The good news is that Americans have never been richer. The bad news is that most of them don’t feel like it.

There has been tremendous growth in income and wealth in the U.S. in the last half century, even for poorer and middle-class households. But because of the nature of that growth, as well as the changing structure of the national economy, a lot of the people who have benefited also believe that the economy isn’t working for them.

It is true the middle class is shrinking. In the 1960s the income distribution of U.S. households looked like a bell curve with a very thick middle. Today there are fewer Americans in the middle — largely because many have joined the ranks of the upper-middle class. In 1967, a little more than 5% of Americans earned or received more than $150,000 (in 2024 dollars). Now more than 30% do. And it’s not just the middle class that moved up: In 1967, more than 38% earned or received less than $50,000. Now that figure is 21%.

Income inequality also increased. The very rich — the top 5% and especially the top 1% — got much richer than everyone else, even the top 20%. The income distribution curve has flattened as more people have moved into the upper part, with the upper tail moving even further from everyone else.

The result? More Americans than ever are affluent — and more have the sense that something is wrong with the economy.

Americans earned more for several reasons. The first is that neoliberal economic policies worked as intended. In the last 50 years, there have been big increases in productivity, solid GDP growth and, since the 1980s, low and predictable inflation. All this helped make most Americans richer.

There has also been a decline in unionization, which helped to compress wages between the upper tail of the income distribution and the middle. More Americans now go to college, where they incur debt but also increase their lifetime earnings, especially as technology favors people with degrees. America is also older, and people tend to earn more later in their careers. On the lower end, income grew in part because the figure includes welfare benefits and tax credits.

There are legitimate reasons that many households feel poorer, even if their income is greater. It is a struggle to keep up with the price increases of many critical services in regulated sectors such as health care, education and housing. There is also some justified anxiety that the earnings growth and prosperity won’t continue. The last 60 years was the Era of the Baby Boomers, when income gains were large for anyone who went to college. The college premium still exists, but it has stopped growing and it comes at a higher cost.

And while technology and trade have made everyone richer, they have made a far smaller group of people much, much richer. It’s not just the handful of people who are rich beyond comprehension. There are hundreds of Americans who are worth more than a billion dollars. This is in part because technology changed and a few firms earned more — and paid more — than the rest. Working in certain industries also means much higher earnings. And a superstar economy rewards high performers much more than everyone else, whether that superstar is Taylor Swift or a talented manager in a fast-growing corporation.

To be clear, this system helps create economic growth that makes everyone better off. But in the very top tier of income, it can feel like a zero-sum competition between the merely affluent and the truly rich.

This poses a challenge not just for economic planners but for the very meaning of prosperity. Growth and rising incomes are usually the goal of economic policy, including neoliberal economic policy. But the last two decades show that rising incomes aren’t always enough to engender good feelings about the economy.

This intra-top-quartile resentment may also help explain why more politicians want higher taxes on super-high earners but don’t ask the upper middle class to pay any more. The taxes are not just a way to pay for more middle-class welfare benefits. They are a form of economic retribution.

The catch is that there is a tradeoff between growth and equality. At least some of the growth at the top came from more productivity. Innovative companies, some founded or led by billionaires, help make the American economy (or at least Americans’ stock portfolios) richer. Yes, there is room to increase taxes on the rich, but punitive taxes can harm growth.

The idea that the economy is rigged and zero-sum is leading to a rise in populism in both parties. The result will probably be less trade and more price controls, which would mean a slower-growing economy — or even one that is shrinking. Then Americans will learn that the only thing worse than rising inequality is flat or declining income.

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”

Related Articles

Nina Stachenfeld: So DEI doesn’t work. What would be better?

Maureen Dowd: Time to let my brother do the carving

Noah Feldman: How constitutional limits become negotiable

Thanksgiving and the new births of freedom

Mary Ellen Klas: Since when is it treason to defend the rule of law?

It is no secret that diversity, equity, and inclusion (DEI) programs are under attack in our country. They have been blamed for undermining free speech, meritocracy, and America itself. The University of Virginia is the latest to settle with the government and walk away from its DEI initiatives rather than defend its programs or find a new solution.

Those who decry DEI say they do so in the name of meritocracy. They argue that those who benefit from DEI programs do so at the expense of other, more qualified individuals, and that these programs are weakening professions such as our military, science, education, and health care.

But these arguments have it exactly backwards. DEI programs were never designed to give privilege to underrepresented people. They were put in place to chip away at discrimination and nepotism, both concepts that are antithetical to meritocracy.

The idea that we had a merit-based system before DEI is a fantasy. A true meritocracy is devoid of racism, sexism, and ageism. It doesn’t exclude based on ethnicity, religion, sexual orientation, sexual identity, or other biases. In a true meritocracy, no one would have an advantage simply because of the socioeconomic station into which they were born.

Yet we do not all start on a level playing field. Consider the systemic and structural racial and ethnic discrimination built into our system. Consider low funding levels for non-white schools. Consider repeated instances of environmental racism and poor access to health care for minorities, which result in high rates of both acute and chronic illnesses, increased school absences for children, and greater morbidity and mortality rates in adults.

According to a 2024 White House report, Racial Discrimination in Contemporary America, racial discrimination accounts for the loss of trillions of dollars in the U.S. When kids go to poorly funded schools, they can’t access the stepping stones to success, such as basic health care, college training programs, afterschool activities, and standardized test training.

Then there’s persistent sex discrimination. A recent study found that in all but one age group, men continue to earn 15% more than women. The gap has continued even as more educated and experienced women enter the workforce and attain the managerial and higher-paying jobs that had been reserved for men.

Women also report being treated differently by employers, and sexual harassment remains an issue for more women than men, both in public spaces and within the workplace. The MeToo Report found 26% of all respondents experienced sexual harassment or assault between 2018-2024, with women more than twice as likely to experience this than men (32% vs.15%).

Critics of DEI programs have offered nothing to replace DEI other than a return to norms that perpetuate their false meritocracy, like legacy preferences in university admissions. The Institute of Higher Education reported that 42% of private four-year colleges considered legacy in their admission process in 2022. Unsurprisingly, it also found that the more racially diverse universities are the ones that do not consider legacy. Although these impacts on racial diversity might be small, they are meaningful and clearly unmeritocratic.

Nepotism has a similar antimeritocracy effect in our other institutions. Indeed, nepotism was so alive and well in 2020 in the Army that they wrote a policy to stop it.

DEI programs were introduced to counter biases such as legacy and nepotism. The goal was to level the playing field, expand access to opportunity for a broader range of students, and identify and develop the most talented individuals.

Our society improves when we include more voices and talents in our institutions. A study published by the Boston University School of Public Health found that when DEI programs are successful, they reduce racist and sexist attitudes, reduce ageism, and improve organizational culture, as well as conflict resolution and job satisfaction. This study also concluded that successful DEI programs are those implemented at the institutional rather than individual level and include longitudinal training.

We should not now run from DEI programs and look to the past for false meritocracies. Rather, we need to learn what works and what does not work when it comes to identifying, nurturing, and promoting talent.

Studies show that DEI opponents object to perceived threats to the status quo. To forestall these objections, new programs aimed at leveling the playing field could emphasize that the workplace will continue to uphold its values and that everyone — including the majority — will remain treated fairly.

Rather than truly attempt to problem-solve, diminish discrimination, and allow institutions to draw on the broadest pool of talent available, today’s DEI opponents have only resurrected the discriminatory policies of the past. We all must have the courage to imagine what a truly inclusive and fair society could look like.

Nina Stachenfeld is a Senior Research Scientist at Yale University School of Medicine, Department of Obstetrics, Gynecology, and Reproductive Sciences. Dr. Stachenfeld is also a Public Voices Fellow of The OpEd Project in partnership with Yale University. She wrote this column for The Fulcrum, a nonprofit, nonpartisan news platform covering efforts to fix our governing systems.