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Building a New Middle Class in the Knowledge Economy

Amid concerns about the future of the working class, Georgetown University professor Harry J. Holzer argues for a new set of pathways to the middle class for those currently left behind in the U.S. economy.

Holzer, the John LaFarge Jr. Professor of Public Policy and an Institute Fellow at the American Institute for Research, analyzes the levels of income and education needed to achieve middle-class status in America, why too few Americans obtain such education levels, and the trends in middle-wage occupational growth where such education would be valued.

The key findings including:

  • According to a reasonable benchmark for a middle-class family level of income (about $50,000 on average), roughly 70 percent of Americans live in families with middle-class or higher incomes in any given year.
  • The odds of attaining middle-class incomes in families where no adult has a bachelor’s (BA) or higher degree often depend crucially on having two or more earners in a family.
  • America has experienced some job polarization since 2000, but the shrinkage of the middle share has been modest – from 41 to 39 percent between 2000-15 – while a “new middle” consisting of well-paying jobs that require postsecondary education or experience is growing.
  • Advancements in digital technologies in the future will not result in the “end of work.” The real question is whether workers whose skills become obsolete will be able to retool and find well-compensated employment in other jobs or industries.Based on the above analysis, Holzer recommends need a range of policies that form a comprehensive system to help more Americans without BAs enter the middle class.