The decline of the middle class and rise of income inequality have been at the heart of the nation’s economic storyline for years, and a new report attempts to quantify how those trends have hit Illinois.
Middle-income households, which in the early 1970s made up 59 percent of all households in Illinois, constituted just 49 percent of the state’s total during the past five years, according to the report from the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign.
Meantime, Illinois’ median household income among the middle class has grown very modestly over that period, to $80,800 in 2015 from $79,300 in 1980, adjusting for inflation. But high-income households have seen their median income jump 14.5 percent, to $192,900 from $168,500. The median pay for low-income households has barely budged, to $26,100 from $25,800.
Illinois faced a slightly steeper decline in its middle class than the national average because it had a greater share of middle-income households to begin with. Nationally, middle-income households shrunk from 56 percent to 48 percent over the past 40 years.
Measuring the middle class is challenging, the report said, in part because it isn’t clear how to define it given associations with education and occupation type. The report’s analysis measured middle class by income level, adjusted for household size. So households earning more than two-thirds of the state’s median income and less than double the state’s median income — between $43,000 and $130,000 — are considered middle class.
The shrinking of the middle class has come as the middle-income jobs that used to form its bedrock have eroded. In 1980, nearly 20 percent of middle-income heads of household were working in office and administrative support, and that declined to 15 percent by 2015. The sharpest decline has been in production, which includes manufacturing.
Health care has absorbed many middle-class breadwinners. In 2015, nearly 6 percent of middle-income heads of households were working in health care, compared with 3.4 percent in 1980. Education and business and financial operations also saw notable increases.
But the most occupational growth has been in service jobs with a range of salaries, including financial services at the higher end and food service at the lower end, leaving fewer options in the middle.
The report, authored by Robert Habans, a postdoctoral research associate, did not offer policy recommendations but did suggest how policymakers should think about policy with the objective of shoring up the middle class.
That includes policy that improves the quality of jobs, such as higher minimum wage or unionization, as well as policy that affects labor supply and demand, such as infrastructure investments to create jobs or education investments to improve the talent pool.
“In short, shoring up the middle means making bad jobs better, keeping good jobs good, and supporting the growth of the economy as a whole,” Habans wrote.