Economic growth has long been touted as the tide that lifts all boats—but for the middle class, that promise has turned hollow. Despite decades of rising productivity and corporate profits, workers’ wages have stagnated, living costs have exploded, and inequality has reached staggering levels. As we navigate 2025, the challenges facing middle-class families aren’t just persisting—they’re getting worse.
The Great Wage Stagnation
Over the past 40 years, worker productivity has surged, yet paychecks haven’t kept up. Our research shows that the average worker lost out on 43% of potential earnings growth—essentially sacrificing 1% in annual wage increases every year due to shrinking labor income shares and widening inequality.
Meanwhile, the benefits of economic growth have flowed overwhelmingly to the top:
- The top 10% captured the lion’s share of gains.
- The top 1% saw their incomes skyrocket.
- The top 0.1% pulled further ahead than ever.
The Cost-of-Living Crisis
Even as wages flatline, essential expenses have spiraled out of reach:
- Housing costs up 190% in 50 years.
- College tuition up 264% in the same period.
- Healthcare, childcare, and groceries eating up larger chunks of paychecks.
In 2025, this squeeze is even more acute. While remote work and gig economy jobs have expanded, they’ve also introduced new instability—fewer benefits, unpredictable hours, and eroded job security.
What’s Next?
Without systemic changes—like stronger labor protections, affordable housing policies, and fairer tax structures—the middle class will keep losing ground. The question isn’t just how to grow the economy, but who actually benefits from that growth.
