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Texas' Middle Class and the Opportunity Crisis

Texas' Middle Class and the Opportunity Crisis

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Published by: ProgressTX on Jul 03, 2012
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07/02/2013

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exas’ middle class didn’t just happen. Like much o America in the post-war
period, exas’ inrastructure—rom its schools to its highways to its public
universities—were built and sustained by public policy and public support. In ad-
dition, the state’s large natural oil resources helped spur job creation throughout
the 20th century. Unlike other regions in the nation, unions have not histori-cally played a vital role in propelling exan workers into the middle class. As aresult, the earnings gap between high school and college graduates in exas is
much larger than in some other parts o the country where non-college-educated
workers were able to negotiate decent wages, health insurance, and retirement
benefts through a union. With ew unionized jobs, Texans have relied on higher
education—and the public systems and policies that make a college education a-
ordable—to provide economic mobility. Smart investments in public education
in the 1980s and 1990s gave rise to a wave o rst-generation college students.
Obstacles tO GrOwinG andstrenGtheninG texas’ Middleclass
•Lakgdj•Sagaag•Iadqaamphahadmpa•Hghaaam•Cgdgagah•Emmakgpp
The AmericAn DreAm
is about working hard in return or decent wages, economic stability,and being able to provide a better lie or your kids. But the kinds o jobs that can provide a solidmiddle-class lie in return or hard work are in short supply in exas. Unemployment is still high,earnings have been stagnant or a decade, and many workers lack health insurance and retirementsavings to protect them nancially during a serious illness or when they can no longer work.
connecT wiTh Dēmos AT: 
www.deMOs.OrG
follow us AT: 
@deMOs_OrG
 
FacebOOk.cOM/deMOsideasactiOnkeep On tOp OF the latest trends and analysisFrOM dēMOs at Our new blOG, pOlicyshOp.net
This is a brieng paper inDēmos’ “Future Middle Class” series and is co-published with
 
CenterforPublicPolicyPriorities
 
Under AttAckteXAS' MiddleclASS And theopportUnity criSiS
 
unDer ATTAck: TexAs’ miDDle clAss AnD The opporTuniTy crisis
page 2 of 11
Going orward, exas aces a number o challenges to building and sustaining a strong middle class. Work-ers at all levels o education have aced stagnant or declining wages over the last decade. One reason is that job growth has been strongest in the service industry and other sectors where wages are low and employeebenets are limited or non-existent. Across the economy, exas employers are much less likely than thosein many other states to provide their workers with health insurance. Rising out-o-pocket costs and skimpy plans mean that a amily illness can lead to substantial costs and medical debt. And as employers replacetraditional pensions with 401(k)-type plans, or oer no retirement plan at all, middle-class workers cannotcount on a secure retirement.At the same time, it has become more costly to raise a amily. Now that a majority o mothers are employed,amilies must pay or child care. High-quality care or preschoolers is expensive, yet parents ace these costs
early in their working years when their earnings are low. Housing is also more expensive relative to household
income than it was decades ago. Te need or most working parents to have their own vehicle and the highprice o gas urther strain middle-class amily budgets. And because amilies struggle just to cover everyday expenses, it is hard or them to save and protect themselves in the event o a job loss or other amily crisis.Challenges to the uture o exas’ middle class can be seen most clearly in the economic prospects or the
state’s young people. Today many young workers are earning the same or less than their parents did a genera-
tion ago, dashing hopes or economic mobility. Although a our-year college degree improves job prospectsand lietime earnings, skyrocketing college costs, especially since exas’ tuition deregulation in 2003, aremaking it hard or all but the most auent students to stay in school and graduate. exas college graduateshave high levels o student debt while their earnings have allen over the past decade. Young workers areincreasingly less likely to have access to health insurance and retirement benets through their employers,with the most dramatic changes occurring in recent years.
Te unraveling o the social compact predated the Great Recession, but the economic crisis hastened its
demise. Not only did the state lose 320,000 jobs because o the Great Recession, but the economic eects o those lost jobs reverberated to all corners o the state, particularly the already-strained nances o the stategovernment. We estimate that the jobs lost rom the recession have reduced state sales tax revenues by over$540 million, on top o other revenue losses rom the recession, putting thousands more middle-class jobsat risk. o put this in perspective, that lost revenue could have paid the salaries o over 4,700 teachers ornearly 3,900 nurses. Recent budget cuts, in response to the Great Recession, will create much more middle-class job loss.Now is the time or employers, workers, and policymakers to come together once again to rebuild pathwaysto the middle class, create good jobs with air pay and decent benets, and ensure that prosperity is broadly shared in the next generation.
 
unDer ATTAck: TexAs’ miDDle clAss AnD The opporTuniTy crisis
page 3 of 11
eaRNINgS¹
Over the last 20 years, earnings or exas workers (ages 18-64) have grown modestly. Ater increasing in thelate 1990s during the economic boom, real median earnings have remained relatively at. Despite the Great
Recession, exas median earnings peaked
in 2009 at $33,280, although last year they ell to $31,620, roughly where they were a
decade ago. Key to strengthening exas’
middle class will be overcoming this wage
stagnation. Earnings in exas are consis-
tently lower than they are nationally. exas
median earnings were 89 percent o the
national level in 2010 (see Figure 1).
educatiOn
In exas as elsewhere, a college degree isthe surest path to a middle-class income.exas workers with a bachelor’s or gradu-ate degree earn more than twice as muchas those with only a high school diploma($55,080 versus $25,500 in 2010). exasworkers o all education levels experi-
enced earnings gains in the late 1990s but
all except those with a our-year collegedegree had lower earnings in 2010 than2000. Bachelor’s degree-holders ended
the decade at the same earnings level they 
attained in 2003. Workers with an associ-ate’s degree lost ground throughout the
decade, whereas high school graduates hadan uptick in earnings only to see them allsince 2004 (see Figure 2).
FiGure 2.Median annual earninGs OF texaswOrkers by educatiOn, 1990-2010 (2011 dOllars)FiGure 1.Median annual earninGs OF wOrkersin texas and the u.s., 1990-2010 (2011 dOllars)
TEXAS UNITED STATES$25,000$27,000$29,000$31,000$33,000$35,000$37,000
$10,000$15,000$20,000$25,000$30,000$35,000$40,000$45,000$50,000$55,000$60,000BACHELOR’S DEGREE OR MOREASSOCIATE’S DEGREESOME COLLEGE, NO DEGREEHIGH SCHOOL DIPLOMALESS THAN HIGH SCHOOLCOMPLETED
source:
Dēmos analysis of Current Populaon Survey data
source:
Demos analysis of Current Populaon Survey data using 3-year averages.Data not available for “Some College, No Degree” prior to 1993.

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