States Where the Middle Class Is Being Left Behind

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7. Rhode Island
> 10-yr. chg. in middle class income share: -0.6 ppts.
> Middle class share of income: 15.4% (2007), 14.8% (2016)
> Upper class share of income: 48.7% (2007), 50.5% (2016)
> Lower class share of income: 3.2% (2007), 2.9% (2016)

Rapid income growth over the past 10 years among the wealthiest residents in the United States has far outpaced that of the poorest Americans, leading to worsening income inequality and shrinking the middle class. In Rhode Island, the share of income generated by the middle quintile of households fell from 15.4% of all income in 2007 to 14.8% in 2016, one of the largest declines of any state. The share of income earned by the wealthiest quintile, meanwhile, rose from 48.7% of all income to 50.5%, one of the largest increases. The median household income among the richest quintile rose 20.0% over that period, nearly twice the 11.3% income growth experienced by the middle class of earners — one of the largest differentials of any state.

One factor contributing to the relatively slow growth of middle class incomes in Rhode Island may be the decline of the state’s manufacturing industry. Employment in the manufacturing industry fell 20.3% from 2007 to 2016, the sixth largest decline of any state.

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6. Ohio
> 10-yr. chg. in middle class income share: -0.6 ppts.
> Middle class share of income: 15.4% (2007), 14.8% (2016)
> Upper class share of income: 48.4% (2007), 50.2% (2016)
> Lower class share of income: 3.5% (2007), 3.3% (2016)

The share of income earned by the middle quintile of earners in Ohio fell from 15.4% in 2007 to 14.8% in 2016, one of the largest declines of any state. The shrinking of the middle class in Ohio was largely due to the rapid income growth among the state’s top earners. The median income of the wealthiest fifth of households rose by 21.7% from 2007 to 2016, far more than the 12.6% income growth among the middle quintile of earners and the 8.4% growth among the bottom fifth of households.

While the affordability of housing often declines in tandem with increases in income inequality and upper class income growth, the cost of real estate in Ohio is relatively close to what it was 10 years ago. The value of the typical home has risen only 1.7% from $137,800 in 2007 to $140,100 in 2016, less than one-third the national increase in home value and now the eighth lowest median home value of any state. The share of households earning between $35,000 and $75,000 a year that spend at least 30% of their income on housing in Ohio actually fell from 20.7% in 2007 to 15.5% in 2016, one of the largest declines in the country.

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5. Indiana
> 10-yr. chg. in middle class income share: -0.7 ppts.
> Middle class share of income: 15.8% (2007), 15.1% (2016)
> Upper class share of income: 46.8% (2007), 48.9% (2016)
> Lower class share of income: 4.0% (2007), 3.6% (2016)

According to the Gini index, income inequality has increased more over the past 10 years in Indiana than in all but two other U.S. states. The median income of the wealthiest fifth of Indiana households rose 20.9% from 2007 to 2016, nearly twice the income growth among the middle quintile of households and almost four times the income growth among the poorest fifth of households — each among the largest differentials of any state. The share of all income earned in the state by the middle class fell from 15.8% in 2007 to 15.1% in 2016, the fifth largest decline in the country.

The relatively slow growth of middle class incomes in Indiana may be partially due to the decline of certain blue collar industries in the state. While 17.0% of all jobs in the state are still in manufacturing — the largest share in the country — the number of jobs in the industry fell 4.8% over the last 10 years, one of the larger declines of any state.

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4. Michigan
> 10-yr. chg. in middle class income share: -0.7 ppts.
> Middle class share of income: 15.3% (2007), 14.6% (2016)
> Upper class share of income: 48.4% (2007), 50.4% (2016)
> Lower class share of income: 3.6% (2007), 3.3% (2016)

The median income of the wealthiest quintile of households in Michigan rose 20.2% over the last 10 years, far more than the median income growth among middle class households of 10.3% and nearly three times the income growth in the poorest quintile of 7.5%. The disparity in income growth has led to increased income inequality in Michigan and a decline in the size of the middle class. The share of income earned by the middle quintile of households fell from 15.3% in 2007 to 14.6% in 2016, nearly the largest percentage-point decline of any state.

While in other states where top earners’ income grew far faster than middle and lower classes incomes the cost of housing also increased at a relatively rapid rate, housing in Michigan has largely become more affordable over the past 10 years. The value of the typical home fell from $153,100 in 2007 to $147,100 in 2016 in Michigan — one of only 13 states where home values are lower today than they were 10 years ago. The share of households earning between $35,000 and $75,000 a year that spend at least 30% of their income on housing actually fell from 26.3% to 16.5%, the largest percentage-point decline of any state other than Nevada.