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?'"
"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."
Click to read Colorado's Middle Class Families: Characteristics and Cost Pressures.