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Amy Traub

Metro Inequality: What Cities Can Do About the Shrinking Middle Class

A series of new realities about the places Americans live “further put to rest the old perceptions of cities as declining, poor, minority places set amid young, white wealthy suburbs” announces a new study by the Metropolitan Policy Program at the Brookings Institution. Bringing together a wealth of new demographic data, the report documents how the nation’s suburbs have become more diverse and have seen a new increase in poverty, while central cities have gained population from the suburbs since the housing market crash. Overall, the authors argue, the cities and suburbs that make up that nation’s metropolitan areas share common challenges – from an aging population to the need for a college educated workforce – and must face them together.

Looming large among those challenges is the dramatic escalation of inequality in the last ten years, as economic growth and increases in productivity failed to raise incomes for most Americans. In other words, even the good times of the 2000s weren’t so good for most of Americans, since a disproportionate share of the gains went to the very highest income earners. As a result, the American middle class is shrinking.

The troubling trend has been analyzed before – most powerfully in the Economic Policy Institute’s biannual State of Working America reports – but the new study puts the middle-class decline in a metropolitan context. The decline and stagnation of median incomes during boom economic times “call[s] into question the sufficiency of overall macroeconomic growth – and metropolitan economic growth too – for improving living standards for most Americans.” (emphasis mine) There are clear implications for federal policy, but there are also opportunities for effective action at the local level. While Brookings’ report does not delve into local policy specifics, The Drum Major Institute for Public Policy has identified a number of city policies that begin to address the forces diminishing the middle class throughout our metropolitan areas.

One potent tool cities have to strengthen and expand the middle class is their own budgets which, even battered by the recession, still offer opportunities to channel existing spending in ways that promote the creation of solid, middle class jobs. For a decade, cities across the country have implemented living wage laws, mandating that companies that receive public contracts pay wages that that keep families out of poverty – providing at least a shot at the middle class. The main drawback of these policies is that they typically impact only a small number of working people. So cities are found ways to expand their reach: municipalities like Minneapolis now insist that when the city provides economic development subsidies to companies, the jobs created must meet certain standards for wages and benefits. Recently Pittsburgh has taken another step, passing a prevailing wage law to ensure that new real estate developments subsidized by the city don’t undermine wages being paid in unsubsidized developments. Pittsburgh’s experience also illustrates how good city policies can resonate throughout a metropolitan region: the broader county is now considering a similar law.

The Los Angeles Clean Trucks program offers another vision for how cities can transform low-income, no-benefit jobs (in this case, as short-haul truck drivers serving the nation’s largest port) into more stable positions that at least offer regular employee protections. Once Federal Maritime Commission approves the plan, the city will improve both local air quality and job quality by allowing only licensed trucking companies to service the port.

Cleveland is nurturing a new model of “green” worker-owned co-ops that offer job training, solid wages, and benefits for the larger community. Miami-Dade County is taking action to stop businesses from cheating their employees out of wages earned. San Francisco protects employees from losing a paycheck (or even losing their jobs) when they get sick and need to take time off work.

Across the country, these city policies are small but meaningful steps to ensure that as the economy beings to grow again, it will create the kinds of jobs that give working people a fair share of that growth – so the middle-class in metro areas and beyond grows again too.

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Posted at 1:49 PM, May 13, 2010 in Cities | Economy | Labor | Middle-class squeeze
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