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Where has the middle class gone?
In this series, the Metropolitan Planning Council (MPC) will explore where Chicago’s middle class lives, along with mapping the middle class experience by race and how it’s changed over time for both the city and the region.
A conundrum amidst continuous news of the endless permutations of the middle class: If the middle class is shrinking, is it because the lower class is growing, or the upper? It turns out that for the Chicago region, it’s both, with substantially higher growth among the lower-income. From 2000 to 2014, the percentage of lower-income metro Chicagoans grew from 23.6 to 27.4, a jump of 16 percent. Middle incomers dropped from 56.3 to 51.1, a loss of 9 percent, and upper incomers grew from 20.2 to 21.5, an increase of 6 percent.
These changes are actually less extreme than those in, for instance, the Minneapolis/St. Paul region, where the lower class grew by 22 percent, middle class fell by 11 percent, and upper class increased 12 percent.
The middle class population loss across major metros is striking:
According to Pew, looking back further to 1970 shows an even more pronounced shrinking of the middle class. For the entire country, the middle-income share decreased from 61 percent in 1971 to 50 percent in 2015. Over this nearly 45-year period, the share of the upper-income tier rose from 14 percent to 21 percent, and the share in the lower-income tier increased from 25 percent to 29 percent.
According to Census data, Chicago’s shift was even more extreme: The share of middle class families in metropolitan Chicago has declined from 72 percent in 1970 to just 47 percent today.
Pew points out the emergence of a distinct geographical pattern regarding which metropolitan areas had the highest shares of adults who were lower income, middle income or upper income in 2014. The 10 metropolitan areas with the greatest shares of middle-income adults are located mostly in the Midwest. Notably, Chicago metro is not on the list.
Other highlights: Chicago metro grew by 5 percent from 2000 to 2014, and the minority share of population jumped by 14 percent. Unpacking that further, African Americans dropped by 7 percent while Latinos grew by a whopping 32 percent. While those in the upper income tier grew by 6 percent, the share of the metro population with a bachelor’s degree or higher grew by 27 percent, and those with less than a high school diploma dropped by 38 percent. Clearly, the rise of those with high levels of education is not equating to a comparable rise in income across the region.
This may be due in part to the fact that our unemployment rate jumped a full 63 percent from 2000 to 2014, from 4.3 percent to 7.1, an increase second only to Los Angeles among peer metros:
Finally, Chicago metro’s income inequality rose 20 percent from 1999 to 2014. Pew uses the 90/10 ratio to determine the ratio of incomes at the top (90th percentile) versus the bottom (10th percentile) of the workforce. The region’s 90/10 ratio was 10.7 in 2014, meaning that 90th percentile earners made 10.7 times what 10th percentile earners did. While that’s substantially lower than the U.S. as a whole, which has a 90/10 ratio of 16, the OECD points out that most European countries have 90/10 ratios between six and eight.
Why does this matter? Research from Dabla-Norris et al., Cingano and others indicate that a struggling middle class holds back future economic growth, and Pew’s data indicate that regions with a larger middle class have lower income inequality. The more of a dumbbell shape our income patterns take—larger on low- and high-income ends of the spectrum and smaller in the middle—and the more separately we live by class, the harder it gets for our economy to fire on all cylinders.
Consider the picture this CityLab article paints, based on research by Li et al:
Metropolitan economies rely on labor of all kinds, often side-by-side, with high-end architects alongside plumbers, office towers near cab stands, and biotech inventors with security guards. But when low-wage workers pay an out-sized chunk of their paycheck just getting to work, or when suburban office parks locate beyond the reach of public transit, those inefficient patterns start to affect whole regional economies.
McDonald’s recently announced its planned move from suburban Oak Brook to the trendy West Loop. According to CBRE, more than 50 high-profile companies have relocated from the suburbs to the city since 2007. Will employers locating closer to transit and to areas with higher unemployment, whether city or suburban, help to reduce a downward pull on our economy? We’re keeping an eye on that through our study on the Cost of Segregation.
Up next: how changes to Chicago metro’s middle class have played out spatially.
To learn more about Chicago's middle class, read the other posts in the series.