Prosperity Watch Issue 61, No 3: Middle class decline in North Carolina metro areas

May 17, 2016
The middle class is declining nationwide, and in North Carolina that decline is primarily increasing the numbers of low-income adults, not the wealthy. From 2000 to 2014, the number of adults in middle income households in North Carolina declined by 4 percentage points, the fourth greatest decline, after Michigan, Georgia and Indiana, in the nation. The loss of a middle class is being driven by declines in median household income, growing income inequality and the loss of jobs in industries such as manufacturing, for example. 
Deeper analysis released last week by the Pew Research Center provides even greater insight into the country’s declining middle class by looking at metropolitan areas. Of the 10 metropolitan areas in North Carolina in the analysis, all saw a decline in the middle class along with an increase in the number of adults considered low-income over the same period. Just one metro, Fayetteville, saw growth in the number of upper income households but alongside growth in the number of low-income adults.  
Three metro areas in North Carolina — Goldsboro, Hickory-Lenoir-Morganton, and Rocky Mount — saw the steepest decline of their middle class among all 229 metro areas analyzed in the country. 
A declining middle class generates challenges for the broader economy, particularly when coupled with a growth in low-income households, as consumer demand for goods and services declines, wages remain depressed and fewer jobs get created.  Indeed, recent research into the patterns of economic growth in the United States have found that greater equity in economic outcomes across groups is linked to regional prosperity.  Moreover, economists have found that a strong middle class is correlated with employment and output growth supporting greater regional prosperity.
North Carolina’s metro areas have long been portrayed as the beneficiaries of the state’s growing economy but this latest research suggests that the picture is far more complicated. And that failure to address the decline in the middle class in metro and non-metro areas will hold back regional economies and the state’s economic potential to deliver opportunity to all.