FILE PHOTO: Aerial view of Logan City and Cache Valley in the summer
A recent study published by SmartAsset has examined which states are best for America’s middle class, and Utah and Idaho rank first and second, respectively. The states who border each other held the same positions in the publication’s 2020 study, as well.
According to the report, the middle class is defined as households with an annual income between $60,000 and $149,999 and is the largest economic group in the United States.
“More families are renting than buying homes and in recent years and the number of families considered cost-burdened (paying more than 30% of their income for housing) has steadily increased – up to approximately 27% of the middle class in 2018,” says study author Anja Solum. “However, some states are better than others for middle class residents and we set out to uncover them.”
The study compared the percentage of households in the middle class, median household income adjusted for cost of living, median home value, homeownership rate, the Gini index (a standard set by the U.S. Census Bureau to examine income equality), four-year changes in both median household income and middle-class job growth.
Utah remains the state with the highest percentage of middle-class households (46.62%) and second-most equitable income distribution based on the Gini Index (Utah received a score of 0.42 – where 0 means everyone receives an equal share and 1 means only one recipient or group of recipients receives all the income). Part of that is due to increased wages throughout the state. From 2017 to 2021, the number of jobs earning an average salary of $30,000 to $70,000 increased by more than 33% (ranking third-best).
However, as several other recent reports have indicated, the cost of housing in Utah is expensive. The state ranks ninth among most expensive home values, with the median home value in Utah at $360,800. The homeownership rate among Utah’s middle class is 71.32%.
Idaho ranks second in the study after scoring well in equitable income distribution, homeownership rate, four-year change in median household income and increase of middle-class jobs. The median home value in Idaho is $290,400 and 72.75% of middle-class Idahoans own a home.
Middle-class jobs are growing in most parts of the country, the study found. Nationally, jobs with average earnings between $30,000 and $70,000 increased by 19.29% from 2017 to 2021. These jobs grew in 47 states, with Arizona seeing the largest increase over the same time period (47.68%). Four places, however, have seen a decrease in these jobs, namely the District of Columbia (-14.41%), North Dakota (-7.16%), Vermont (-1.58%) and Washington (-0.85%).
See how SmartAsset ranked the states below:
1. Utah
Across all 50 states and the District of Columbia, Utah has the highest concentration of middle-class households (46.62%), defined in our study as households with an annual income between $60,000 and $149,999. Additionally, Utah’s Gini index – a measure of income inequality, where 0 indicates perfect equality and 1 indicates perfect inequality – is the second-lowest nationwide, at 0.42.
Utah ranks third-best for its median household income adjusted for cost of living, at about $81,500. In addition, from 2017 to 2021, the number of jobs earning an average salary of $30,000 to $70,000 increased by more than 33% (ranking third-best).
2. Idaho
Idaho shows consistency over time, remaining second-best overall in our study. From 2016 to 2020, the median household income in Idaho increased by 21.17%, the fifth-best rate overall. Additionally, the number of jobs earning a middle-class income ($30,000 to $70,000) increased by 31.20% which also ranks fifth-best in our study. The state’s income distribution – measured by the Gini index – ties for third-best with an index of 0.44.
3. New Hampshire
Jumping three ranks from the No. 6 spot in 2020, New Hampshire also ranks in the top 10 states for four of seven metrics analyzed. These metrics include the percentage of middle-class households (44.10%), Gini index (0.44), homeownership rate (73.25%) and median household income adjusted for cost of living ($77,966).
New Hampshire falls farthest behind when it comes to median home value. Census Bureau data shows that the state’s median home value is $297,800, the 15th-highest in our study.
4. Minnesota
The Land of 10,000 Lakes ranks fourth-best for its homeownership rate (73.88%), with a median home value of $263,300. Of all the households in the state, our estimates show that 43.10% of them belong to the middle class (ranking fifth-best).
Since 2016, the median household income has increased by 15.13% and when adjusted for the cost of living, the income value is $76,561,10th-best in our study. When measuring income inequality, Minnesota ties for the 11th-best Gini index of 0.45.
5. Colorado
Colorado ranks second-best its four-year increase middle-class jobs (39.08%) and eighth-best for its four-year change in the median household income (18.25%). After adjusting for cost of living, the median household income in Colorado is $75,447 (which ranks 12th-best). Additionally, 41.78% of households in this state are in the middle class (ranking 10th-best).
Colorado falls behind for our two housing-related metrics, with the homeownership rate (66.79%) ranking only 36th-best and the median home value ($415,700) ranking sixth-highest.
6. South Dakota
South Dakota ranks as the sixth-best state for the middle class, ranking in the top 15 states for three metrics. It has the 15th-highest homeownership rate (40.69%), sixth-best Gini index (0.44) and fourth-largest four-year increase in middle-class jobs (33.20%). For middle-class individuals looking to put down roots, homes in South Dakota are also relatively affordable. The median home value is 16th-lowest, at $188,900.
7. Iowa (Tie)
Across the seven metrics we considered, Iowa ranks particularly well for housing-related measures. It has the eighth-lowest median home value ($164,000) and ninth-highest homeownership rate (72.46%). Additionally, Iowa ties for the third-lowest Gini index in our study, at 0.44. The median household income adjusted for cost of living is $67,779, 24th-highest in our study.
7. Michigan (Tie)
In Michigan, more than 73% of households own their home, a top 10 rate in our study. The median home value is $179,500, or 13th-lowest across all 50 states and the District of Columbia. We estimate that almost 39% of households in Michigan are middle class, the 27th-highest rate. Finally, the number of middle-class jobs increased by 20.27% (ranking 13th-best) from 2017 to 2021.
9. Vermont
Vermont moves up this year, ranking 20th-best overall in the previous version of this study. This Northeastern state ranks eighth-best for two metrics: percentage of households in the middle class (42.03%) and homeownership rate (72.62%).
Between 2016 and 2020, the median household income in Vermont increased by 16.91% (which ranks 16th-best overall). However, as previously noted, the number of middle-class jobs has actually decreased by almost 2% from 2017 to 2021.
10. Indiana
Indiana rounds out our list of the top 10 states for the middle class jumping eight spots from No. 18 in our previous study edition. The median home value is $163,500 (seventh-lowest) and 40.14% of households are in the middle class (ranking 20th-best). The homeownership rate is 12th-highest, at 71.39%.
Indiana falls farthest behind when it comes to median household adjusted for cost of living. We found that the adjusted figure is $65,373, the 18th-lowest across all 50 states and the District of Columbia.
To find the best states for the middle class, SmartAsset looked at data for all 50 states and the District of Columbia across seven metrics:
- Percentage of households in the middle class. This is the percentage of households with an annual income between $60,000 and $149,999. Data comes from the Census Bureau’s 1-year 2020 American Community Survey.
- Median home value. Data comes from the Census Bureau’s 1-year 2020 American Community Survey.
- Homeownership rate. This is the number of owner-occupied housing units divided by total occupied housing units. Data comes from the Census Bureau’s 1-year 2020 American Community Survey.
- Four-year change in median household income. This is the percentage change in median household incomes from 2016 to 2020. Data comes from the Census Bureau’s 1-year 2016 and 2020 American Community Surveys.
- Gini index. This is a statistical measure of income inequality. An index of 0 indicates perfect equality, and an index of 1 indicates perfect inequality. Data comes from the Census Bureau’s 5-year 2020 American Community Survey.
- Median household income adjusted for cost of living. Household income figures come from the Census Bureau’s 1-year 2020 American Community Survey and cost of living data is from the Bureau of Economic Analysis.
- Four-year middle-class job growth. This is the increase in employment for jobs with average earnings between $30,000 and $70,000. Data comes from the Bureau of Labor Statistics and is for 2017 and 2021.