Incomes rise for those at top

Middle class continues decline, but number in poverty declines slightly.

Ohio’s middle class has continued shrinking in the post-recession years, but not because more families have descended into poverty as many people assume.

In fact, the main reason for the erosion of the middle class — generally defined as those with annual incomes from $30,000 to $100,000 — has been a sizable increase in the number of people considered well-off in Ohio, according to a Dayton Daily News analysis of state income data.

From 2009 through 2013, the last year for which figures were available, the number of Ohio households with annual incomes of six figures or more grew by 102,337, or 14 percent. Meanwhile, households with incomes below the middle-class threshold actually declined by 6,714, or 1 percent, according to five-year, inflation-adjusted estimates from the U.S. Census Bureau’s 2013 American Community Survey.

“Yes, there was a middle-class decline, but it wasn’t because the low-income population grew. It was because the high-income population grew,” said Dennis Sullivan, a retired economics professor from Miami University. “There’s a real hidden story about the way in which Ohio’s income profile is changing. It’s really a hollowing out of the middle class.”

A separate report from the Pew Charitable Trusts’ Stateline blog found the number of middle-class households in Ohio shrunk from 50.9 percent in 2000 to 45.7 percent by 2013.

Over the same period, Ohio’s inflation-adjusted median income fell from $56,437 to $48,081, reflecting big declines in income within the middle class — a trend that was seen in all 50 states, according to Pew.

“If you were making $90,000 before the recession began, and now you’re making $30,000, you may still technically be in the middle class, but you probably don’t feel like you’re in the middle class anymore,” Sullivan said.

Still, the data clearly show a bulging in the category of those with higher incomes.

Adult couples under under age 35 showed the biggest increase in Ohio, according to Sullivan, who used Census data to look at income distribution by age using approximately the same parameters as the researchers from Pew.

In 2000, just 13 percent of the couples in the group now known as the Millennials earned more than $97,000; by 2013, the share had increased to 22 percent, according to Sullivan.

Dual incomes contributed to the increased prosperity, but Sullivan also found that the share of upper-income singles in the group grew, from 4 percent to 6 percent.

Tommy Miller of Kettering is a prime example of how some in the so-called Millennial age group have prospered in Ohio’s post-recession economy.

Without offering specifics about his pay, the 31-year-old Miller said over the past three years, “I dramatically increased my salary” by moving from a job as a graphics designer to senior software engineer at Crown Partners, now Razorfish Platforms — an “eBusiness” consulting agency in Centerville.

Miller’s current job “basically changed my entire life,” he said. “Back in the day, I was living paycheck to paycheck; there were times when I couldn’t go out to eat with my friends, and things like that. That’s all changed. I just bought a new car. I don’t worry about paying bills. It’s been a lot of work, but it’s been worth it.”

Miller, who has spent the past 10 years working full-time while attending college part-time, will graduate with a bachelor’s degree in management information systems from Wright State University later this month.

A closer look at the numbers

The biggest group affected by the shift from middle- to upper-class status has been married couples age 55 and older, according to Sullivan, who found the percentage of those couples earning more than $97,000 rose from 21 percent in 2000 to 26 percent in 2013.

Meanwhile, single Ohioans under age 55, who don’t have the benefit of more than one income, lost the most ground. Their percentage of upper-income households held steady at 6 percent from 2000 to 2013, while their share of lower-income households grew from 60 percent to 65 percent, according to Sullivan.

The American Community Survey shows there were major differences among the major ethnic groups as well.

Blacks in Ohio moved out of the middle class and into more affluent tax brackets at an even faster pace than their white counterparts, even though the affluent African American population was much smaller.

There were approximately 40,000 black households in Ohio with incomes above $100,000 in 2013, compared to more than 747,000 upper-income white households.

But the share of upper-income African American households shot up by 20 percent from 2009 to 2013, while the percentage of white households in the same category rose by 13.5 percent, according to the Census data.

Median income plummets

While some segments of the population have thrived, even against the downturn in the economy, many Ohio’s families are struggling to maintain their middle-class lifestyles.

Bob Densmore of Jamestown and his wife still consider themselves middle class, but they’re struggling to recover from a job loss last year that has forced the couple to dramatically alter their way of life.

“It’s been a struggle,” said Densmore, 58, a computer programmer and developer who was working on a project at Wright-Patterson Air Force Base before his employer, Peerless Technologies Corp., lost the contract for the project. “I was up to about $83,000 a year before I lost my job. Now, I’m working in factory for a temporary employment agency until I can find something better. I’ve experienced a huge drop in income.

“I’ve had to dip into my 401(k) so we don’t lose the house,” he said. “We don’t go out to eat. We make chili instead, things like that, to stay in the budget. I still have a motorcycle, but I had to cancel the insurance on it, and, basically, just parked it. ”

Densmore, who has an associates degree in information technology, recently completed a certificate program at Sinclair Community College focusing on information system security in hopes of landing a job in the high-demand industry.

Pell Grant changes

Such efforts toward education and training are the keys to moving into the middle class and above, said Charles Showell, retired dean of the business school at the historically black Central State University.

“It’s not like it was before when blue-collar workers were well represented in the middle class,” Showell said. “There are not a lot of good jobs out there anymore for a person with a high school diploma, and far less for people without one.”

But access to higher education has become increasingly difficult, especially for blacks and other low-income students facing rising tuition and dwindling financial aid, Showell said.

Referring to proposed changes to the government’s Pell Grant program, Showell said: “It’s going to make it more difficult for blacks and everyone else who depends on that aid to get the education they need to achieve middle-class status.”

Recently passed budget resolutions in Congress propose a freeze on the maximum Pell Grant award and further restrictions on the recipients of the need-based grants that primarily go to college students.

Nationally, 60 percent of African American undergraduate students and close to half of Hispanic students currently depend on Pell Grants to help pay for school, according to government data.

If Pell Grants end up on the chopping block, “it’s going to start a vicious cycle,” Showell said. “You can’t climb out of the mud, if you have this kind of legislation holding you down, and that means income inequality will continue to grow.”

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