Those findings are in line with research from the Foundation for Economic Education (FEE), which finds the wealthy got a lot wealthier during the pandemic. "Recent Federal Reserve data showed the top 1% now hold just over 32% of all wealth in the U.S. economy," says Jon Miltimore, managing editor for FEE. "That's about 30% higher than it was in 1989 when the Fed started that data set."

"If you were in the top 20% or the top 1%, you might have had a pretty good year last year," he continues. "The middle class fell behind a little bit, and the working poor and poor Americans fell behind the most."

Miltimore predicts this trend will only get worse with growing inflation brought on by massive government spending in response to the pandemic. "Inflation is a much different story for middle class and working class Americans, and they're going to be harmed the most by inflation," he tells KTRH.

There is no easy solution to reverse the trend of the ever-shrinking middle class, but Miltimore believes it starts with reining in federal monetary policy, which has been too favorable to wealthy interests. "There's a lot of power concentrated in Washington, D.C., with the central banks and such," he says. "The politicians are supposed to be a firewall in between those (powerful interests) and the people, but we know that's often not the case."

"I think a lot of (politicians) mean well, but we see that when they suddenly get a lot of power like during the pandemic, they end up helping and enriching themselves and their friends, and that was what we saw in 2020."

Photo: Getty Images

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