Short answer: 44% of residents by one estimate, based on a broad income-based definition of “middle class”

|

The “middle class” is at the center of many national political debates, but it’s not always clear who’s included or how big it is. The middle class can be defined by income, assets, demographics, education, aspirations, or other factors. This report uses an income-based definition to estimate the size of West Hollywood’s middle class.


Middle-class income in the US

What counts as a middle-class income? We’re adopting the approach used by the Pew Research Center, a nonpartisan think tank:

  • They started with the median household income in the US in 2014. Median means that half of households made less, half made more.
  • They assumed that middle-class households were those that made between two-thirds and twice the median income.
  • Then they calculated the required income for different household sizes. Their ranges were national averages.

According to their calculations, a single adult needed to make between about $24,000 and $72,000 to be middle class. The required income was higher for families because they have higher expenses: $34,000 to $102,000 for a couple and $48,000 to $144,000 for a family of four.

Source: Pew Research Center, “America’s Shrinking Middle Class: A Close Look at Changes Within Metropolitan Areas,” May 11, 2016.


Middle-class income in the Los Angeles region

We took the Pew ranges and adjusted them for the Los Angeles region in 2017. For a single adult, the adjusted range is about $29,000 to $88,000. It’s $41,000 to $124,000 for a couple and $59,000 to $176,000 for a family of four. Keep in mind that these ranges are fundamentally assumptions, even though some data is involved.

Sources: Pew Research Center (for original range); US Bureau of Labor Statistics (for “CPI-U” inflation adjustment); US Department of Commerce, Bureau of Economic Analysis (for “regional price parity” cost-of-living adjustment); our analysis.

We do have one concern about these ranges: the low ends may be too low. We’re not sure an individual can live a middle-class lifestyle in this region on $30,000 a year. In fact, as far as the Federal government is concerned, a Los Angeles County resident making less than $50,500 is eligible for low-income subsidized housing programs.

We could use the Federal guidelines as a floor for middle-class incomes. The new Los Angeles ranges would be roughly $50,000 to $88,000 for an individual, $58,000 to $124,000 for a couple, and $72,000 to $176,000 for a family of four. We could, but we won’t in this report. We’re sticking with the broader ranges derived from Pew’s analysis.


Size of the middle class in the US

Using their income ranges, Pew found that half of American adults were middle class. They also found that the middle class shrank over the last 40-plus years. It went from 61% of adults in 1971 to 50% in 2015. As the middle class shrunk, lower- and higher-income groups both grew. Lower income went from 25% to 29% of adults. Higher income rose from 14% to 21%.

Source: Pew Research Center, “The American Middle Class Is Losing Ground,” December 9, 2015.


Size of the middle class in the Los Angeles region

Pew also calculated the percentages for Los Angeles and other metropolitan areas, adjusting for differences in the cost of living. They estimated that 47% of adults in the region were in the middle class in 2014. That was slightly lower than the national average of 50%. It was a point below the regional number in 2000.

However, the bigger difference between Los Angeles and the US was in the lower-income group. That group covered 37% of adults in the region, but only 29% of adults in the US as a whole.

Note: The Los Angeles estimates are for the Los Angeles-Long Beach-Anaheim metropolitan area. Source: Pew Research Center.

We were curious whether counting children as well as adults would change the numbers significantly. We replicated Pew’s calculation for Los Angeles in 2014 and then added children. The middle-class share declined three points to 44%, while the low-income share increased from 37% to 41%. With children included, the lower-income population (41%) was almost as large as the middle-class population (44%).


Size of the middle class in West Hollywood

How big is the middle class in West Hollywood? We have the income ranges, but the answer is still surprisingly elusive. The Census Bureau doesn’t publish the exact data we need for a city as small as West Hollywood. We came up with three estimates based on three different approaches:

Estimate Approach Concern
44% Done by imputing city-level income and household size data to individual households Imputation involves assumptions — it’d be better to have household-level data
40% Uses Pew’s household-level data source, but the numbers are for a larger area that includes Beverly Hills and the Hollywood Hills West neighborhood No reason to think the middle class is the same size in Beverly Hills and Hollywood Hills West as it is in West Hollywood
40% Based on the correlation between the middle-class percentage and an income inequality index, which we have for West Hollywood Among communities in the region with a similar income inequality index, the middle-class percentage varies from 37% to 45%, so the 40% estimate isn’t very precise
Sources: US Census Bureau, American Community Survey, 2012-2016; IPUMS-USA, University of Minnesota, www.ipums.org; Pew Research Center; our analysis.

We prefer the first estimate: 44%. It’s methodologically different from Pew’s approach, but it’s West Hollywood-specific. Keep in mind that all of these estimates are based on the broad income ranges derived from Pew’s work. Narrower ranges would mean lower estimates for the size of the middle class.


Comparison to nearby cities

We can compare West Hollywood to nearby cities with the same data source Pew used. The chart below shows that the middle class is probably a larger share of adults in West Hollywood (44%) than in Hollywood (40%), Beverly Hills (40% for the area that includes the city), or Santa Monica (42%). It’s smaller than in cities such as Burbank (51%), Pasadena (45%), and Glendale (45%). It’s also lower than the regional average of 47%. We checked, and the results are fairly similar if children are included.

Notes: The West Hollywood number is based on our first approach. The other numbers are from the second approach. Culver City isn’t shown because it’s combined with other communities in the IPUMS data. Sources: Same as above.

A smaller middle class can result from a bigger group of lower-income residents or more higher-income residents. For example, Santa Monica and Beverly Hills have smaller middle-income percentages than West Hollywood. In both cases, their higher-income groups are six percentage points larger than West Hollywood’s. In contrast, the lower-income group in Hollywood is almost twice as large on a percentage basis. Hollywood’s middle- and higher-income groups are smaller.

Note: Numbers may not add up to 100% due to rounding. Sources: Same as above.


http://wehobythenumbers.com/wp-content/uploads/2018/01/201801-middle-income-range-region-2017.jpghttp://wehobythenumbers.com/wp-content/uploads/2018/01/201801-middle-income-range-region-2017-300x300.jpgDavid WarrenPeoplebeverly hills,burbank,glendale,hollywood,los angeles,low income,pasadena,santa monica
Short answer: 44% of residents by one estimate, based on a broad income-based definition of 'middle class'| The 'middle class' is at the center of many national political debates, but it's not always clear who's included or how big it is. The middle class can be defined by income,...