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Middle Class in Major U.S. Cities is Shrinking, Pew Study Says

In cities across America, the middle class is hollowing out.

A widening wealth gap is moving more households into either higher- or lower-income groups in major metro areas, with fewer remaining in the middle, according to a report released Wednesday by the Pew Research Center.

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In nearly one-quarter of metro areas, middle-class adults no longer make up a majority, the Pew analysis found. That's up from fewer than 10 percent of metro areas in 2000.

Pew defines the middle class as households with incomes between two-thirds of median income and twice the median, adjusted for household size and the local cost of living. The median is midway between richest and poorest. By Pew's definition, a three-person household was middle class in 2014 if its annual income fell between $42,000 and $125,000.

Middle class adults now make up less than half the population in such cities as New York, Los Angeles, Boston and Houston.

That sharp shift reflects a broader erosion that occurred from 2000 through 2014. Over that time, the middle class shrank in nine out of every 10 metro areas, Pew found.

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"The shrinking of the American middle class is a pervasive phenomenon," said Rakesh Kochhar, associate research director for Pew and the lead author of the report. "It has increased the polarization in incomes."

The squeezing of the middle class has animated this year's presidential campaign, lifting the insurgent candidacies of Donald Trump and Bernie Sanders. Many experts warn that widening income inequality may slow economic growth and make social mobility more difficult. Academic research has found that compared with children in more economically mixed communities, children raised in predominantly lower-income neighborhoods are less likely to move into the middle class.

Nationally, the proportion of middle class adults shrank to 51 percent in 2014 from 55 percent in 2000, Pew found. Upper-income adults now constitute 20 percent of the population, up from 17 percent. The lower-income share has risen to 29 percent from 28 percent.

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Yet the changes have been much more dramatic at the local level. There are now 79 metro areas in which the proportion of adults in upper-income households equals or exceeds the national average of 20 percent. That's more than double the 37 cities in which that was true in 2000.

The report studied 229 of the largest U.S. metro areas, which constituted 76 percent of the U.S. population.