Study: Share Of Middle-Class Households Drops

Mar 19, 2015

Credit The Corporation for Enterprise Development

A new analysis by the Pew Charitable Trusts’ Stateline found that “in all 50 states, the percentage of ‘middle-class’ households — those making between 67 percent and 200 percent of the state’s median income — shrunk between 2000 and 2013.”

In Illinois, according to the assessment, that share slipped from 49.8 percent in 2000 to 45.8 percent in 2013. The median income in this state was $56,210 in 2013, down from an inflation-adjusted $64,201 in 2000.

Stateline wrote: “The change occurred even as the median income in most states declined, when adjusted for inflation. In most states, the growing percentage of households paying 30 percent (the federal standard for housing affordability) or more of their income on housing illustrates that it is increasingly difficult for many American families to make ends meet.” In Illinois, that share climbed from 27 percent in 2000 to 34 percent in 2013.

In February, Illinois Issues looked at the issue of the shrinking middle and found, as Stateline did, that all 50 states experienced widening income inequality.

According to the Economic Policy Institute, “in Illinois, the top 1 percent captured 64 percent of all the income growth from 1979 to 2007. Between 2009 and 2011, the top 1 percent had 24.5 times as much income as the bottom 99 percent.”

Amy Terpstra, director of research for the Chicago-based Heartland Alliance’s Social IMPACT Research Center asked in that February story: “Why should we care about income inequality and why should we care if we are losing the middle class? Why should we care about this stuff? And why is it kind of frightening? Ultimately, it’s a core American belief that hard work should pay off, right? That individuals who contribute to our economic growth should actually reap the benefits of that growth.”

She says a shrinking middle class has negative effects on the nation’s health, housing and education systems. “If we look at it for the last few decades, the benefits of economic growth have really been skewed in favor of the wealthiest people in society. I think that raises not only basic issues of fairness, but it really does negatively affect our economy and our political system. I think it reduces social cohesion. It reduces trust in government. It reduces participation in the democratic process.”