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Cities Where the Middle Class is Rising

May 4, 2015
Mortgages, Studies
Cities Where the Middle Class is Rising
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The middle class in America has long been called one of the strongest and most powerful middle classes in the world. In recent decades, however, the U.S. middle class has been shrinking, and in the past few years, stagnant income growth has been a major reason.

U.S. households have seen different rates of growth in earnings over the past 40 years depending on their income group. The table below shows the change in average household income, adjusted for inflation, from 1973 to 2013 for different income groups: the 20% in the lowest-earning group, the middle 60% we identified as the middle class and the highest-earning 20%, which includes the top 5% of households.

While the top 5% of U.S. households saw an astronomical increase in average income — 81.1% growth from 1973 to 2013 — those at the bottom suffered an 8.4% drop in average earnings. Meanwhile, middle-class households have witnessed a modest income growth of 17.6% in those decades.

However, the rate of growth for middle-class income has slowed significantly since the 1990s. In fact, since peaking in 2007, the average income of middle-class households has fallen about 6.8%, while the nation’s richest saw a 0.8% increase in average income. Over those seven years, the nation’s poorest households got significantly poorer, with average incomes falling 10.8%.

While the middle class is still the largest group in the country, it may no longer be the most powerful. In 2013, the highest-earning 20% of households controlled 51.4% of household income in the U.S., while the middle class owned of 45.4% of income.

To analyze the state of the middle class, NerdWallet examined the data for 1,946 U.S. cities to find where average middle-class income increased the most from 2007 to 2013. In our analysis, we viewed each city as a microcosm to identify the middle 60% of earning households. We investigated the following factors:

Growth in middle-class prosperity. We considered the strength of the middle class in each city by analyzing the share of total household income owned by middle-class households. We also examined the growth in the share of aggregate income since 2007 for the middle class and the growth in average middle-class household income to find the cities on the rise.

Middle-class income and affordability. We analyzed the average income of households in the middle 60% of earners. We also included average monthly housing costs in each city to assess affordability for middle-class families.


Top 100 cities where the middle class is rising

Urban vs. suburban middle class

Nearly all of the places where the middle class is growing stronger are small cities. In fact, the largest of the top 100 places is Frisco, Texas, which can be considered a midsized city. So what’s happening with middle-class population in urban America?

The numbers reveal a clear difference between the urban middle class and the middle class in the nation’s suburbs and small cities. The middle class in large cities, with populations of 200,000 or higher, owns 46% of total household income in those areas. Meanwhile, the middle class in small cities, places with populations under 75,000, has 49% of household income.

In large cities, the average middle-class income of about $52,194 is 16% lower than the average household income of $62,150 earned by the middle class in smaller cities.

These figures reflect a narrative that has long existed — that suburbia is a friendlier place for the middle class than large urban centers and the challenges of those locations, such as cost of living, safety and quality of schools.

The chart below displays the middle-class share of total household income, change in middle-class share of income, change in middle-class household income, average middle-class household income and average monthly housing costs of the 20 largest cities in the U.S.

Of these urban centers, only Fort Worth, Texas, has experienced growth in middle-class share of aggregate household income since 2007. San Francisco, California, and Austin and El Paso, Texas, are the only cities in this group that saw an increase in average middle-class household income.


All income data are from the U.S. Census Bureau’s American Community Survey. Incomes for 2007 were adjusted for inflation to reflect 2013 dollars using inflation rates from the Bureau of Labor Statistics. The score for each city is from the following variables:

  1. Middle-class share of total household income is 25% of the score.
  2. 2007-2013 change in middle-class share of total household income is 25% of the score.
  3. 2007-2013 change in average middle-class household income is 25%.
  4. Average middle-class household income is 12.5% of the score.
  5. Monthly housing costs are 12.5% of the score.

Image via iStock.