Op-Ed: America’s middle class is in trouble, but not in Utah

Written by: Peter Reichard

The nation’s middle class has gradually been shrinking. Fifty years ago, more than 60% of Americans were in the middle class. Now the percentage is less than 50%. It’s worth noting that the upper class grew during that time. But so did the lower class. In short, our nation is becoming increasingly stratified. This is particularly evident when we look at America’s major cities and the urban-rural divide.

A robust middle class provides a pipeline of human capital for employers to thrive, entrepreneurs for the next generation and a consumer base for goods and services. It often means lower demands on the public sector, from health coverage to social services. It may also infuse a community with a sense of well-being.

The good news is, Utah has a remarkably strong middle class. By the latest numbers, Utah’s middle-class households stand at 54% of the total. That’s well ahead of the national average of 47%. It’s also ahead of every other state. And the second- and third-place states are our neighbors, Wyoming and Idaho, at 52%.

Those are among the findings of a new Utah Foundation report, “The Soil of Common Ground: Social Cohesion in Utah.” It’s the latest in our Utah Social Capital Series, with previous installments focused on civic engagement, social trust, community life and family life. The latest report looks at various measures of social cohesion, but the measure of our middle class is probably the most significant.

We can peg Utah’s strong middle class to its economy, but economic growth does not necessarily lead, in the long run, to a robust middle class. It is true that poorer states in the deep South, West Virginia and our neighbor New Mexico are among the most economically stratified. But the same is also true of economic powerhouses like California and New York. Their middle-class households are well below 50% of the total.

As Utah continues its rapid growth, it will have to step gingerly to avoid becoming another place of haves and have-nots. That begins with education. More of our young people need to obtain the credentials to fully participate in the economy and achieve middle-class status. Whether it’s a doctoral degree or a skills certification, the difference between attainment and nonattainment often equates to the difference between joining the middle class or not. The impacts ripple across our economy and our society, and can echo through generations.

For this reason, the Utah Foundation launched a series of reports on educational attainment last year with a look at how our post-secondary institutions can boost attainment. Two more studies are underway: One will examine how our K-12 systems can broaden students’ horizons beyond a high school education; the other will explore the opportunities in post-secondary alternatives to four-year degrees.

Another key area of concern is housing affordability. Homeownership and the wealth creation it imparts has long been a key feature of American middle-class life. Recent Utah Foundation research found that the median homeowner net worth is $255,000, while the median renter net worth is $6,300. However, in 2020, the share of renters priced out of Utah’s median-priced home jumped to 73%, from 63% the year before. Rapid population growth, the nation’s lowest supply of housing for sale, inflation, supply chain issues and rising interest rates only complicate matters.

To expand the entry-level homeownership opportunities, local governments will have to continue to expand their playbooks to open the way for smaller scale single-family homes — perhaps with smaller lot sizes and relaxed parking requirements — as well as opening the way for other house-scale building types. We are already seeing a surge in townhouse development and other efforts to increase the overall housing supply.

Finally, as the Utah Foundation has documented, the great telework experiment holds the promise of opening economic opportunities to a broader geographic range in Utah. Through telework, more middle class Utahns may find it feasible to cash their paychecks in rural areas. Those are the very areas most in need of an economic spark — and they also happen to offer some affordable homeownership opportunities.

 

This op-ed was originally published in the Deseret News: https://www.deseret.com/opinion/2022/3/29/23000029/utah-middle-class-strongest-in-nation-challenges-in-education-home-affordability

 

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