In cities across America, the middle class is hollowing out as more households move into either higher- or lower-income groups. New Orleans, Lafayette and Baton Rouge were among cities in a report that saw the biggest gains in upper-income residents from 2000 to 2014.
The widening wealth gap means fewer households remain in the middle, the Pew Research Center report said.
According to Pew, Lafayette and New Orleans saw an overall gain of 13 percentage points in the share of adults who were upper income. Baton Rouge had an 11 percentage point gain. The national average went up by 1 percentage point during the 14-year period.
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.
Walter Lane, an associate professor of economics at the University of New Orleans, notes that while the percentage of upper-income residents was increasing in the Crescent City, average income has been “pretty much consistent since 2008.” While there was growth in higher-paying energy and health care sectors, there has been a lot of activity in hospitality and tourism, which tend to pay less. And some sources of traditional middle-class jobs, like those at the nearby Stennis Space Center and the now-defunct Avondale Shipyards, have seen cutbacks.
“The rest of us aren’t keeping up,” Lane said. “We’re losing middle-income jobs, and the upper end is gaining.”
Pew notes that the cities that had the largest percentage gains in upper-income jobs are heavily dependent on the energy industry, such as Odessa and Midland, Texas, which were tied at the top of the list with a 26 percentage point gain. Baton Rouge also has benefited from a boom in petrochemical construction, while Lafayette has seen more health care jobs and a burgeoning tech sector.
The energy sector has seen big hits since 2014 because low oil and natural gas prices have drastically reduced drilling activity.
Middle class adults now make up less than half the population in such cities as New York, Los Angeles, Boston and Houston. Forty-nine percent of New Orleans and Lafayette households were middle class in 2014, while Baton Rouge was 52 percent middle class.
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.
That sharp shift reflects a broader erosion that occurred from 2000 through 2014 when the middle class shrank in nine out of every 10 metro areas, Pew found.
“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.
There are now 79 metro areas in which the proportion of upper-income households equals or exceeds the national average of 20 percent, including Baton Rouge, Lafayette and New Orleans. That’s more than double the 37 cities in which that was true in 2000.