New Pew Research Center data shows the middle class is dwindling. It’s true in about 90 percent of metropolitan areas surveyed, including Dallas-Fort Worth.
Rakesh Kochhar from the Pew Research Center explains what that this means for North Texas -- and beyond.
Interview Highlights: Rakesh Kochhar on….
…what defines ‘middle class’: “For a household of three if you make between $42,000 to about $125,000 annually, you are middle income by our definition.”
…what’s happening in Dallas-Fort Worth: “The share of middle income in Dallas fell from about 54 percent, 55 percent in 2000 to 50 percent in 2014. In both years that’s about the national average actually. There was also an increase in the share of upper income but also slightly an increase in the share of lower income. So movement out of the middle was in both directions in Dallas.”
… why the middle class is shrinking: “The root cause is rising income inequality. So there’s more of a spread in income distribution, people being pushed to the top end of income distribution or the lower end. That in turn is driven by a number of factors, including technology at the workplace, which is rewarding people with greater skills, higher-level skills, technological, computer-based skills, more education. But there are also factors like globalization, outsourcing jobs and the decline of unions.
… people sinking into the lower-income tier vs. making the jump to upper-income: “Nationally, it’s almost a divide, About half of the metro areas saw more of an increase into the upper-income tier. And half of the areas saw a move into the lower-income tier. If you balance the two movements, you find a slight upward movement nationally. … The two leaders in the country in terms of movement up the income ladder are in Texas, Midland and Odessa. They bring communities, both benefiting from the oil boom, in the last 10 years or so. But what we don’t know is what has happened since our analysis ended, what has happened with the recent crash in oil prices.”
… how the middle class in Texas’ border cities are faring: “Laredo, El Paso, McAllen and Brownsville: These areas are among the most lower-income in the country. But many of these are are progressing up the income ladder. One of the areas that witnessed significant movement was actually McAllen, where the share of middle income rose from 39 percent to 45 percent.”
…the implications of a shrinking middle class: “We don’t know if there is an optimum size for the middle class but we do know from research that is emerging that an income distribution that puts people at the opposite ends of income, low or high income tiers, tends not to be conducive to economic growth itself. The large middle class is favorable in the sense that it supports more demand in the economy and drives aggregate demand, drives economic growth, but actually what that optimum size is, we don’t know.”