Other Voices

The middle class is being gutted in Texas as income shifts to wealthy

Despite lower unemployment rates and minimum wages that should help lift more people out of poverty, middle-income households are not getting ahead.
Despite lower unemployment rates and minimum wages that should help lift more people out of poverty, middle-income households are not getting ahead. AP

Gov. Greg Abbott’s 2016-2017 budget plan praises the state’s “unparalleled” successes in leading the nation in both job creation and economic opportunity.

Likewise, President Barack Obama’s final State of the Union address reflected on how the U.S. economy stabilized and grew during his two terms as president.

Despite this mostly rosy economic news, middle-income households are struggling and will continue to face significant economic challenges.

The good economic news is that the U.S. unemployment rate remains at 5 percent, and more than a quarter of all states raised their minimum wage for 2016.

The Texas unemployment rate has been lower than national averages for about nine years, and unemployment rates in cities such as Austin and Dallas are at historic lows.

Despite lower unemployment rates and minimum wages that should help lift more people out of poverty, middle-income households are not getting ahead.

A recent Pew Research Center report shows that for the first time in almost 45 years, middle-income households (who earn between $42,000 to $126,000) are now less than 50 percent of total U.S. households.

Rich households received 49 percent of total income in 2014. That is a dramatic jump from the 29 percent that they earned in 1970.

During this same period, the share of total income for middle-income households dropped from 62 percent to 43 percent.

This trend probably will continue. Most job growth will come from occupations that pay relatively low wages, according to recent data assembled by the Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis.

Many jobs that have helped propel workers into the middle class, such as postal clerks, and middle-income jobs that involve routine or repetitive tasks, such as executive secretaries, bookkeeping, accounting and auditing clerks, will continue to shrink during the next 10 years.

On the other hand, jobs that pay low wages, such as home health aides or retail and fast food workers will proliferate.

What does this mean? It means that the dwindling of middle-income jobs along with the proliferation of lower-income jobs has gutted the middle class.

It is creating an economically polarized society. And this polarization can be found in Austin, Dallas, Houston and San Antonio — four of the 10 most economically segregated large cities in the country.

So what should Texas do?

State officials have implemented economic development plans that have encouraged businesses to create more jobs for Texas workers. But if Texans want to maintain a middle class, we will need more than jobs that pay at or slightly above the minimum wage.

To help Texas workers achieve the middle-class goal, Texas businesses must provide middle-income jobs.

Mechele Dickerson is the Arthur L. Moller Chair in Bankruptcy Law and Practice at the University of Texas at Austin School of Law.

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