The Biggest Loser: Wisconsin’s Middle Class Shrinking Faster than in Any Other State

Thursday, March 26, 2015 at 12:59 PM by

The middle class is being hard hit all over the country, and Wisconsin’s middle class is taking the hardest hit of all. Wisconsin’s middle class, once nearly the strongest in the country, has shrunk more than in any other state, according to a new report.

The share of Wisconsin households considered middle class fell to 48.9% in 2013, down significantly from 54.6% in 2000. Middle class households are those that earn between 67% and 200% of the state’s median income, according to the definition laid out in the report by Pew Charitable Trusts. That would mean that in 2013, Wisconsin households with incomes between about $34,000 and $103,000 would be considered middle class.

Wisconsin isn’t alone in losing its middle class. In fact, all 50 states saw the size of their middle class decline between 2000 and 2013. But Wisconsin’s loss was the largest, with about 1 out of every 10 of its middle-class households leaving the middle class during this period. That translates to a drop of about 220,000 households in Wisconsin’s middle class.

The weakening of Wisconsin’s middle class is especially alarming because a strong middle class has long been one of Wisconsin’s strengths. In 2000, only one state – Utah – had a bigger middle class than Wisconsin. But by 2013, eight states had larger middle classes than Wisconsin, including the nearby states of Iowa and Nebraska.

Wisconsin household earnings have also fallen faster than in most other states. Between 2000 and 2013, the income for a typical Wisconsin household fell by $8,900; only four states had larger declines in in household income over that period measured in dollar amounts. Wisconsin’s rank for median household income fell from 18th to 24th.

There’s no single reason why the decline in economic security for Wisconsin middle-income households has been so much greater than in most other states. One contributing factor is that Wisconsin’s population is growing more slowly and is on average older than the populations of many other states. Also contributing is the decline of manufacturing in the U.S.; Wisconsin’s economy relies more heavily on manufacturing than nearly any other state.

Another factor that adds to the alarming drop in Wisconsin’s middle class is the declining share of Wisconsin workers that belong to unions. Unionized workers earn more in wages and other compensation than non-union workers who are otherwise the same, and the higher wages help push additional households into the middle class. Union workers are also better off than their counterparts with regards to health insurance, retirement, and paid time off.

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The share of Wisconsin workers belonging to unions has declined faster in Wisconsin than in most other states – the same pattern that holds true for the size of the middle class and for median household income. In 2000, 17.8% of Wisconsin workers belonged to a union, dropping to 12.3% in 2013. Only five other states had bigger percentage-point declines, and Wisconsin’s ranking has dropped to 19th in 2013, down from 10th in 2000.

There’s plenty of bad news here about the economic security of Wisconsin’s families. But there is also some good news mixed in: Wisconsin’s middle class, even in its weakened state, is still stronger than in most other states. It’s not too late to make investments in families and communities that will help the middle class thrive and strengthen the foundation of Wisconsin’s economy. By making sure that Wisconsin households have access to high-quality schools, affordable higher education, and health care when they need it, we can help Wisconsin’s middle class grow and prosper.

Tamarine Cornelius

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