In big U.S. cities, the middle class is dead

American Dream

Probably no entity in American life has been scrutinized more than the middle class — they rise, they’re left for dead, they rise again, they die again, etc. It’s almost comical sometimes. But in reality, especially after the 2008 downturn, the middle class might be generally eroding. Typically, a good way to determine if that’s actually happening involves housing prices, affordability of housing, and the like. If you look at a couple of sources on that, though, it’s not so promising.

Start with this article from CityLab. It quotes a study from Trulia — we’ll get to that study in a second — that says that, across the 100 largest U.S. metros, 63 percent of homes are “within reach” for a middle-class family. (When you say “within reach” in this context, it’s relative to the city in question, as we’ll explore in a second.) Problem, though: among the 20 richest U.S. metros, only 47 percent of homes are “within reach.” (And San Francisco is 14 percent, which I wrote about once before.)

Now here’s the Trulia article and their methodology:

As in our inaugural middle-class affordability report, we calculated the share of for-sale homes on Trulia that are affordable to a middle-class household, based on whether the total monthly payment – mortgage, insurance, and property taxes – was less than 31% of the metro area’s median household income. (See note below.) Because we define “middle class” separately for each metro based on the local median household income, our affordability measure takes into account that a middle-class income is higher in some markets than in others.

If you use this 31 percent cut-off, here’s how things look in three U.S. cities:

Middle Class Home Affordability

Alright, so … Atlanta is a better bet for the middle class than San Francisco. Seems logical. There are some problems with basic social mobility in the American Southeast, but that’s a bigger topic.

Now look at this:

Middle Class Ohio

First thought? Damn, move to Ohio. Akron, Toledo, Dayton, Columbus, Cleveland all in the top 10. It’s the middle-class renaissance there! Kinda interesting, then, that it’s also the state that seems to decide most Presidential elections.

(Should be noted, of course, that this data comes from one source — Trulia — and thus you need to take some of it with a large chunk of salt.)

Now look at this:

Education Levels and The Middle Class

Basically, you pretty much need to be educated — because it can help you make more money — to live in some of these cities. If you’re HS or less in the Bay Area, about 3 percent of homes might be attainable for you. Even in Houston, which is probably one of the cheapest cities in America to make your way in, a high school diploma or less only means 1 in 4 homes is available to you (“within reach”) as a member of the middle class. Again, Cleveland and Atlanta are better bets in that context — but obviously they’re a bit of different cities than San Francisco and New York.

Inequality really is at a tipping point in America, honestly — and that might be eroding our trust in each other.

I’m not sure if I would go ahead and say the middle class is “dead” or anything, because I do think the “standard dream” of a house, 2 cars, 2 kids, all that — I do think that’s still attainable. But it’s clearly much MORE attainable in certain places, and these numbers will probably shift even more in the next decade or so. (In fact, this is where you should be working by 2022.)

Ted Bauer