Why America's middle class is disappearing from cities (+video)
The middle class is shrinking in nine out of ten cities around the country, while the lower and upper classes are growing, according to a study released Wednesday by Pew Research Center.
As it shrinks nationwide, America’s middle class is leaving the urban core.
According to a study released Wednesday by Pew Research Center, the middle class is dwindling in nine out of ten cities around the country, while the lower and upper classes are growing.
The decline coincides with decreasing wages across nearly every income level. Median household income nationwide in 2014 was 8 percent below the level seen in 1999. Wage inequality also rose in 2015, continuing a decades-long trend. The gap between middle and lower-class wages has held relatively stable since 2000, but the distance between the very wealthiest sectors of the population and the 99 percent continues to grow as their incomes also climb.
Wages did grow slightly in 2015, but the upper class reaped most of those benefits. The Great Recession's impact both on wages and employment still lingers, Rakesh Kochhar, Pew's associate director of research, tells the Christian Science Monitor in a phone interview.
“Because of the economic downturn, employment took a huge hit, and there is still a fair amount of slack in the labor market, [which is] going to keep income on the lower side,” he says.
Pew looked at numbers from 229 out of 381 “metropolitan statistical areas” that the Census Bureau identifies and uses in its data. What Pew found was that people are migrating across class lines: some families moved into a lower-income bracket, while others entered the upper class. And that trend isn’t isolated to just those 229 major metropolitan areas.
“What we find is that this is a share of widespread decline in the middle class, and a trend in rising inequality in all areas as well,” Dr. Kochhar says.
According to Pew, the percentage of Americans living in a middle-income household fell from 55 percent in 2000 to 51 percent in 2014. During that same 14-year period, the number of adults in lower-income households moved from 28 to 29 percent, and the number in upper-income households jumped from 17 to 20 percent.
The trend is particularly pronounced in the Midwest, where the national decline in manufacturing has hit some communities especially hard. Pew estimates that employment in manufacturing shrunk by 29 percent nationwide from 2000 to 2014.
Several factors contribute to this trend, Kochhar explains. Higher-income manufacturing jobs requiring highly skilled technical expertise, like those offered in Silicon Valley, have experienced a boom, while low-skill manufacturing jobs are eroding in the face of competition from abroad.
In the retail sector, the 154 Wal-Mart stores that the company shuttered in January had a negative impact on many rural communities, pulling away both jobs and revenue. Analysis from the Washington Post shows that a disproportionate number of the stores were operated in lower-income communities in the Midwest and southeast.
The widening gap between rich and poor is also reflected in trends in city housing costs. As the middle class is forced away from cities by rising rent and mortgage costs, they leave behind an expanding lower class and a rising upper class stepping in to take their place.