Starting with the Great Recession and increasing with the 2016 Presidential Election, people across the United States started to realize that large parts of the US were being left out of political and social narratives.
Across the US, wages are increasing at a much lower rate than housing costs are. More households are cost burdened, spending a greater percent of their total income on housing, whether that is rent or a mortgage, taxes, insurance, and utilities.
With a large middle class, a history as a successful rustbelt state, and home to an increasingly polarized rural and urban population, Pennsylvania is a state that epitomizes these 21st century tensions.
Is the middle class in Pennsylvania becoming more vulnerable over time, and if so, could this explain why such polarizing tensions exist in a once booming state? Here we examine the Pennsylvania middle class over the past ten years.
Households are middle-income if they earn between two-thirds and double the median annual income, controlled by household size and year.
Housing burden is a metric often used to determine what housing support the most vulnerable households should receive from the government.
But how is the Pennsylvania middle class faring without the support of the government safety net? Are middle-income renters and homeowners experiencing different levels of housing cost burden across the state? Are a greater percentage of middle class households in rural areas experiencing housing burdens than those in urban areas?
In 2005, no matter where you were in Pennsylvania, at least 27% of middle-income renters and 17% of middle-income homeowners were housing cost burdened.
In 2010, burden was more widespread. Many areas saw the highest rates of housing cost-burden in 2010. While in 2015, many areas saw a decline in the percentage of households with cost-burden, households in eastern Pennsylvania continued to experience greater cost burden than those in the rest of the state, both homeowners and renters alike.
Looking at Pennsylvania over time also reveals that the distribution of housing cost burden is becoming more of an urban issue. Between 2005 and 2010, percent of cost-burdened middle-income renter households in the city of Philadelphia increased from 57% to 60%, and remained at that level in 2015.
Homeowners who are considered severely burdened spend at least 50% of their household income on housing. Overall, a smaller percentage of households are burdened at this level. Interestingly, the percentage of middle-income households who are severely burdened is not equally distributed across Pennsylvania, and are increasingly concentrated around urban areas over time.
A majority of households in Pennsylvania are middle-income and homeowning. Over the past ten years, the homeowning middle class is shrinking while the renting middle class grows.
After a peak in 2010, the total number of burdened middle class households is falling.
While the number of burdened homeowning households is shrinking, the number of burdened renting households is growing, and the overall number of renting households is growing as well. From 2005 to 2015, there was a 17% increase in the number of middle class renting households experiencing housing cost burden. We suspect this reflects the country-wide trend of middle class homeowners downsizing or shifting to rental units, while rents continue to rise relative to inflation and wages.
Here we see the distribution of all burdened households across the state in 2015, revealing that burden is generally concentrated around urban areas. While most urban areas have a higher number of burdened renting households, the non-urban areas with high burden rates have a higher number of burdened homeowning households.
Take Monroe County, a semi-rural area where 45% of the middle-income households are housing cost burdened in 2015. In Monroe, there are more than twice as many burdened homeowning households than burdened renting households. Another interesting case is the suburban Bucks County, with the second highest number of burdened households in the state, there are roughly 50% more burdened homeowning households than renting households.
The distributional effects of housing cost burden over time should guide Harrisburg policymakers in their efforts to support Pennsylvanians as the state urbanizes and the middle class experiences new vulnerabilities.