States Where the Middle Class Is Being Left Behind

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Methodology

To determine the states where the middle class is being left behind, 24/7 Wall St. used data on the average pre-tax income earned by each income quintile from the U.S. Census Bureau’s 2015 American Community Survey. We defined the middle class as the third quintile, or the middle 20% of households. We examined the growth in average household incomes in the third and fifth quintiles between 2011 and 2015 to identify income trends in the middle and upper class. The final list is composed of states where middle class incomes increased at or slower than the national increase for the middle quintile, and where incomes for the upper quintile rose at the same rate or faster than the national upper quintile. Because ACS income data reflect pre-tax levels, they may overstate the degree of income inequality in the poorer quintiles. However, it is unlikely that the tax burden of the third quintile is significant enough to skew the data.

We also looked at data on each state quintile’s share of aggregate state income from the ACS, and how that share changed between 2011 and 2015. Also from the ACS, we reviewed poverty rates and the Gini coefficients. The Gini coefficient indicates the degree to which incomes in an area deviate from a perfectly equal income distribution. Scaled between 0 and 1, a coefficient of 0 represents perfectly equal incomes among all people. All data are from 2011 to 2015. From the Bureau of Labor Statistics (BLS), we looked at annual unemployment rates from January 2011 through January 2016. The percentage of non-agricultural employees who identify as members of a union came from Unionstats.com. Tax data came from the Tax Foundation, a nonpartisan research group, and reflect sales tax rates as of January 1, 2016.