Middle-income families shrink most in RI, Maine, studies say
By NBP Staff | February 15, 2016, 14:32 EST
Two New England states top the list of those where the middle class is declining, according to a study by 24/7 Wall St. published recently by USA Today.com.
The study, based on income earned before taxes by the middle 20 percent of earners in each state, ranked Rhode Island and Maine among the top five states feeling a middle income squeeze.
Overall, the study showed that middle-income household earnings fell 0.7 percent from 2000 to 2014 while the top 20 percent gained 3.7 percent. This despite the economic expansion that began in June 2009 and a drop in the national unemployment rate to just under 5 percent by January.
In the Ocean State, the divergence was more pronounced, with the middle households bringing in 3.1 percent less by 2014 and the top earners collecting 4.5 percent more, according to 24/7 Wall St. In Maine, it said the highest-earning households notched a 6 percent gain, while the middle-income group saw its take decline 2.2 percent.
The study pegged the 2014 middle-income household earnings at $55,414 in Rhode Island and $49,250 in Maine.
The trend goes back to the turn of the century, according to an analysis published by Stateline.org, a Washington-based unit of the Pew Charitable Trusts. According to its research, the number of middle-income households fell from 2000 to 2014 in every state but Hawaii, while median household incomes have dropped in all but four states: North Dakota, Oklahoma, South Dakota and Wyoming. All four had benefitted from a boom in oil production.
While the Stateline study shows just six states – Alaska, Delaware, Idaho, New Mexico, Utah and West Virginia – experienced more growth in the lower-income household group than in the upper category, even in those states where more families are counted as having moved above the middle than below, median incomes have fallen since 2000, after adjustment for inflation
In New England, the Stateline study parallels the 24/7 Wall St. data, showing Maine with a 5.1 percentage-point decline in the proportion of households ranked as “middle class,” to almost 47 percent, and Rhode Island with a 4.9 percentage-point drop since 2000, to 43 percent. At the same time, Maine’s upper-income group increased by 2.8 percentage points to about 18 percent and in Rhode Island, the top group grew by 4 percentage points to 21 percent.
In Massachusetts, the middle group shrank by 4.7 percentage points to almost 44 percent, while the upper-income proportion rose 3.4 percentage points to about 21 and the “lower class” ranks swelled by 1.3 percentage points to about 33 percent.
Stateline defined its “middle class” as households making between two-thirds and twice a state’s median income. Median incomes vary widely, from $39,680 in Mississippi to $73,971 in Maryland. In New England, Connecticut has the largest median, at $70,048 in 2014, followed by Massachusetts at $69,160. Maine and Rhode Island have the lowest.