Compared to how things were in Canada, I wouldn't say that there is no longer a middle class here in the US,
not yet, anyway. And the change isn't exclusive to arts and music.
I have no doubt that times are tougher though. That being said, I can tell you first hand that there's still some people earning a decent living making music and performing. For the past few years, we've lived on my wife's income because I couldn't legally work in the US. We're not rich, but we're not poor either.
Rewind a couple of years, back in Canada, I was the one providing. In spite of the gold and platinum records on the walls and all the awards, my wife had to go back to school and work gigs which had nothing to do with music because there was no money to be made. And her case was not an exception.
I'm sure that the situation has degraded here. But whether it's the guys playing 5 nights a week for Phantom of the Opera or The Book of Mormon on Broadway, or the fellows traveling with Cirque, or people writing music for them and their assistants... None of those fellows are rich, but they earn a proper living.
Maybe I'm a bit more positive about it because of where I come from. Back in my little hometown in French Canada, growing up, there was not even a notion of anything such as a musical middle class. The only options were to hit the big time - the chances of which were of the order of 0,00000000000001% - or to land THE gig as a music teacher.
In both cases, you had to be ready to move to where the opportunities were. And I'm guessing that that principle is universal, though fewer and fewer actually get their chance.