Montana's middle class is shrinking, study says

Apr 03, 2015

Billings Gazette, April 3, 2015  
Montana’s middle class is shrinking as the income divide widens between the upper and lower classes.

The percentage of Montanans with middle-class incomes fell from 51.3 percent in 2000 to 46.6 percent in 2013, according to a report by the Pew Charitable Trusts. The drop was more than neighboring states Wyoming and Idaho, where the percentage of households earning between 67 and 200 percent of their state’s median income was nearly flat.

Median household income in Montana in 2013 was $46,972.

“The increase in income inequality in the United States has been well documented, and the hard question is: One, what is it caused by, and two, what can we do about it?” said Barbara Wagner, Montana Department of Labor chief economist.

Creating an educated workforce is part of the solution, Wagner said. The number of Montana jobs requiring more than a high school education is increasing, though the state lags behind the national demand for college-educated workers. There are still a lot of trade jobs in Montana that pay $50,000 or more annually.

Worker education, tax structure and social programs to help people out of poverty are all part of what’s become a national discussion for growing the middle class. At the Federal Reserve System’s community development research conference this week, the growing gap between the rich and poor was a main discussion point. The Pew data was cited at the beginning of the discussion by Federal Reserve Chair Janet Yellen.

The Montana Legislature, as it enters its final weeks, hasn’t done much to address the shrinking middle class, said Heather O’Loughlin of the Montana Budget and Policy Center. One in six Montanans lived in poverty in 2013, the year of the Pew survey. Since then, an additional 11,000 Montanans have slid into poverty.

“Unfortunately, the Legislature failed to move forward the most successful anti-poverty tool to help working families — to establish an earned-income tax credit,” O’Loughlin said. One bill that would have created the tax credit, House Bill 592, appears to be dead. “A majority of the House legislators voted to approve HB 592 this week, but it was tabled in (the) appropriations committee. Policymakers should consider reviving this measure to better help working families.”

Montana has not been without wage growth in the past decade, according to the Montana Department of Labor and Industry Research and Analysis Bureau. There’s been wage growth in every economic category, with low-income workers seeing the biggest increase expressed as a percentage.

Much of that dollar growth in the low-income population doesn’t come from pay raises, but rather from switching jobs, or holding down multiple jobs.

But despite wage growth for the low-income workers, the gap between rich and poor has increased. In 2008, the difference in income between the Montana’s lowest and highest wage classes was $19,960. In 2013, the gap was $22,676.

Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.