By Cliff Potts, CSO, and Editor-in-Chief of WPS News
Baybay City, Leyte, Philippines — February 16, 2026

New Federal Data Confirms a 40-Year Hollowing of the U.S. Middle Class

A newly released report from the Congressional Budget Office provides the clearest long-term evidence to date that the American middle class has been steadily hollowed out over the last four decades, even as the broader economy expanded.

Covering the period from 1979 through 2022, the data shows a consistent pattern: income and wealth growth became increasingly concentrated among the highest-earning households, while middle-income households lost relative economic share and long-term security.

This shift did not occur during a recessionary collapse or a single crisis. It unfolded during decades of economic growth, technological advancement, and rising productivity.

Growth Without Shared Gains

According to the CBO’s analysis, total economic output rose substantially over the study period. However, the distribution of those gains changed sharply:

  • High-income households captured a growing share of national income and wealth.
  • Middle-income households experienced slower income growth and declining wealth accumulation relative to the overall economy.
  • Lower-income households saw modest gains during limited periods, but those improvements proved fragile and easily reversed.

The result was not stagnation across the board, but redistribution upward.

The Post-1979 Turning Point

The report identifies the late 1970s as the inflection point. After 1979, wage growth increasingly diverged from productivity growth. Compensation tied to labor weakened, while returns tied to asset ownership—stocks, real estate, and financial instruments—accelerated.

Over time, this shift changed how economic stability was achieved. Income from work became less reliable as a path to security, while ownership of capital became the primary driver of wealth accumulation.

Policy choices over multiple decades reinforced this structure, including tax treatment favoring capital income, deregulation of financial markets, and the long-term erosion of collective labor power.

Not a Cultural Failure

The data directly contradicts narratives that attribute middle-class decline to individual behavior, skills deficits, or cultural change. Workers became more productive over the period studied, not less. Participation in the economy continued. The missing factor was not effort—it was access to the rewards of growth.

What declined was not work ethic, but leverage.

A Structural Outcome, Not a Cycle

The CBO report does not frame these trends as temporary or self-correcting. Instead, it documents a durable economic realignment that persisted across multiple political administrations, market cycles, and technological eras.

In that sense, the findings do not reveal a new problem. They formally document one that has been visible for years to those living inside it.

Conclusion

From 1979 to 2022, the American economy expanded while the middle class lost ground. The wealthiest households increased their economic footprint. The middle absorbed risk without proportional reward. The structure held.

The data now confirms what many workers, households, and analysts have long observed firsthand: the middle class was not outpaced by change. It was out-positioned by design.

For more social commentary, please see Occupy 2.5 at https://Occupy25.com

References
Congressional Budget Office. Distribution of Household Income, 1979–2022.

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