"There's no getting around the basic, day-to-day wage insecurity that people in Colorado are facing," says Scott Wasserman, president of the Bell Policy Center, the organization behind the study, "Colorado's Middle Class Families: Characteristics and Cost Pressures."
The document is accessible below in its entirety. But here, Wasserman and Todd Ely, an associate professor with the University of Colorado Denver School of Public Affairs and a co-author of the report, discuss some of the biggest takeaways from the analysis, with their observations illustrated by Bell Policy Center graphics.
As they reveal, the path to the middle class in Colorado has plenty of obstacles.
• The proportion of middle-income families in Colorado has declined from 53 percent in 2000 to 49.6 percent in 2016
"Middle-income family decline is a national trend," Ely says, "and Colorado kind of follows that trajectory. But I think it's important to mention that the declining middle can be the result of a couple of things — both a growing lower-income group and a growing upper-income group. The change is offset by both of these things. So the broader narrative is very much about increasing inequality. Our data suggests that we're seeing increases in both extremes and the middle group shrinking in size — not tremendously, but by a decent amount."
• The share of middle-income Colorado families with young children has decreased from 27.4 percent in 2000 to 21.4 percent in 2016, while two-adult, no-child families have increased by 21.5 percent
"From a public-policy perspective, what families look like really matters for the services that are prioritized," Ely notes. "In Colorado, we've seen a big increase in individuals living on their own or two adults without children in the household. But when we talk about the middle class, we often associate it with the two adult-two child family, with kids in the home — and the family not only has a house, but is saving for college and retirement. So there's a bit of a different perspective of what middle class is for those without kids. And for those who do [have children], there's an increasing need to have two adults working."
• A quarter of middle-income families and nearly half of upper-income families in Colorado have at least one graduate degree, suggesting a bachelor’s degree alone may not be enough to reach or sustain middle-income levels
"When we looked at 2016 in comparison with 2000, we saw that the predominance of at least a master's degree was becoming more important," Ely acknowledges. "At this point, I wouldn't say its essential for entry into the middle class. But in upper-class families with upper-income levels, almost half of the families have at least one graduate degree represented. And in the middle class, a quarter of families with a graduate degree is still a big number. In sixteen years, that's gone up 10 percentage points. I don't know what the future holds, but if you think that trend is going to persist, graduate education is going to be more and more important to getting the kind of jobs that will secure entry into the middle class."
"There's a really important debate going on right now over whether you need that graduate degree to make a middle-class life — and our report is showing us that in today's economy, you do," Wasserman adds. "Policy makers at the State Capitol are saying not everybody needs a college education. They're talking about apprenticeship programs that give people these middle-income skills. But what is going to change in our economy to help these people actually earn a middle-class income?"
In Wasserman's view, "this report shows we need to get those wages up. It's all well and good to say you can get these middle-income skills without a college degree. But policy makers need to have an honest discussion with employers in the state to say, 'You've got to get wages up, because what's supposed to be a middle income isn't cutting it.' And in the meantime, we've got to make higher education more affordable. In terms of the state budget and our whole fiscal situation, higher education is the most under threat of anything we fund as a state. And we've all seen how tuition has gone up for families over the past twenty years."
• In 2016, 64 percent of Colorado workers held occupations with a low probability of paying hourly wages that would grant entry to the middle class
"This was an exercise where we took some Colorado-specific data from the federal government that included hourly wage rates on the low and high end for different occupations and looked at where that occupation would put you on the income spectrum — understanding that you would start on the low end and work toward the high end," Ely explains. "Now, the middle class in Colorado is overwhelmingly led by two adult workers and a family. And given that, even if 64 percent of those jobs are in the lower category, most families can double up, and that could put them squarely in the middle class. But there are definitely trade-offs they have to make for that to happen."
• Colorado’s median home value in 2016 was nearly five times that of the median household income, ranking seventh highest across the country
Ely concedes that "the housing question is really fresh on most people's minds. It's very visible. You've got these rules of thumb for how much income you need to afford a house — like, you want a mortgage that's no bigger than three times your income. And that ratio is a telling indicator about how challenging it is to buy the median house in Colorado on the median income."
However, Ely goes on, "the story's not all bad, especially for people who already have a house they're comfortable in. They're building equity and their wealth is increasing. In general, if you're in a house that's sufficiently sized and located for your number of family members, it can be a good situation. But for people who are moving into the state and starting a family and in need of different housing options, they're really facing the dilemma of 'How do I afford a house that meets my needs on this median income that I have?'"
• Hispanic families are overrepresented in Colorado’s lower-income group relative to their overall population share
"The demographics are very alarming," Wasserman says. "By the year 2050, approximately 60 percent of the new entrants into the workforce will be Latino. So it's immensely alarming to see Latinos so underrepresented in the middle class today. If we can't figure out how to move more families of color up the income ladder, the state's going to have a huge economic problem in thirty years, when white families have aged out of the workforce and are relying on families of color who aren't in a position to earn a middle-class income."
• Most middle-income families in Colorado with children will struggle to balance middle-class budgets without making trade-offs that undermine financial health
For the study, Ely says, "we had to come up with what a middle-class budget would look like in Colorado for families in different parts of the income range. We tried to be conservative and base our numbers on what was reported by individuals in Colorado through some federal survey sources: the need for housing, food, transportation, taxes, retirement savings, college savings. And when we tallied these amounts up and compared them to where those families fall on the income level in Colorado, you could see it would be very difficult to fully embrace all of those kinds of aspirational budget items given the salaries."
Individuals on the high end of the middle-income demographic "were able to be fairly comfortable and meet the expectations of a middle-class life on a middle-income budget," he admits. "But for those in the lower and middle range of middle income, they often had to fall back on debt, including credit cards, student loans and auto loans, or they'd make other sacrifices. And unfortunately, one of the natural things that was sacrificed was savings, including savings for the adults' retirement and the children's higher education."
The bottom line for Ely: "A lot of families will say they're middle class — but they're finding it's hard to live that middle-class lifestyle."