The middle class is shrinking and in Chicago it’s almost gone | Hacker News Reader

The middle class is shrinking and in Chicago it’s almost gone

wbez.org

74 pointsSQL221960 comments

We should be careful with maps like this of Chicago, since the time period we're talking about (1970-) coincides with the phasing out of redlining, which kept black families out of white stronghold neighborhoods. It could just be that what you're looking at is the gentrification of the north side and "white flight" into the suburbs.

Also, the numbers for this map don't sync up with the "rich blocks, poor blocks" census maps of Chicago. For instance, these maps appear to show Portage Park and Jefferson Park as low-income neighborhoods; that's not what the 2010 census map shows (substantially above the state median!), nor what anyone would expect if they were familiar with those neighborhoods, which are both middle class enclaves. In the 2010 census maps, as soon as Austin gives way to Belmont-Cragin, we're back into middle class neighborhoods on the west side.

This map also has Mt. Greenwood as a poor neighborhood. Unless we suddenly stopped paying cops and firefighters, that seems pretty unlikely. Someone else familiar with the city got an idea of what's going on here?

My understanding (however much it is relevant) is that Chicago is still one of the most segregated large cities in the country. So, the end of redlining/contract housing/etc. did not mean the end of segregation and its effects.

The linked blog post is better. Reading through the methodology it seems this is just white flight. At least without representing the full regional map that would be the easiest conclusion.

They also don't mention the closing of the US Steel plants in this article, even though for the time frame they're discussing it was probably the single most important event for the south side middle class.

Hmm, following the link to look at more charts of the underlying data I'm confused about how to interpret this.

First, the definition of "middle class" they're using is literally average Chicago income, not fixed to some inflation adjusted amount or compared to the U. S. as a whole. I didn't see at a glance if that average income changed over the time. If the average income rose, but the distribution changed, that's not necessarily the middle class being "almost gone".

Also, there's a lot on uncontrolled confounders here. Age is a big one. It mentions that half of census regions saw their average income decline by 20% but that of those regions the majority of people there are under 19 (!).

So one interpretation of the data could be that the city as a whole got richer but a few small areas stopped having kids.

If the modern day poor are living an equivalent life style to the middle class from 50 years ago is that really a problem? That’s what part of this article seems to describe. Also would be interesting how much of this is attributable to the rise in prevalence of two income households. 2x a middle income would be considered wealthy by the measure used in this study

>If the modern day poor are living an equivalent life style to the middle class from 50 years ago is that really a problem?

If the middle class have largely collapsed into the poor, and the poor now live as the middle class did - that implies that for the formerly middle class there has been no growth in fifty years.

I don't understand where you're asserting the article says that. The fact that neighborhoods whose per capita income was around the middle in 1970 are in the lower quintiles now does not mean that the 1970 middle class and the 2017 lower class have "equivalent lifestyles." It means the neighborhoods are poorer.

They literally outline a house that has changed occupants (white/middle class to Latino/lower class) but the living/working situation was the same.

You may have better car and TV than middle class from 50 years ago BUT if small emergency expense puts you in red you are not living middle class lifestyle.

Remember to blame theire character, vices and genetics for a full retro aristocratic statement.

It is a problem, especially given the context of a startup accelerator. The middle class are the core of a modern economy. People with enough money to spend on luxuries. With enough money to support multiple competing luxury products in many different markets. With the financial security to change jobs and move. With the ability to acquire enough capital to pursue an education or their ideas (e.g. into new startups).

While people may be living equivalent lifestyles it's through the consolidation of core needs and improvements in efficiency (that were never passed onto workers as it happens, which is part of why the middle class is collapsing). But importantly these were applied to what used to be luxuries. If there is no one around to purchase the luxuries in bulk how will we will we ever innovate their production to a scale where they become cheap. If the market is not big enough to sustain competitors, how will we ever innovate on features. If people with ideas to change the world they live in don't have the capital to try it where does that hobbyist innovation come from.

I could go on and on, but the key fact is that the middle class are the primary consumers of everything. Additionally, nearly half of the tax burden is met by the middle class (with the other half being mostly corporate taxes). Suffice it to say the middle class is the linchpin to modern economies.

> If the modern day poor are living an equivalent life style to the middle class from 50 years ago is that really a problem?

It wouldn't be if that were the case but it doesn't seem to be. Middle class 50 years ago usually meant raising kids in a house on a single income, something that few can do today. We might have more stuff and more entertainment options, but that's not what matters.

How is the middle class in the US in general? This is completely anecdotal and based on random strangers on the internet, so it may be wrong, but Americans seem more careful with their money today than they did 15 years ago.

I buy a lot of board games, and I’ve noticed how discussions on $100 kickstarters have started being about how it could break someone’s budget. I’m personally part of the Scandinavian middle class, and a hall mark of that, is that you can spend $100 on something silly and not worry about it.

It’s extremely poor data of course, but it’s something I just never saw 15 years ago.

The article's title = "The Middle Class Is Shrinking Everywhere — In Chicago It’s Almost Gone"

Scandinavian middle class is not quite so uniform. Norweigian is considerably more wealthy than Swedish. I would guess Danish inbetween though closer to Swedish. I actually guess you are Norweigian!

Norwegians are in a league of their own, that’s true, though it’s more their society that had money and not private citizens as such. They generally also have rather high prices on everything.

I’m Danish though.

The article says:

In 1970, 61 percent of Americans belonged to the middle class, said Kochhar, “a clear majority.” Using Pew’s methodology, that figure now hovers around 50 percent nationally.

Indeed there are increasing number of warnings, articles, and studies saying that middle-class is shrinking. And it is obviously very hard to understand it if you are not part of it yourself. Probably much harder to find anyone agreeing with that if you post it to a tech/engineering focused community.

But we should not ignore these warnings.

This [1] is a study I read some time back that broke down the numbers. The paper was focused on the chiseling out of the middle class, as is this one. For instance in 1979 the middle class controlled 46% of all income, and the upper/rich classes controlled 30%. Today (well at least today as of 2014) the rich and upper class control 63% with the middle class left with 26%. There's even been a chiseling out of the middle class as a whole declining from 38.8% of society to 32% of society.

But the eye opener is this. This is the change in the size of each economic group between 1979 and 2014 as a percent of the total population:

- Rich: 0.1% -> 1.8%

- Upper Middle Class: 12.9% -> 29.4%

- Middle Class: 38.8% -> 32%

- Lower Middle Class: 23.9% -> 17.1%

- Poor or Near-Poor: 24.3% -> 19.8%

Since statistics like this are certainly subject to biased interpretation and 'massaging', this [2] is a wiki section on the political stance of the Urban Institute. In any case though the paper is very readable and methodology very transparent. I found it all eye opening to the point that it actually changed my worldview. America is doing something very right economically. Note the increase in the upper middle class is more than double the decline in the size of the middle class meaning in that time period you also saw people moving from poor or lower middle class to upper middle class.

I'd hypothesize that what you're seeing is simply less of a bubble. 15 years ago the internet was much more of a luxury and the individuals using it were reflective of that. Now it's ubiquitous and the class distributions are much more balanced.

[1] - https://www.urban.org/research/publication/growing-size-and-...

[2] - https://en.wikipedia.org/wiki/Urban_Institute#Political_stan...

> For UIC to consider a census tract middle income, the average per capita income there had to fall between $28,712 and $43,068.

What a hilariously narrow definition of “middle class”. That’s roughly $14.35 to $21.53 per hour.

This entire analysis is a waste of time.

Is the underlying data available? I’d love to take a crack at producing some better visualizations.

I suspect they were using the data from here [1]. Quite well organized and easy to play with, even has numeric indexing of the various areas so you can mix and match the data easily!

[1] - https://www.chicago.gov/city/en/depts/cdph/provdrs/health_da...

It's very obvious to me that the largest American cities are built for the very wealthy and the very poor. If you can afford to move out you can greatly increase your quality of life elsewhere.

In the 1970's crime spike in many American cities, and the 'burbs' became a real aspiration. The middle class simply moved out.

American cities have mostly 'business cores' anyhow, with big banking buildings, not like in Europe where they're pedestrian and have homes.

In some cities, there's been a renaissance of urban living and people moving back in since the 2000's, but it depends on the city.

My guess is that 80% of what's going on here is just that: demographic migration.

What we need is greater Chicago data and probably statewide as well.

I suspect you'll find the 'exaburbs' doing really well.

> A city census tract was considered “middle income” if its average per capita income fell between 80 and 120 percent of the metro-wide average for that year

The "middle class" term should be replaced in our language with something more concrete. It's not even a class after all. It's just an arbitrary label that doesn't have any useful meaning.

In San Francisco, you actually have the new housing developments pay for the construction of Below Market Rate units. This makes new housing even more expensive and effectively prices out the middle class. The lower class can buy BMR units tho.

Moreso, high income and low income have both decreased as well. Instead there's been large gains in "very high" income, and "very low" income. Other categories have essentially evaporated.

Just did taxes. Middle class and bill went up significantly due to completely destroyed deductions limit.

Meanwhile people I know who make far less are getting great refunds and my rich friends don't notice anything different personally but their businesses are all saving money.

I know the original article provides some data in terms of what the "classes" are.

It would be nice to have some DEFINITIVE numbers that says what the class ranges are.

It seems like a moving target, and subject to wide interpretation.

What salary ranges constitute poverty? middle class? upper-middle class? upper class? insane 1%?

Is there even anything definitive to point to for these numbers?

Chicago likely has harsh zoning laws that raise the cost of housing and also imposes steep taxes for not-great public services (https://www.illinoispolicy.org/study-illinois-home-to-highes...). Should it be any surprise that the middle class is moving to Phoenix, Austin, Dallas, Atlanta, and Florida?

Perhaps we ought to lower the cost of living (https://www.econlib.org/yimby/) in Chicago, along with other cities like New York and Boston.

I agree that’s likely true for New York and Boston (and San Francisco) but Chicago is actually fairly developer friendly and ok with density.

I think Chicago’s taxation is the problem. The taxes are the highest in the nation and have scared off the middle class.

Not only are they the highest, they have to keep going up for the next few decades due to the structural debt of the city and the state.

due to the structural debt of the city and the state.

That's a very soft way of saying "we have a super, mega, ridiculous pension crisis sucking the city dry"

Which taxes are you referring to? Chicago's total tax burden, including property taxes, is lower than most East Coast cities, and the state is 8th, not 1st, in statewide tax burden. Doesn't NYC, for instance, have much higher taxes than Chicago?

They've transitioned into the Pension Class.

There is one very key issue here that is often overlooked. Here are two datums. The first [1] is Chicago community areas by per capita income. The second [2] is the same areas by fertility rate. There is an extremely strong correlation between these two datums. This holds everywhere from our world at large, to individual countries, to even community areas within an arbitrary city in the US. The areas with the lowest fertility rate is "Loop" with a fertility rate of 24.3 and a per capita income of $65,526. The area with the highest fertility rate is South Lawndale with a fertility rate of 99.6, more than 400% that of Loop. And they have a per capita income of $10,402.

While there may be some exceptions, they are indeed the exception. This holds true everywhere. These [3] are data for the US as a whole contrasting fertility vs income. Once again those earning less than $10,000 have a fertility rate more than 20 points higher (150%) the rate of those earning $200k+ per year. And there is a disconcertingly smooth gradient in between. As an aside there are also strong links between fertility and low education and high religiosity as well as low income.

Think about what this means for each generation of children. An ever larger portion of children end up coming from these families with low income, low education, and high religiosity. And now this even larger portion of society will go on to spread their genes in a comparable way meaning you'll see an even higher chunk of children from the next generation coming from these groups. Poverty gets turned into a virus. Bringing people out of poverty might be a solution if not for the fact that then when people emerge from poverty, they stop having as many children.

And another issue here is that fertility rate understates the issue! When one group has the same number of children but has them younger, this has a direct effect on 'real' fertility rates. Imagine there are two groups with an identical fertility rate. However, one has children at 15 years of age on average, and another on 30 (using these numbers only for convenient math). By the time the 30 group has had their child the 15 group has had a child, and that child is now also having a child! You have the exact same fertility rate on paper, but in terms of population impact the young group has a 100% greater fertility rate.

Ultimately people who can in no way expect to be able to provide even a half decent upbringing for children need to stop having so many children. At the same time people who actually can afford to help provide a great life for a new generation need to stop being so self centered and do just that. Until that happens what do people expect to see? You're going to see poverty spreading rapidly even if it was holding completely level simply because you'll see more new people in poor families.

Keep in mind the twisted nature of exponential growth. If you have a population of 10,000,000,000 with a fertility rate of 2 and then a population of 10 with a fertility rate of 4, that population of 10 will become the majority and in the longrun approach becoming 100% of the population. You cannot overstate the relevance of fertility rates if you at all care about socioeconomic issues.

[1] - https://data.cityofchicago.org/Health-Human-Services/Census-...

[2] - https://data.cityofchicago.org/Health-Human-Services/Public-...

[3] - https://www.statista.com/statistics/241530/birth-rate-by-fam...

I feel like this has been the case for a long time, though, maybe forever. I recall the stereotype of the Irish Catholic family, for one.

What's everyone's opinion of Andrew Yang?

Is this not the goal? Everyone seems to want this. Reduced taxes for the rich. Deregulation. A better "business environment" due to "small government". The continuation of employer-provided healthcare. Stricter intelectual property laws. Ever single domestic policy choice of late seems determined to do this. Middle america should be happy. They keep voting for this stuff.

The fact that the system is routing around democratic processes to serve the interests of the wealthy is a feature, not a bug: the entire "objective function" that capitalism optimizes is weighted according to wealth.

Chicago is anything but a "small government" city. Chicago (and Illinois) is very much a "big government" city, so I don't understand your criticism.

I don't know where you hail from, but what you so snarkily describe is not happening...at all. Taxes in the US, at all levels, are going up as evidenced by the continual rise in tax revenue collected by virtually all levels of government.

There has never been more regulations placed on businesses that deliver middle class wages. Trump may have rolled back a handful of redundant regs, but that's just a finger in the dike. Healthcare costs and costs of coverage continue to geometrically increase because of government interference. IIRC, employer-provided healthcare may even be diminishing in some fashion. Not sure.

As for IP laws, I'm not sure how you're relating that to the collapse of the US/Western middle class, but I'm sure you have a reason to mention it.

> Taxes in the US, at all levels, are going up

https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_Unite...

Your factoid, indicating that 'a specific threshold of cap gains tax' has gone down, does not negate the commenters point.

Cap gains is only one kind of tax, moreover, the 'top rate' is just one factor in it.

Overall - tax receipts as a % of GDP have roughly been steady [1] or going up a little bit.

(Hint: tax rates going up or down don't mean that tax receipts go up or down in unison. Lower taxes could possibly mean more tax revenue etc.)

[1] https://en.wikipedia.org/wiki/Hauser%27s_law

As for Chicago, there might be specific factors.

My unscientific hunch is that the middle class moved out, the crappy neighbourhoods expanded, and some neighbourhoods were taken over by migrants from poorer countries who don't have access/qualifications for higher skilled jobs.

Essentially the same story as many cities, without maybe the 2000's renaissance we've seen elsewhere with people coming back to the urban core.

It would be nice to look at the entire Chicago region.

Chicago has been overwhelmingly governed by the Democrats, yet they things you've listed are usually pushed by the Republicans. And people leaving are usually going to the majority Republican states and cities. How can you explain this phenomenon?

Far right Democrats enact these sorts of policies too, see Southern California as an example.

They're usually huge bootlickers, bought and paid for by companies.

Edit: Downvote away, but if you tune to local public radio in San Diego & LA, some "Democrat" will often be banging on about how the #1 job of theirs is to ensure law and order. Democrats in other states don't usually prattle on about law and order, but its a special breed down there.

"Democrat" doesn't necessarily mean liberal. There are plenty of conservative Democrats, and plenty of the "socially liberal, fiscally conservative" types.

Those conservative democrats seem to be pretty well hidden these days :-)

Was that different before 1970?

easy. democrats do not want to live in states where the ideas they vote for are put into concrete projects. just look at california. they all going to texas to make it become like cali

This is a tiresome trope that needs to die.

California is a formerly Red state, Texas is nearly blue.

It's not that the situation is the opposite of what you describe, it's that your nostrums are utterly incoherent and describe nothing of any accuracy.

Chicago's problems are caused by things well beyond chicago. These local issues are driven by national choices. Elect all the best mayors you can, but America's economy is dominated by the national government, and to a lesser extent states. Chicago's problems will be solved when the nation breaks free of the ussual squabbles and opts to resolve social issues rather than scream dogma at each other.

I'm not sure whether I agree with you or not, but something I'd add to your point is that this is also a proxy for typical political ideologies. 'Small government' is specifically focused on reduction of the size of the federal government excepting a few national responsibilities including military. The point of this is to strengthen autonomy at a level closer to the people -- states, counties, and so on.

I don't really abide either side of the political spectrum, but I do find this point salient. Chicago's successes, and failures, should come as a result of decisions made in Chicago, and to a lesser degree the whole of Illinois. States being held subject to decisions, outside of a very small set of shared minimal norms, from a completely detached governing body that lives very much in a bubble in D.C. is just quite a peculiar system. Having 2% representation in e.g. the Senate does not, in my opinion, markedly change this. Probably made a lot more sense when we had 13 colonies and a hundredth the national population.

Chicago, and Illinois, has made its own problems far worse than other cities and states by a completely corrupting their defined benefit pension system. Also see NJ/CT/KY. They have hundreds of billions in debt coming due, the figures are staggering. It also doesn’t help that the weather in Chicago is not to most people’s liking, so other than employment or existing family, most people aren’t going to choose to move to Chicago.

When Warren Buffet says he’s avoiding doing business for the next few decades in certain regions due to the defined benefit pension debt, I would certainly be making sure I have backup options or a way out.

I'm not questioning or disbelieving the veracity of your statement, but do you know where Buffett made those comments? I'm not seeing anything in a casual search and that would be interesting to parrot around.

I think it was in one of his letters from a couple years ago too, but he most recently said it a week or two ago:

https://www.cnbc.com/2019/02/25/full-transcript-billionaire-...

> if I were relocating into some state that had a huge unfunded pension plan I’m walking into liabilities. ’Cause I mean, who knows whether they’re gonna get it from the corporate income tax or my employees-- you know, with personal income taxes or what. But that-- that liability isn’t gonna-- you can’t ship it offshore or anything like that. And those are big numbers, really big numbers. And they may come--you can delay a long time. I mean, they-- you’re getting pushed maybe somewhat. But the politicians are the ones that really haven’t attacked it in a good many states. And when you see what they would have to do-- I say to myself, “Why do I wanna build a plant there that has to sit there for 30 or 40 years?” ’Cause I’ll be here for the life of the pension-- plan-- and they will come after corporations, they’ll come after individuals. They-- just-- they’re gonna have to raise a lotta money.

Thanks for that! And I hate to say this, but Buffett is almost damnable for saying this because of the party and candidates he almost exclusively supports.

The statistical evidence proves you are wrong.

Chicago's political system is dominated by public sector unions. Social welfare spending across the US, including in Chicago, has massively increased since 1970.

Meanwhile, on the regulatory front, the percentage of jobs requiring an occupational license increased from 5% in 1950, to about 25% today. Entire regulatory agencies were also created since 1970, including the EPA and OSHA.

Any broad-based measure of how regulated the economy is, like the size of the Code of Federal Regulations, shows regulations increasing in scope since 1970.

> Middle america should be happy. They keep voting for this stuff.

I lived in "Middle America" and I wouldn't say Chicago is representative of "Middle America" in general? But I only visited Chicago so perhaps someone from there can chime in and correct me.

> Deregulation.

Chicago just doesn't seem like a great bastion of "Deregulation".

It just seems like you are disproving your points here.

Now if we are talking stereotypes, besides deep dish pizza, one thing I think of when I think Chicago is corrupt politicians. The local news stations seems to agree at least:

https://chicago.cbslocal.com/2019/02/11/chicago-most-corrupt...

Reply on news.ycombinator.com