Middle Class in Colorado is Squeezed, SPA Researchers Find

Who is middle class in Colorado?  What can a middle class family in Colorado actually afford in terms of what is commonly perceived as a “middle class lifestyle” – home ownership, health care, retirement and college savings, a car, a vacation every now and then?  SPA faculty members Todd Ely and Geoff Propheter teamed up with the Bell Policy Center to answer some of these questions, and presented their preliminary findings at the April First Friday Breakfast.

The bottom line – about half of Colorado’s families fall within a commonly used definition of middle class, and of that group, typically only two-parent families where both parents are working in professional or managerial jobs can reliably afford the elements of a middle class lifestyle.

As moderator Scott Wasserman pointed out, the United States is “grappling with the issue of income inequality like we never have before,” and it feels like income inequality is “starting to settle in.”  Dr. Ely shared that in Colorado, a two-parent family with two children is defined as middle class if the family income is between $68,000 and $206,400; a single parent with two children is middle class if the family income is between $28,467 and $85,400.

Colorado’s middle class is shrinking, from 53 percent of the population in 2000 to 49.7 percent in 2016, while the upper class and lower class grew about 2 percentage points each during the same time.  SPA research found that for two-adult, two-child families, only those at the upper range of middle class can afford the middle class lifestyle; for those at the lower end, particular those with young children, income falls 22 percent short.  This gap is even more pronounced in single parent families – Dr. Ely and Dr. Propheter found that no families within the middle class income range could afford the middle class lifestyle.  Obviously, Dr. Propheter noted, families are making tradeoffs to make up these gaps, choosing which expenses to give up in order to meet the rest of their expenses.  This could range from giving up small luxuries or regular vacations all the way to failing to save for retirement or giving up a dream of homeownership.

Some possible culprits in the middle class squeeze include huge increases in costs of the elements of a middle class lifestyle compared to more modest increases in family income.  For example, health care costs increased 70 percent between 2000 and 2016, and the cost of higher education shot up an amazing 85 percent.  During the same time, family income in two-parent households rose 20 percent, and 17 percent for single-parent families.  The increase in higher education costs are particularly notable when compared with data indicating that wage earners are likely to need a four-year college degree in order to qualify for the professional and managerial jobs needed to stay in and rise out of the middle class in Colorado, and this is particularly true where one parent chooses to stay home with children.

As both panelists and audience members noted, the data on Colorado’s middle class has important implications for Colorado policies and spending priorities, particularly in the areas of K-12 and higher education, health care costs, child care and elder care, and housing options.

Click here for a link to the audio recording of the event. The full report will be released in early summer 2018.



Categories: Events, Uncategorized

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