Alabama In the Middle of the Pack Among the Best States For the Middle Class

Alabama tied with Florida for 29th in a recent study by Smart Asset ranking the best states for the middle class in America. States in the Midwest generally landed near the top of the rankings while states in the Northeast were generally ranked near the bottom, with states in the Southeast near the middle.

The comparison was based on an equal weighting of seven data points including:

  • Percentage of households in the middle class (earning between $35,000 and 100,000)
  • Median household income (adjusted for cost of living)
  • Five-year change in median household income
  • Median home value
  • Homeownership rate
  • Gini coefficient (a measure of income inequality)
  • Five-year middle class job growth

Data for the study was obtained from the U.S. Census Bureau’s 2018 American Community Survey and the Bureau of Labor Statistics.

Utah was ranked #1 due to its high percentage of middle class residents, 47.3%, and having the lowest income inequality of all states. Utah also has the second highest median household income of $73,342 when adjusted for cost of living. Maryland took the top spot in this category with $75,334 although it had an overall ranking of 39th.

Other states ranking in the top 5 include Idaho, Iowa, Nebraska, and Indiana. Similar to Utah, Idaho had a homeownership rate above 70% and a relatively high median home value of $233,100. The midwestern states of Iowa, Nebraska, and Indiana ranked 3-5. All had a relatively high percentage of households in the middle class at 46-48% and high rates of homeownership of 66-71%. With a median home values in the $147,000-162,000 range, these markets are also affordable for entry-level buyers.

At 29th, Alabama was near the middle of the rankings. Alabama’s homeownership rate of 68% is higher than the national average, but the state was hurt somewhat in the rankings by its 42.4% of households in the middle class, which ranked 34th. Alabama’s median home value of $147,900 as measured by the 2018 American Community Survey also suggests that homeownership is within reach for a large percentage of residents. A recent affordability study by the Alabama Center for Real Estate calculated affordability scores of 199.5 for Alabama and 154.8 for the United States. This means a family earning the statewide median family income has approximately 2 times the income necessary to qualify for a loan to purchase a median priced home in the state, suggesting that markets in Alabama are more affordable than the nation as a whole.

Here’s how other states in the southeast ranked in the study: Tennessee (12th), South Carolina (15th), Georgia (19th), Kentucky (22nd), Arkansas (25th), North Carolina (26th), Florida (29th), Mississippi (36th), Texas (41st), and Louisiana (50th).

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