Certainly, there is some fuzz and overlap there. A retiree earning $50k/year on dividends and capital gains meets that criterion, while a top-shelf skilled professional or DINK couple earning $400k/year solely from working 40 hours per week (each) does not. The latter could certainly become upper class rather easily just by paying off debt, avoiding unnecessary expenses, and dumping excess cash into index funds, but as long as that plan can be cut short by two simple words ("you're fired") they haven't crossed that class boundary yet.
Generally, when the middle class shrinks, it isn't because a significant portion of them are becoming upper class. More often, it is because expenses rise faster than prevailing wages. The mark of the middle class, to me, is being able to comfortably pay all living expenses with all adults in the household working no more than one full-time job (probably salaried, but not necessarily) at 40 hours per week. You can get everything you need with just one job, and some of what you merely want.
The instant you cross that line where you have to abandon desires and work longer to make ends meet, you're in the lower class. There are certain needs in the US that are not actually survival-level necessities, but rather mandatory to meaningfully participate in civil society. Those have expanded. In earlier decades, you essentially just needed a motor vehicle, a location-based telephone number, and a mailing address. Now, you also need one or more person-based telephone numbers, an Internet connection, and various forms of insurance. Expense categories expanded, even as costs for each expense rose. Median wages stayed stagnant. So people drop out of the middle class. They stop going to the movies and take on more hours or a part time job in order to pay their phone bill.
But we can get that "side-hustle" now, so that makes it all right?
One person's second job may be another's primary source of income.
Besides, two salaries won't move you from middle class to upper class.
Edit: and 120k/yr is nowhere near "upper-class"
http://www.taxpolicycenter.org/statistics/household-income-q...
1: http://www.nytimes.com/2003/01/12/opinion/the-triumph-of-hop...
Additionally, if the wealth distribution curve for the country is basically a backwards "L" with the bend at the ~99th percentile, the difference between the 60th and 80th percentiles isn't really meaningful since the "upper class" is clearly the 99th percentile.
Edit: obviously there are also social caste connotations that used to be applied here too, but I'm only interested in the economic definition.
From Merriam-Webster: a social class occupying a position above the middle class and having the highest status in a society
Many of the HN regulars are upper income, but very few would qualify as upper class (most of us lack the political and social connections).
Citation needed.
What, exactly, is the magnitude of the effect of single-parent homes on the size of the middle class? Without answering that, your "gut instinct" explanation, if that's what it is, is meaningless.
One major conclusion of their research is that the family income of children whose parents divorce and remain divorced for at least six years falls by 40 to 45 percent.
http://www.nber.org/digest/jul02/w8786.html
As per the Census Bureau (table F-10), in 2014, married couple families with one or more children under 18 years, earned an average income of $111,278. In other words, traditional two-parent families earned an income that was more than three times higher than for households headed by a single mother.
http://www.forbes.com/sites/aparnamathur/2015/11/18/the-cost...
Saying that the income of a single-parent family is lower does not remotely answer the question of "What is the magnitude of the effect of single-parent homes on the size of the middle class?"
I actually went and looked up the tables in the census: https://www.census.gov/data/tables/time-series/demo/families...
We have the same percentage of single parent families now as in 1995 (29%). That's over 20 years, the number has barely budged. So how does your answer relate to the question of the decline of the middle class since then?