The Shrinking Middle Class

Over the last few years, you have probably heard talk of the “shrinking middle class.”  Sabrina Tavernise from The New York Times  recently reported on a study conducted by Stanford University that takes a closer look at the rising income inequality in America. The study found that the portion of Americans living in middle income neighborhoods has declined significantly since the 1970’s.

Over the past four decades the map of prosperity in America has changed quite drastically, with larger patches of affluence and poverty and a shrinking middle. The study covered 1970 through 2007. In 2007, 44% of families lived in neighborhoods that were defined as middle income which is down from 65% in 1970. At the same time, the study found that in 2007 one third of Americans were living in poverty or affluence, compared to just 15% in 1970.

The shift involves more than just income. There is also increased residential sorting by income, with the wealthy flocking to the new exurbs and gentrified pockets in which lower and middle income families cannot afford to live. Our neighboring city, Greensboro, NC, experienced one of the largest increases in income segregation over the past decade.

Sean Rearden, author of the study, argues that these shifts have far reaching implications. Children raised in mostly poor neighborhoods have less access to high-quality schools, child care, and preschool. It also means that the prosperous have less interaction with people from other income groups, which jeopardizes the likelihood that they will support projects- such as parks, schools, and public transportation- that benefit the public good. There is also a growing gap in standardized test scores of rich and poor students and a growing gap in rates of college completion.

The full study can be found here.

At a time of growing concern over income inequality, this study raises a few questions. For example, does increased income inequality impede social mobility? What implications does income segregation have on schools and quality of education? Does increased income segregation matter? Should we do anything about it? Let us know what you think!