The graph above is from the Pew Charitable Trust. You can click on the image to see an interactive version of it which shows the change in the middle class since 2000 by state. The darker the state, the greater the change. Here are their remarks:
The middle class has shrunk since 2000 in all 50 states and the District of Columbia, according to a Stateline analysis. In 22 states, middle-class households – defined as those making between two-thirds and twice the state’s median income – fell to less than half of the total households between 2000 and 2013.
In Illinois those who meet their definition of middle class have fallen from just below 50% of the state’s residents to just under 46%. Meanwhile, inflation-adjusted household median income has fallen from $64,201 to $56,210. That means that Illinois has a lower percentage of people in the middle class than any other state in Midwest other than Ohio and we’re very nearly the same as Ohio in that regard.
Although they haven’t fallen as fast as we have and incomes in them have not declined as much as here, Illinois still has a higher percentage of its people than either California, New York, or Texas and just a tiny bit fewer than Florida.
The decline in the middle class in Illinois is attributed to a number of factors but primarily housing costs of which property tax is a substantial component, see here.
Running my cursor over the states, it looks like the states with the highest percentage middle class (over 50%) are:
Alaska
Idaho
Iowa
Utah
Wyoming
The states with the smallest middle class (under 44%) are:
California
Mississippi
Louisiana
New Mexico
New York
Or, said another way, “middle class” is a proxy for race.
It could be. The large middle class states are red (though IA may be purple), have relatively few African-Americans, and West of the Mississippi. South Dakota and Nebraska are close to being listed here, but so is New Hampshire.
The small middle class states appear to be of two types: (1) high density blue states, like New York and California. New Mexico has to be shoe-horned in, but New Jersey, Connecticut and Massachusetts are almost listed here too, and (2) southern red states, with Alabama, Georgia, Kentucky and West Virginia almost listed here as well. Race seems more ambiguous here. Some of these Southern States have the most African-Americans in the country, but Kentucky and West Virginia are pretty white. California does not have many African-Americans.
I would like to think the difference here is that the Northern or Northwestern interior states have had to work harder to maintain a diverse economy.
No but it has lots of Hispanics as does New Mexico. Somewhat surprisingly so do a number of southern states.
I’m not really sure what to make of the definition. If we picked a point estimate for median of $55k then we really have a middle class range by their definition of $37k to $110k. That, it seems to me, gives a different perspective than plus or minus a third, or $37k to $73k. Specifically, a lot of $80k – $100k earners who, one would think, should be relatively comfortable. Yet they are falling materially in number. Further, since you need to go to where the volume is, and not just the torch and pitchfork pleasing gaudy incomes, to generate taxes, the turnip seems to be running dry, whether for new expenditures or redistribution. No different than the public pension problem, this a a class a structural nightmare.
There simply is no substitute for a growing, well employed economy.
The definition also worries me a bit. 67% of Median in the low income state puts you kind of close to official poverty levels. Does the cost of living in those states offset that?
OT- Somewhere recently I saw a graph showing Scott Walker’s favorability had dropped a lot. I wasn’t sure why. Maybe the large drop in median income and loss of the middle class helps explain it.
Steve
I think what they’ve done is set anything over one standard deviation above median income as “middle class” which I think is an eccentric definition. I would define middle class as plus or minus a standard deviation.
However, that, too, is problematic since the distribution of income isn’t normal (we know that because average income and median income aren’t the same).
That’s the crux of the problem. My solution is a more diverse economy and we do whatever we need to do to accomplish that. My preference would be to ban the sale of Treasury bonds to foreign governments or sovereign wealth funds or the like (which are the same things).