Copyright The Boston Globe
Sasha White, 33, a public school music teacher who lives in Dorchester and owes $123,000 in student loans, carefully juggles each of her household bills. She feels too close to the edge of a financial cliff not to. “Student debt, I put that on the back burner for now,” she said. “The only thing that I take care of are things that are going to immediately come after me.” All three women make enough money to be considered middle class — a status that once conferred financial security, even a measure of comfort. The ability to buy a house and a car. Pantries stocked and utilities paid each month. Enough left over to take an occasional vacation, maybe help their kids with college and with a downpayment on a starter home. But those days are gone. Today, the middle class in Massachusetts is being hollowed out. In 2000, about half of Boston-area households qualified as middle class. Now only 41 percent remain. Most moved into the upper-income group, with about half as many sinking down to the low income group. Driving the squeeze is a stratospheric rise in inequality. Since 2006, the state’s richest 5 percent have seen their income soar, earning 34 times more than the bottom 20 percent. At the same time, more people at the lower end of the middle class are losing their tenuous grasp and slipping out of it. The number of households reporting over $200,000 of annual income in Massachusetts, moving up and out of the middle class, jumped fivefold from under 90,000 in 1999 to more than 420,000 in 2022, according to the most recent IRS data. For those left in the middle, holding onto the lifestyle they have feels increasingly precarious — and increasingly expensive. Corporations have gone from almost never having mass job cuts 50 years ago to laying off hundreds and thousands even as they report record profits. Child care expenses here are among the highest in the nation. The total cost of getting a degree from a public university has tripled since 1999. And home prices around Boston have more than tripled over the same period, while rents have skyrocketed 140 percent. “When I was growing up, ten grand was a down payment on a house, not an apartment rental,” said Wendy Millar-Page, a 55-year-old municipal worker living in Winthrop. If the middle-class squeeze continues, it could jeopardize the state’s future and undermine the country’s economy, reliant as it is on consumer spending, warned Mechele Dickerson, an expert in the decline of the middle class at the University of Texas Austin. “If you want to have a thriving economy you have to have many human beings who are doing the spending,” Dickerson said. “That’s not going to work unless you have a thriving and financially secure middle class.” Who exactly is middle class can be tricky to define. Economists typically say it’s anyone who makes between two-thirds and double the median income in a given area. That range varies widely between states, counties, and even from town to town. In Massachusetts, a middle-class income ranges from a low of about $66,000 to a high of $200,000, close to the highest of any state. At the local level, middle class can range from a low of $45,000 in a city such as Worcester to a high of more than $400,000 in places like Wellesley and Weston. But looking solely at a person’s income ignores the other side of their personal balance sheet: keeping up with day-to-day cost of living in one of the most expensive regions of the United States. Arena is an example. She has a master’s degree and works as an assistant director at Boston University, overseeing two centers at the Frederick S. Pardee School of Global Studies. After being priced out of subsidized housing in Somerville, she moved in with her parents in Peabody, before finally moving into a one-bedroom in Cambridge. She now spends half her monthly income on rent. By the economists’ definition, Arena is in the middle class. Yet Arena isn’t sure how she’ll ever afford her own home or her own family. She often wonders: Why does it feel so hard to make a living? Even those on the high end of that range can find themselves juggling budgets. David Stefanovic, a 70-year-old software developer in Waltham, makes upwards of $150,000. While his parents were able to raise four kids in a single-family home, he has no kids and was only able to afford a condo. Stefanovic credits a lucky break in his professional career decades ago when his company was acquired and he was able to get a cash infusion. “That was more than half of our down payment,” he said. “We could not afford our condo now.” Yet even with career success, Stefanovic opted to take Social Security early, to help cover his 98-year-old aunt’s rent. She lives only on Social Security, with no extra income. “We needed more breathing room, while we support her.” White, who makes about $98,000 a year while juggling multiple jobs, has similar questions as Arena. Raised in a middle-class home, she knew she could make a positive difference as a music teacher. “I didn’t see many music teachers that looked like me in the schools,” she said. “So I figured, why not be a Black woman music teacher, because we barely see that.” To do so, she pursued a costly master’s degree in music education from Boston University. With rent payments, car payments, food, credit card bills, and more than $100,000 of student debt, White has taken on two jobs, one as a full-time high school band teacher and another as an afterschool choir teacher, plus several side hustles. “I could not survive without my second job,” White said. In between gospel songs and jazz ensembles, she checks her bank account and plans her finances. She agonizes waiting for each paycheck. “I have to do all of my bills two months in advance,” she explained. “If I want to do something, like a vacation, there’s no spontaneity at all. Unless you want to be in a rut.” When she considered a job in teaching, attaining the same lifestyle she had growing up seemed within reach. But like White, in Greater Boston, many children of middle-class families are worse off than their parents. When members of the Silent Generation born in 1940 reached age 30, nearly all of them earned more than their parents did at the same age, according to research from the Brookings Institution. For those born in 1980, the tail end of Gen X and early millennials, only half out-earn their parents. And Gen Z may do even worse — almost half of 18- to 27-year-olds now rely on financial assistance from their parents to get by, according to a survey by Bank of America. The US economy isn’t growing as quickly as it did after the two world wars, which accounts for some of the slowdown in upward mobility, researchers said. Fewer manufacturing jobs and lower rates of unionization also hurt the earnings potential of young people with only a high school education. Jess Cunningham, a 31-year-old social worker in Bridgewater, feels like she’s watched the middle-class dream fade as she’s entered adulthood. Millennials like her, she said, grew up assuming hard work and college education would provide “a good life and be able to afford a home, have a family, white picket fence, the American dream sort of a deal.” “Now we’re realizing it’s not just about the bachelor’s, but you have to have the master’s degree, and even then it might not work out,” said Cunningham, whose household income is just under $100,000. For Cunningham’s younger clients, in Generations Z and Alpha, many don’t dare dream at all. They tell her no matter how hard they work, there is an overwhelming sense of just scraping by because of the cost of living. She attributes a lot of the depression and anxiety she sees among her younger clients to financial stress. “I think a lot of my clients’ mental health problems would be either eliminated or made a lot easier if there weren’t so many systems designed to crush them,” Cunningham said. Both of Wendy Millar-Page’s adult children, recent college graduates, live in her home in Winthrop as they struggle to find good-paying jobs and affordable apartments while paying off their student loans. Her son, a theater major, is working as a supervisor at an ice cream shop trying to build savings of about $10,000 to cover the costs of moving into an apartment. Millar-Page was more hopeful when the Biden administration tried to address the student loan crisis, but the Supreme Court blocked most of the plan. President Trump has opposed forgiving student loans and his administration resumed loan collections this summer, after a three-year pause. “I dread watching the news,” she said. “We’re not getting any relief from Washington.” President Trump campaigned on reviving the middle class: “incomes will skyrocket, inflation will vanish completely, jobs will come roaring back, and the middle class will prosper like never, ever before.” But so far, inflation is higher than a year ago, the labor market has weakened, and only 38 percent approve of Trump’s performance on the economy. John Gniadek, 55, is among the last generation expected to out-earn their parents. He grew up with a stay-at-home mom and an electrician dad, and is now a tech executive who makes more than $200,000, putting him at the upper end of the middle class. Though he and his wife have been able to save and pay off their home in Uxbridge, retirement “scares the hell” out of him. Thinking of what his three children face is even more worrisome. “I don’t know if there’s even going to be a middle class anymore,” he said. “I think you have people that are high earners, extremely wealthy. Then you have kind of everybody else — that kind of gets by and are really struggling.” Lily Geismer, a history professor at Claremont McKenna College, gasped when she saw a home near the Cambridge neighborhood where she grew up listed for up to $35 million. “It’s bananas,” she said. The seven-bedroom mansion with eight fireplaces, not far from Harvard Square, last sold for $450,000 back in 1983. And while the mega price tag may get headlines, its increase in value (after including additions and renovations) is only half the 10-fold increase for Cambridge home prices overall since 1983, according to data from the US Federal Housing Finance Agency. “The sense of wealth inequality is so very palpable,” Geismer said. The outsized rise in home prices undercuts a critical component of building and maintaining a strong middle class: home ownership. Even before paying off a mortgage, homeowners can tap into the increased value of their property through home equity loans to pay for college tuition or other expenses. Later, a house can be sold to fund retirement or passed down to the next generation. In Boston proper, only about one-third of residents are homeowners, according to US Census data, and across the state nearly two-thirds are. Those rates trail behind other New England states, such as Maine, where nearly 75 percent of housing units are owner-occupied. And that may only get worse for younger generations, as the rate of homeownership in Massachusetts is estimated to drop for residents under 65 over the next decade, according to the Urban Institute, a nonprofit research organization. With younger people increasingly unable to buy, they risk missing out on that entire cycle of multigenerational wealth creation. How did the cost of housing, the largest expense for most families, get out of control? When housing supplies are too low, prices jump to levels only affordable by people with higher incomes, transforming neighborhoods that were once home to firefighters and early career professionals into wealthier enclaves. Alexander von Hoffman, a senior research fellow at the Joint Center for Housing Studies at Harvard University, points to the state’s seemingly successful transition to a powerful knowledge economy — enabling many with bachelor’s and master’s degrees to flourish, but often leaving those with less formal education unable to find high-paying jobs. “It had a ripple effect, this market created by all these affluent people,” von Hoffman said, “they bid up the prices of the house, particularly the single-family housing.” The wealthy also drive rising prices for other scarce services, such as child care. With more demand for child care than providers, wealthier families can afford to pay higher rates. Ellen Anthony and her husband bought a house with their adult daughter in Stow to help with child care but also to make homeownership possible for both generations. Anthony’s husband is a carpenter and Anthony relies on Social Security, while her daughter and husband both work full-time jobs. “My daughter says to me pretty often, I don’t know how two-parent families do it. Never mind one-parent families,” Anthony said. The average cost of child care for a 4-year-old in the state has skyrocketed to nearly $18,000, according to the Economic Policy Institute. Child care for an infant is even higher, costing about $26,700 a year — that’s more than the annual cost of housing or college for most families. Child care is considered affordable when it costs no more than 7 percent of a family’s income. By that standard a family would have to make $381,428 a year to afford it. That means fewer than one in 10 families in Massachusetts can truly afford infant care. Jennifer Carrigan in Dracut knows the struggle too well. Despite making a six-figure salary in commercial real estate, Carrigan finds that the expense of raising three children daunting. To lessen the cost, her husband is a stay-at-home parent. But on occasion they’ve each taken part-time weekend jobs to make it all work. “It sounds like a good salary on paper,” she said. “But no, I’m struggling.” Starting in the 1980s, as the American middle class struggled to compete with low-wage labor from abroad, workers in Massachusetts outperformed thanks to the growing high tech, finance, and life sciences sectors. Local officials came up with a name for it: The Massachusetts Miracle. The long tail of prosperity that followed was not simply the good fortune of having some of the best universities, investment firms, and hospitals in the world. State leaders used public funds to back private ventures and offered tax incentives to support new businesses and new industries. Public education was revamped to raise academic standards and emphasize STEM. Proceeds from early success in the computer hardware sector were poured back into budding startups. “Massachusetts was at the forefront of a shift to a post-industrial economy,” said Geismer, the history professor who has written about the state’s success. “You can still see the consequences of that in the state today. It’s still on the forefront.” But now as income inequality continues to rise, the trends that powered the state’s economy are running down. The persistence of remote work after the pandemic has started to push middle-class work to lower-cost regions. Professional services jobs, for example, have declined steadily for the past two years, peaking at 638,800 Massachusetts jobs in October 2022. Finance peaked at 230,300 jobs in June 2023 and has since slid to 227,300. In high tech, jobs peaked at 98,900 in September 2022 and have since dropped to 91,700. In another few years, artificial intelligence could eat into whatever roles remain, some experts fear. All of that was before the Trump administration’s attack on research projects and Medicaid spending, which threatens to punish the life sciences and health care ecosystem — one of the state’s only sectors still providing more jobs midway through 2025. About 350,000 Massachusetts residents could lose health coverage over the next decade, according to the Center for Budget and Policy Priorities, while the state could lose some $3.5 billion in health care funding for hospitals and billions more in research grants. Governor Maura Healey has said that the state has allocated billions of dollars over the next decade to reignite growth in life sciences, boost the budding clean tech industry, and foster an artificial intelligence-based sector. Meanwhile, the 2021 MBTA Communities Act is aimed at creating thousands of new apartments to ease housing shortages and, possibly, bring down rents. Yvonne Hao, Healey’s secretary of economic development until May and a former tech entrepreneur, said the state has studied why previous efforts created so much inequality, leading to Massachusetts now ranking third-worst in the nation for income disparity. “That’s a very shameful statistic,” Hao said. “I don’t think democracy is sustainable when you have such big income inequality.” The problem was that many programs to stimulate new businesses and support new technologies didn’t prioritize generating middle-class jobs, especially for people without college degrees, Hao said. As a result, all kinds of new companies that cropped up in the state, from biotech to batteries, had their headquarters here but built their factories and drug manufacturing facilities — with thousands of good paying, middle-class jobs — elsewhere. “We weren’t intentional about it,” Hao said. “So that is something we’re very specifically trying to correct.” Robert Forrant, a historian at University of Massachusetts Lowell, is less optimistic that the benefits will trickle down beyond the highest earners. “We’re a capitalist economy, private-sector driven,” he said. “That’s not going to change.” The stark and widening gap between people’s expectations of life in the middle class and today’s financially squeezed reality can generate anger and resentment, deepening class divides that can prevent people from coming together to find solutions, policy experts said. Meanwhile, the struggle continues for most Massachusetts residents. Handly, the Brockton state worker, would like to feel financially comfortable enough to retire. She comes from a long line of highly-educated, middle-class people who found stability in the Boston area. But Handly feels worse off than her predecessors, despite having worked at a state agency for nearly 20 years and owning her own home in Brockton. Her situation makes her feel “bitter, and I don’t like to feel bitter, ever,” she said. “I’m not that kind of person.” She’s looking for a second job, but hasn’t found one yet. Photos by Craig F. Walker. Illustrations by Ashley Borg. Design by Ryan Huddle. Development and graphics by Daigo Fujiwara-Smith.
