Seattle, WA – A new analysis of Washington’s economy reveals that many hallmarks of middle-class life – owning a home, sending the kids to college, having health care, and building a retirement nest egg – have become increasingly unattainable for local families:
- Owning a home: Falling home prices are good news for people looking to buy – but not for recent purchasers who now owe more than their home is worth. And the typical home is still far more expensive relative to family incomes than 20 years ago. In 1990 the median home value in Washington was 3 times the median household income. By 2008, a home cost 5 years of median income.
- Sending the kids to college: Between 1991 and 2008, tuition and fees at the University of Washington increased from 6.3% to 11.5% of median annual household income. At the more affordable community colleges, required expenses rose nearly as fast, from 2.7% to 4.7% of state median income. Even with financial aid, low- and middle-income students are graduating with significantly higher debt levels – and the effects of “sticker shock” can keep students from ever applying to college in the first place.
- Getting health care: Health care is eating up more of family budgets. Worker contributions to employer sponsored family health insurance premiums have increased from 3.4% to 5.8% of median household income between 1999 and 2008. Out-of-pocket expenses have also shot up, particularly for workers approaching an in middle age – from $724 in 1996 to $1,118 in 2006 (in 2006 dollars).
- Building a nest egg: Only about half of private sector workers in Washington have access to a retirement plan at work. Today’s defined contribution plans, like 401(k)s and 403(b)s, make retirement income far more dependent on the ups and downs of the economy and the stock market than the defined benefit plans they replaced, which guaranteed workers income based on years of service and earnings. With the collapse of the stock market in 2008, workers who had consistently contributed to 401(k) accounts since 2003 lost nearly one-fourth of their account values.
Even as costs have increased, today’s households and workers have less income than was the norm just a decade ago. Worse yet, most middle-income Washington families hadn’t even dug out of the economic hole created by the last recession before the “Great Recession” of 2008-09.