METRO MIDDLE CLASS SIZES REFLECT LOCAL DEMOGRAPHIC AND INDUSTRIAL PATTERNS
Looking across all metropolitan areas suggests common local factors associated with having a larger—or smaller—middle class.
First, racial makeup relates to middle class size. Metro areas in which non-Hispanic whites account for a larger share of population tend to have larger middle classes (Figure 2). Such metro areas also have, on average, smaller low-income populations, and larger high-income populations. By contrast, metro areas with larger black populations tend to have smaller middle classes, and larger low-income populations. These patterns make sense given the strong, longstanding relationship between race and income in America. Notably, metro areas with larger Hispanic populations also have larger low-income populations, but middle classes of about the same size as other metro areas. Metro areas with large Asian populations, most of which are in California, have smaller middle classes and larger high-income household shares.
Second, the types of industries that are prominent in a metro area are strongly associated with the size of its middle class. Metro areas where a larger share of the population works in retail, construction, administrative services, agriculture, manufacturing, and transportation have larger middle classes on average (Figure 2). These industries tend to provide decent-paying jobs for individuals who may not possess a four-year college degree, and who represent the bulk of the workforce in most metro areas. Conversely, metro areas where professional services, information, finance, and management industries predominate have relatively small middle classes, and considerably larger high-income populations. These are mostly large places like the San Francisco Bay Area, Washington, Boston, and Seattle, with significant numbers of highly paid workers. Consistent with the observation above about college towns, metro areas where more people work in higher education tend to have smaller middle classes, and larger low-income and high-income populations.
SMALL/MID-SIZED METRO AREAS HAVE EXPERIENCED LARGER CHANGES IN THE SIZE OF THEIR MIDDLE CLASSES
Under the definition employed here, the relative size of the U.S. middle class does not change over time; 60 percent of all households always have incomes in the middle three quintiles of the income distribution. Because about 86 percent of Americans live in metropolitan areas, the collective size of their middle class also does not change much over time. The share of all households in metro areas classified as middle class was 60.2 percent in 2017, down just slightly from 60.7 percent in 2000.
The middle-class share in metro areas dropped slightly because they gained somewhat more high-income households over the past decade and a half. The 382 U.S. metro areas added (on net) roughly 13.5 million households from 2000 to 2017. Of those, 8.0 million (57 percent) had middle-class incomes, 3.4 million (25 percent) had incomes in the adjusted top national quintile, and 2.6 million (18 percent) had incomes in the adjusted bottom national quintile. Put another way, metro areas overall became a little bit wealthier compared to the rest of the country.
Many individual metropolitan areas, of course, experienced more significant changes in the size of their middle classes, from an 11 percentage-point drop (Grand Forks, N.D.) to an 8.1 percentage-point increase (Auburn, Ala.) (Table 2).
CHANGES IN METRO MIDDLE CLASS SIZE USUALLY REFLECTED EXPANDING HIGH-INCOME POPULATIONS
As the above examples suggest, metro areas that experienced the largest expansions or contractions in their middle classes had mixed fortunes. In some, a gain in middle-class size seemed to reflect upward mobility for previously low-income households, while in others it reflected downward mobility for once-high-income workers. Similarly mixed dynamics characterized metro areas in which the middle class shrank.
In general, however, patterns of growth and decline in metro areas’ middle classes from 2000 to 2017 seemed more likely to reflect positive than negative momentum for local households. To illustrate this, Figure 3 sorts the 382 metro areas into four quadrants. In the quadrant with the largest number of metro areas (124), the middle class shrank, but the change in share of households with high incomes exceeded the change in the share with low incomes. This was the pattern noted above for San Francisco and Bismarck, N.D. In the quadrant with the second-highest number of metro areas (99), the middle class grew, while again the change in high-income share exceeded the change in low-income share. Auburn, Ala. and Odessa, Texas fit this pattern. The quadrant with the fewest number of metro areas (68) represented places in which the middle class shrank and low-income household growth predominated—economically struggling metro areas like Bloomington, Ill. and Valdosta, Ga.
WHAT THE MIDDLE CLASS IN METRO AREAS TELLS (AND DOESN’T TELL) US
As is true with most socioeconomic phenomena, how we choose to define the middle class has important implications for what we conclude about it. The definition employed here is an expansive one; it includes three in five households nationwide. A narrower definition, one anchored more strongly to local conditions, or one based on a concept other than income (e.g., occupation or educational attainment) might yield a different geography of the American middle class. This approach nonetheless suggests a few important takeaways about where the middle class lives, how that may be changing, and what it means:
- The presence of the middle class varies considerably across U.S. metro areas. National policies aimed at improving the conditions of the middle class, and helping more people rise to join its ranks, will thus impact metropolitan areas differently. In this way, “people-based” interventions (like the Earned Income Tax Credit or Medicaid) have important placed-based effects.
- Some factors associated with the local size of the middle class are relatively fixed. For instance, newer metropolitan areas in the South and West developed as larger, more suburban places that incorporate more middle-class communities than older metro areas in the Northeast and Midwest. Regional benchmarks could be more useful than national ones in assessing the size of a given metro area’s middle class.
- As other local factors change over time, they may change the size of the middle class with them. Certain aspects of metro areas’ demographic and industrial structures are closely associated with the presence—or absence—of the middle class. These associations may help local policymakers better understand the sectors most likely to provide middle-class jobs, or the population groups most likely to hold them.
- Middle classes have grown and declined in metro areas over time—often by considerable degrees—but have done so for very different reasons. To the extent the American middle class possesses a common set of assets, and faces a common set of challenges, changes in the size of the middle class locally over time may bring those assets and challenges into sharper or weaker focus. Yet researchers and policymakers should more deeply examine middle-class conditions at the local level to truly understand and improve middle-class resilience.