The nation’s middle class is shrinking. Between 1970 and 2000, middle-class neighborhoods in the 100 largest cities in the nation dropped from 58 to 41 percent, outstripping the corresponding drop in mid-level incomes from 28 to 22 percent. While 55 percent of low-income families lived in middle-class neighborhoods in 1970, only 37 percent did in 2000.
In addition, a comprehensive study by the Brookings Institution ? the Living Cities Census Series1 ? found that the middle-income profile of central-city neighborhoods shrank from 45 percent to 23 percent in the same time period. Meanwhile, even suburban neighborhoods shrank in their percentage of middle-class families, slipping from 64 percent in 1970 to 44 percent in 2000.
The overall trend shows that the middle-class is not just moving, it’s dwindling, and neighborhoods are increasingly likely to tip toward being either very high or very low income in both cities and the near suburbs.
In part, this is an unintended paradox of a robust economy. The housing market, for example, has been booming until recently, and high prices have erected a barrier to many middle-class families. In New York City, the number of apartments that might be rented by the average firefighter or police officer dropped by 205,000 between 2002 and 2005, according to The New York Times.2
Being middle class has different meanings in different places. It covers a wide range of household incomes, from about $20,000 in Miami, to $40,000 in New York and Boston, to $60,000 in San Francisco. But that class of family is shrinking, and neighborhoods that are predominantly middle-class are disappearing from the cities and their nearest suburbs.
For example, a recent survey by the Public Research Institute at San Francisco State University reported that families there that earned more than $50,000 were twice as likely to leave the city as those with lower incomes.3 More than 50 percent of that city’s firefighters, police officers, emergency medical personnel, nurses, and teachers live outside of San Francisco, where the median home price has reached a daunting $780,000.
And it’s not just large cities that are experiencing middle-class flight. A recent survey conducted by the Portland Press Herald4 newspaper in Maine showed that less than 12 percent of all housing built there since 2002 was suitable for middle-class income levels. Homes priced below $250,000 were becoming rare. Instead, developers in many cities are building expensive condos to attract well-off Baby Boomers and empty-nesters.
For example, in Portland, a $75 million project is going up on the eastern waterfront that will include 75 luxury condominiums, a boutique hotel, and an office building. Nearby is the Ocean Gateway cruise ship terminal.
At half a million dollars each, those condos are a natural attraction for young professionals, self-employed people who can work anywhere, and Baby Boomers whose hard work and smart investments have left them wealthy, healthy, and looking for an ideal place to have fun.
This combination of factors has proved a winning formula for developers and buyers alike, but one of the results is that it has pushed the middle class out, even while some of the older and more vulnerable middle-class areas have turned into low-income neighborhoods.
The shrinking and shifting of the urban middle-class population is one of many cyclical phenomena brought on by demographic forces, such as the sequential life stages through which the Baby Boom generation has been passing since just after World War Two. It’s easy to underestimate the powerful influence this generation has on every element of society. Baby boomers, numbering almost 80 million, represent almost a third of the U.S. population, according to a study released by the MetLife Mature Market Institute.5
Therefore, the growth of upper-class neighborhoods to the exclusion of middle-class ones simply represents the upward economic drift of the Baby Boomers. The explosion of the middle-class beginning in the 1950s was accelerated by the Baby Boomers. It continued as they entered the job market in the ‘60s and ‘70s and began buying houses. As their household wealth increased, they moved up. This latest upward move represents the single largest movement of personal wealth in the nation’s history.
Given this trend, we offer the three forecasts that follow:
First, the trend toward a shrinking middle class will not reverse itself in the near future, simply because there is no population as large as the Baby Boomers to fill out the ranks that they vacate. On the other hand, it’s likely that as the Millennial generation matures, it will increasingly create and occupy middle class neighborhoods in cities once again. The number of those neighborhoods, while not likely to return to previous levels in absolute terms, will come back as a percentage of all neighborhoods.
Second, in the meantime, the polarization of cities into rich and poor neighborhoods will pose important policy issues for city governments and other organizations. The middle class is the broad base of our consumer economy, and while the movement of the middle class doesn’t threaten the national economy, it may have a local impact in certain cities. San Francisco, at the highest end, seems particularly vulnerable. Better planning to ensure access to services will require some forethought on the part of civic leaders.
Third, savvy entrepreneurs will begin moving in to salvage run-down neighborhoods and return them to the middle class.
In the same way that builders can take over a cornfield to build a middle-class community in the exurbs, they also reclaim troubled urban areas and realize a profit from families who would like to return to the city. References List : 1. To access The Brookings Institution’s “Living Cities Census Series,” visit their website at: www.brookings.edu 2. The New York Times, July 23, 2006, “Cities Shed Middle Class, and Are Richer and Poorer for It,” by Janny Scott. ⓒ Copyright 2006 by The New York Times. All rights reserved. 3. To access the Public Research Institute’s survey “Getting Behind the Headlines: Families Leaving San Francisco,” visit their website at: www.deyf.org 4. Portland Press Herald, November 20, 2005, “Housing Imbalance May Hurt City,” by Kelley Bouchard. ⓒ Copyright 2005 by Blethen Maine Newspapers, Inc. All rights reserved. 5. To access MetLife’s “Demographic Profile of American Baby Boomers,” visittheir website at: www.metlife.com
