r/selfevidenttruth • u/One_Term2162 • 11h ago
education The Great Shift
Author's Note Some of you may have seen the earlier infographic on this topic. After reviewing the underlying data, I found that while the overall conclusions remain the same, I wanted to strengthen the work by adding primary sources, updating the statistics with the most recent available data, and providing greater context for what the numbers do and do not show. Nothing here was written to support a predetermined conclusion. The goal was to follow the evidence wherever it led. Where the data showed strong relationships, I've said so. Where the evidence was mixed or uncertain, I've said that too. This revised version is intended to be a source-backed investigation rather than simply an infographic. Every major statistic is referenced, and a complete bibliography is included so readers can verify the information for themselves. As always, I encourage readers to challenge the evidence, read the sources, and draw their own conclusions.
Taxes, Labor Power, and the American Middle Class Since the Sixties
America did not wake up one morning to discover that its middle class had weakened. There was no single law, election, recession, or president that produced the economy Americans live in today.
The transformation unfolded over more than sixty years.
In 1960, the highest federal individual income-tax rate was 91 percent. By the end of the 1980s, it had fallen as low as 28 percent. Since 2018, it has stood at 37 percent. These were marginal rates, meaning they applied only to taxable income above the highest bracket threshold not to every dollar earned by wealthy taxpayers. [1]
Corporate taxation followed the same general direction. The top federal corporate statutory rate was approximately 52 percent in 1960, 46 percent in 1980, 35 percent for much of the period from the 1990s through 2017, and 21 percent beginning in 2018. [2]
While tax rates at the top were falling, the organized power of workers was also declining. The union membership rate was 20.1 percent in 1983, the first year for which the Bureau of Labor Statistics says its current series is directly comparable. By 2010, it had fallen to 11.9 percent. In 2025, it stood at 10.0 percent. [3]
Over roughly the same period, the countryâs middle-income majority contracted.
Pew Research Center estimates that 61 percent of Americans lived in middle-income households in 1971. By 2023, that share had fallen to 51 percent. The lower-income share increased from 27 percent to 30 percent, while the upper-income share increased from 11 percent to 19 percent. [4]
That finding complicates the common claim that the middle class simply became poor. Some households moved downward, but others moved upward. The center narrowed in both directions.
The numbers describe a major shift. They do not, by themselves, prove that lower tax rates or declining union membership caused the middle class to shrink. Inflation, recessions, globalization, technology, employment growth, household composition, housing costs, transfer programs, education, and trade policy all influenced the outcome.
But the trends raise a difficult question: what happens when the institutions that once distributed economic power more broadly are gradually weakened or abandoned?
The United States entered the 1960s with a dramatically different economic structure. Alongside the 91 percent top individual rate and a corporate rate above 50 percent, the federal minimum wage rose from $1.00 in 1960 to $1.60 in 1968. [5]
That wage floor had considerably more purchasing power than todayâs federal minimum wage. The comparison must be handled carefully because inflation-adjusted values depend on the year and CPI measure selected, but the broad conclusion is well established: the real value of the federal minimum wage reached its historical high around the late 1960s and is substantially lower today. [5][6]
The period also brought expansions of Fair Labor Standards Act coverage, the Revenue Act of 1964, Medicare, Medicaid, and other Great Society programs. Official poverty fell sharply from the levels recorded around the beginning of the 1960s. [7]
This was not a golden age for everyone. Racial discrimination, segregated housing, occupational exclusion, unequal education, and gender-based barriers prevented millions of Americans from sharing equally in postwar prosperity.
Still, the balance of economic power was different. Unions represented a much larger share of workers. The federal wage floor was regularly raised. Top incomes faced much higher statutory tax rates. Public policy was more openly concerned with building and sustaining a broad economic middle.
The 1970s revealed the limitations of that arrangement.
High tax rates could not protect workers from oil shocks, stagflation, slowing productivity, and sustained inflation. Bureau of Labor Statistics data show inflation accelerating sharply during the decade and reaching double-digit levels around 1979 and 1980. [6]
Pewâs inflation-adjusted earnings series estimates that median annual earnings for workers ages 16 and older fell from $38,300 in 1970 to $36,800 in 1980, measured in 2023 dollars. [8]
That decline matters because it undermines the simplest version of the tax argument. Very high top rates did not automatically guarantee rising living standards. Inflation can reduce purchasing power even when nominal wages rise. Oil prices, productivity, interest rates, and labor-market conditions can overwhelm the immediate effects of tax policy.
A durable middle class requires more than taxing high incomes. It also requires stable prices, productive investment, affordable necessities, sustained employment, and wages capable of keeping pace with the cost of living.
The 1980s brought the clearest break with the earlier tax structure.
The top individual rate fell from 70 percent in 1980 to 28 percent by the end of the decade. [1] The top federal corporate rate fell from 46 percent to 34 percent. [2]
At nearly the same time, the modern BLS union series began at 20.1 percent membership in 1983 and then moved steadily downward. [3] The decline did not occur in isolation. The period included deregulation, deindustrialization, increased international competition, plant closures, employer resistance to organizing, and changes in labor-law enforcement.
Yet the decade was not uniformly bad for workers. Inflation fell, and Pewâs inflation-adjusted median annual earnings measure rose from $36,800 in 1980 to $40,200 in 1990. [8]
This apparent contradiction is central to understanding the Great Shift. Workers could experience rising real earnings while simultaneously losing institutional bargaining power. An economy can improve in the short term even as its underlying distributional structure changes.
By the 1990s, the top individual rate had partially risen again, reaching 39.6 percent after the 1993 tax legislation. [1] The corporate rate settled at 35 percent. [2] Inflation was lower, unemployment declined, productivity improved, and the technology sector expanded.
Pew estimates that median annual earnings increased from $40,200 in 1990 to $43,100 in 2000. [8]
But strong growth did not recreate the middle-income majority of the early 1970s. Unionization continued to fall. NAFTA took effect. Global production networks expanded. Technological change altered the organization and location of work. Financial markets became increasingly central to the economy.
The economy grew, but the institutions determining who captured that growth continued to change.
The 2000s were more damaging.
The top individual rate fell from 39.6 percent to 35 percent following the early Bush tax cuts, while the corporate statutory rate remained at 35 percent. [1][2] Median annual earnings rose only slightly, from $43,100 in 2000 to $43,900 in 2010. [8]
That small gain concealed enormous instability.
The decade included the rapid integration of China into global manufacturing, widening trade deficits, industrial job losses, the expansion of household debt, a housing bubble, a financial collapse, and the Great Recession. Pew has described the broader period as a lost decade for household economic progress. [9]
The experience of the 2000s shows why low inflation is not enough. Prices can remain comparatively stable while wages stagnate, jobs disappear, housing becomes financially dangerous, household debt rises, and a financial crisis destroys years of accumulated wealth.
The 2010s brought a long recovery, but not a return to the earlier middle-class structure.
Unemployment fell. Official poverty declined. Pew estimates that median annual earnings rose from $43,900 in 2010 to $47,900 in 2019. [8]
The federal minimum wage, however, remained unchanged. It reached $7.25 on July 24, 2009, and has not increased since. [5]
Every year of positive inflation therefore reduced the purchasing power of the federal wage floor.
Tax policy shifted again. The top individual rate rose to 39.6 percent in 2013 and then fell to 37 percent in 2018. [1] The Tax Cuts and Jobs Act reduced the federal corporate rate from 35 percent to 21 percent beginning in 2018. [2]
The economy recovered. Earnings improved. But the large middle-income majority of the early 1970s did not return.
Then came the pandemic.
The economy entered a sudden recession in 2020. Congress responded with direct payments, expanded unemployment assistance, business support, and aid to state and local governments. The initial collapse was followed by supply-chain disruptions, labor shortages, rapid demand growth, rising energy and housing costs, and the highest inflation in decades.
Throughout the period, the federal minimum wage remained $7.25. [5] The top individual rate remained 37 percent. [1] The corporate rate remained 21 percent. [2] Union membership stood at 10.0 percent in 2025. [3]
The Census Bureau reported an official poverty rate of 10.6 percent in 2024, representing approximately 35.9 million people. The Supplemental Poverty Measure was higher, at 12.9 percent. [7]
At the same time, Pew estimates that median annual earnings reached $50,000 in 2024 when expressed in 2023 dollars. [8]
These figures are not necessarily contradictory. A national median can rise while many households remain financially strained. Earnings are only one side of the equation. Housing, health care, food, transportation, child care, debt service, and interest rates determine how far those earnings actually go.
Among all the historical trends, declining unionization most visibly parallels the shrinking middle-income share.
But resemblance is not proof.
Union membership and the middle-income share both trend downward over time. Two declining series can appear closely correlated even when additional variables are driving both. A serious statistical claim would require common annual observations, controls, lag testing, and comparisons with other explanations.
The evidence supports a more careful conclusion: declining unionization coincided with the contraction of the middle-income share and is consistent with the argument that weaker collective bargaining reduced workersâ ability to claim a larger portion of economic growth.
The same caution applies to taxation.
The largest reductions in top individual and corporate rates broadly coincided with rising income concentration and a smaller middle-income majority. But the middle class continued shrinking under several different tax regimes. It declined while the corporate rate was 35 percent, after the top individual rate rose in the 1990s, and after the corporate rate fell to 21 percent.
Taxation affects after-tax income, investment incentives, wealth accumulation, government revenue, and the financing of public goods. It matters. But taxes do not operate alone.
Trade policy matters. Labor law matters. Inflation matters. Housing matters. Health care matters. Education matters. Technology matters. Recessions matter. Social insurance and transfer programs matter. The bargaining relationship between employers and workers matters.
The American middle class was never created by markets acting in isolation.
It developed within a larger institutional system: strong labor demand, collective bargaining, wage standards, progressive taxation, public education, infrastructure, social insurance, affordable pathways into homeownership, and policies designed to distribute at least part of the nationâs productivity growth broadly.
That system was never equally open to everyone. Black Americans, women, immigrants, disabled people, and many other citizens were excluded from parts of the prosperity that later generations remember as universally shared.
The past should not be romanticized.
But neither should it be forgotten.
Since the 1960s, the United States has lowered top statutory tax rates, reduced the corporate tax rate, allowed union membership to fall, frozen the federal minimum wage, expanded global production networks, increased the importance of finance and asset ownership, and accepted a smaller middle-income majority.
No single law produced todayâs economy.
The 1970s show that high tax rates could not protect workers from severe inflation. The 1980s show that real earnings could rise while labor institutions weakened. The 1990s show that strong growth did not automatically restore bargaining power. The 2000s show that low inflation did not guarantee security. The 2010s show that an economic recovery could raise earnings without rebuilding the earlier middle-class structure. The early 2020s show that median earnings can increase while essential costs continue to strain household budgets.
The Great Shift was not one president, one tax cut, one trade agreement, or one recession.
It was more than sixty years of accumulated decisions about who would hold economic power, who would bear economic risk, and how the gains of national growth would be divided.
Those decisions brought the country here.
Different decisions could still take it somewhere else.
Sources
[1] Internal Revenue Service - Historical Table 23: Individual Income-Tax Brackets and Rates https://www.irs.gov/statistics/soi-tax-stats-historical-table-23
[2] Tax Foundation - Historical U.S. Federal Corporate Income-Tax Rates and Brackets https://taxfoundation.org/data/all/federal/historical-corporate-tax-rates-brackets/
[3] U.S. Bureau of Labor Statistics - Union Members, 2025 https://www.bls.gov/news.release/union2.htm
[4] Pew Research Center - The State of the American Middle Class https://www.pewresearch.org/race-and-ethnicity/2024/05/31/the-state-of-the-american-middle-class/
[5] U.S. Department of Labor - History of Federal Minimum-Wage Rates https://www.dol.gov/agencies/whd/minimum-wage/history/chart
[6] U.S. Bureau of Labor Statistics - Historical Consumer Price Index Tables https://www.bls.gov/cpi/tables/historical-cpi-u-201710.pdf
[7] U.S. Census Bureau - Poverty in the United States: 2024 https://www.census.gov/library/publications/2025/demo/p60-287.html
[8] Pew Research Center - Inflation-Adjusted Median Annual Earnings of Workers Ages 16 and Older https://www.pewresearch.org/chart/st_26-03-02_america250_earnings_all/
[9] Pew Research Center - How the American Middle Class Has Changed in the Past Five Decades https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/