Recent Graduates Are Not Negotiating Salary — Losing Out on Crucial Income

College students and recent graduates are missing out on valuable income early in their careers by not negotiating first job offers, according to a new study by NerdWallet and Looksharp.

We surveyed almost 8,000 new grads who entered the job market between 2012 and 2015, as well as 700 employers. All are members of Looksharp, a leading platform that helps students and grads launch their careers.

Only 38% of survey respondents negotiated with their employers upon receiving a job offer, even though most hiring managers said they expected to discuss salary at that stage. Three-quarters of employers told us they typically had room to increase their first salary offers by 5% to 10% during negotiations.

As college students prepare to walk across the stage on graduation day this spring, being confident and prepared will clearly be key to taking advantage of an important first-negotiation opportunity.

Scroll to the end or click here to see the detailed breakdown of survey responses.

Key trends and takeaways

• 84% of employers said an entry-level candidate would not be putting his or her job offer at risk by attempting to negotiate salary.
• Of the students and graduates who asked for a higher salary, 80% were at least partially successful.
• There’s a significant gender disparity when it comes to negotiation: 29% more male graduates are negotiating job offers than females.
• Employers said sales, marketing and engineering departments within their companies were most willing to negotiate with potential employees.

Check out NerdWallet’s Salary Negotiation Guide, which will walk you through the negotiating process step by step.

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Salary myths debunked

Our findings challenge assumptions that keep some students and recent grads from negotiating. A full 90% of hiring managers said they had never retracted an offer because an entry-level candidate attempted to negotiate. Only 6% responded that they were never willing to negotiate with entry-level candidates. And 76% said entry-level employees who negotiated appeared confident for doing so.

Successfully negotiating a first job offer could mean a major increase in lifetime earnings for new graduates. An employee who successfully asks for a 5% salary bump on a $40,000 job offer when she is 22, for instance, will make an extra $170,000 by the time she retires at 65, based on average annual salary growth of 3%.

The gender gap

Only 34% of female students and recent graduates negotiated, but 44% of men did. Women are not only less likely than men to negotiate first job offers, but they also report being more uneasy about negotiating salary. When it came to asking for more money, 42% of women said they felt anxious — the most common response among the choices “excited,” “confident,” “indifferent,” “anxious” and “unprepared.” Of the men, 53% said they felt confident, the most common choice among male respondents.

We saw these attitudes bear out in salary expectations. No matter the industry, women were more likely to expect between $25,000 and $44,999 as a starting salary. Men were more likely to expect a higher range, from $45,000 to more than $75,000.

When women did ask for a higher base salary, they had the same level of success — about 80% — as men. Beyond salary, it’s possible that inherent gender bias discourages women from asking or getting alternative types of compensation. Men reported more success negotiating stock options, bigger bonuses and more time off; women said they were more successful negotiating flexible schedules.

What’s next?

Now that you know most employers are willing to negotiate salary with entry-level applicants, start building the courage to show up at the negotiating table. Here are a few key points to keep in mind:

• Start by researching how much others earn in positions similar to the one you’re applying for. That way, if a hiring manager offers you a salary below the market value of the job, you have the research to back up your request for more.
• Sit down with a friend, mentor or your college career counselor and practice how you’ll respond once an employer makes you an offer. Make sure your approach is respectful, thoughtful and objective, focused on what value you’ll bring to the company.
• If your employer isn’t willing to budge, consider asking for other perks such as stock options or the ability to work from home one day a week. You can also suggest you revisit the conversation in six months, once you’ve proven you’re a great employee.
• Visit our Salary Negotiation Guide for more actionable tips and scripts.

Student survey responses

We asked 7,764 men and women who graduated between 2012 and 2015 a range of questions about negotiating.

Employer survey responses

Our survey includes responses from 708 employers in more than 20 different industries. The most common fields represented were technology (17%), media (11%) and nonprofit (11%).

Survey demographics

Among respondents, 61% of students and recent graduates were female and 39% were male. All were young adults motivated to join Looksharp’s community of internship and job hunters. The employers in the survey use Looksharp to find and engage talent across the country. These employers represent a range of industries including technology, media, consulting and nonprofits.

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What Costs to Expect When Selling Your Home

Just as with buying a home, selling also comes with its share of dues. You need to prepare your home for prospective buyers as well as pay part of the closing costs, which average around 3% of the home price. Here’s a breakdown of the types of costs you can expect.

Home repairs and inspections: Before the sale, you’ll probably want to fix up carpet stains, window cracks or other home features that have suffered minor damage over time. You also might decide to pay for an inspection for termites or other pests to avoid any unpleasant experience for prospective buyers checking the home.

Staging: To impress buyers, hiring a professional home decorator or stager can help you organize and make your home more appealing. You might also get higher bids on the home this way.

Settlement company fees: If you decide to use a third-party settlement company to ensure all documents and procedures between you and the buyer are correct, you pay the company for your portion of the closing costs and potentially an administrative cost. In return, the company will pay off your mortgage and those closing fees to the lender.

Real estate commission: Generally, you have to pay for the real estate fees for both your agent and the buyer’s agent. The cost can be negotiated, but it typically ranges between 5% and 7% of the home price, split between agents. The money goes to the agents’ brokerages, who will then pay them. This commission can be one of your biggest expenses.

Attorney fees: Lawyers can be certified as real property specialists and in some states might be required to help close a home sale.

Property taxes: Ideally, the buyer and seller pay their respective shares of the property taxes for when they lived in the home that year. Depending on when you sell, you might pay all taxes for that year and have the buyer reimburse you for the time he started living there. Additionally, if your home increased in value more than a certain amount, you might have to pay a capital gains tax.

Seller’s concession: If the buyer is having trouble paying for some of the closing costs, the seller can agree to pay a percentage of them. In exchange, that amount can be added into the home price the buyer pays.

Title search: Although the title search is generally the buyer’s responsibility, you might decide to pay for it as part of the deal. The title search involves a professional reviewing public records to confirm you own the property that you’re selling and that no unpaid dues interfere with your title of ownership.

Lien releases: From the title search, you might discover that some debt hasn’t been paid. If you owe any taxes, contractor costs, utilities or other bills on your home, you’ll receive a lien, or a record of any unpaid amount on your home. You must pay it off to clear your title and be able to sell your home.

Owner’s title insurance: If the title search misses something, a lien remains unpaid or the seller doesn’t actually own the property, this insurance protects the buyer from any financial loss. The seller generally pays for this.

Home warranty: As part of the negotiation with the buyer, you might decide to pay for a one-year protection plan on the buyer’s behalf. This will cover certain repair costs if needed.

Knowing the possible costs when selling your home can keep the process straightforward. Despite being potentially expensive and time-consuming, selling at a good price and without complications can save you time and energy.

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Five Free Budgeting Apps for Your Smartphone

Whether you’ve had your eye on a sharp pair of shades at the mall or are in desperate need of a coffee on your way to work, sticking to your budget can be a challenge. That’s why it’s important to  take advantage of all the help you can get.

The following free mobile apps, all of which are available for both iOS and Android, can go a long way in preventing unnecessary dents in your bank account.

Spending Tracker

As its name suggests, this app lets users create and monitor budgets for weekly, monthly, and annual expenses, organizing them in categories like gas, groceries, and clothing. Spending Tracker lets you sort through past purchases by date, name, or amount, which is useful if you want to find out what you splurged on, and when. This app should be especially handy for consumers who want to get a better sense of how they could cut back on their spending.

Level Money

A slick, easy-to-use app, Level Money lets users connect all their bank and credit card accounts to its system and provides automatic updates whenever they buy something with their plastic. This app uses the same security measures as banks and other financial institutions, which means your personal information should be well-protected. Level Money relies on simple but effective pie charts to show consumers how much money is left in their daily, weekly, and monthly budgets in categories like groceries and transportation. These graphics are also updated whenever you make a purchase using your credit or debit card.

GoodBudget

GoodBudget lets partners and family members sync their budgets across multiple devices and the Web, so when money is deducted from a particular category, everyone knows how much has been spent. That makes this app ideal for families as well as for couples who’ve just moved in together. GoodBudget splits your monthly expenses into digital “envelopes” for which you can choose the categories. It shows how much of the allocated money is left in each envelope after users plug in whatever purchases they’ve made throughout the week — which needs to be done manually because bank accounts can’t be linked to the app.

Pocket Expense

In addition to letting you monitor your budget, Pocket Expense gives you the option of tracking your bills, and it even sends alerts when a payment due date is approaching. Its calendar, which closely resembles that of the iPhone, is one of its best features. Users can scroll through it to figure out which days they tend to overspend on, and can therefore identify recurring spending habits that need to be fixed.

Wally

Another simple, user-friendly app, Wally uses a no-frills layout to help users stay on top of their budgets. Its scan feature is an especially nice touch, as it lets users take pictures of receipts before automatically pulling the most pertinent information from them, like the amount spent and the date of the transaction. Wally lets users set savings goals and notifies them when they’ve been achieved.

The bottom line

It may not always be easy, but adhering to your budget is one of the best money moves you can make. The name of the game is staying disciplined and keeping an eye on your expenses to figure out where you might have slipped up. Although it’s ultimately up to you to stay on track, these apps can provide plenty of support along the way.

Tony Armstrong is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @tonystrongarm and on Google+.

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The Benefits of Being a B Corporation

If one of the goals for your small business is to create better jobs and improve the quality of life in your community, then you may want to join the growing number of companies worldwide that have sought B-corporation status.  Becoming certified as a B corporation is a way to let investors, customers and members of your community know that your company uses best practices when it comes to sustainability.

The “B” in B corporation stands for “benefit,” and certified companies agree to benefit their community by being held to a higher standard of transparency, accountability and performance, says Amy George, co-founder of Blue Avocado, a B corporation based in Austin, Texas, that sells fashionable, reusable shopping and lunch bags. “I wanted to start a company that made being green affordable and easy,” she says. Becoming a certified B corporation is a way to show that Blue Avocado is reaching those goals, she says.

Blue Avocado (re)zip bag

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Before co-founding Blue Avocado, George worked as a sustainability consultant for Fortune 500 companies, helping them develop global impact reports, which show investors and customers how those large companies benefit their communities. “For a long time, there wasn’t a template like this for small business,” George says.

Now, B Lab, the nonprofit that certifies B corporations, has created a way for smaller companies to be certified by a third party to highlight their sustainability efforts, she says.  The company, which started in 2006, has certified over 1,000 companies as B corporations, in industries from accounting services to waste management.  While the certification option can be especially helpful for small businesses, it’s worth noting that many larger companies are also B corps, including Patagonia and Ben & Jerry’s.

According to B Lab, member companies must publicly declare that they have a responsibility to benefit the interests of their employees, community and environment, as well as their shareholders.

There is generally no special tax treatment given to B corporations. You would still need to form your company as a sole proprietorship, partnership, or corporation. If your company is a corporation, however, you may need to amend your articles of incorporation to show that your company considers its impact on the community in addition to shareholders.

Even though it’s not separate business structure, about 26 states recognize the legal status of a B corporation, which can help legitimize your articles of incorporation.

Here’s how your company can join the ranks:

1. Take the Quick Assessment

Before you officially apply for status as a B corporation, you can go to the B Lab website and take a Quick Impact Assessment survey to see where your company stands when it comes to best practices.  Ideally, the survey would be completed by a founder, CEO or other company leader, George says.

The quick assessment is roughly 75 to 100 questions, and it can be finished in about 20 minutes, she  says.  Completing the survey will help you determine how close your company may be to qualifying for B-corporation status.

2. Complete a self-audit

Once you are confident that your company would be a candidate for B-corporation certification, the next step is to take a longer self-audit, called the B Impact Assessment.  This assessment typically takes about an hour and half, though it doesn’t have to be done in one sitting, George says. However, she recommends that a company’s leadership block out a day or so to go over the questions in the assessment, because a lot of them will involve companywide policies, which company leaders will need to discuss.  “It’s more than an audit, it’s a strategy conversation,” George says.

You may be asked questions about your wage structure, promotion policies and how many local suppliers you use, says Seth Gross, principal at Bull City Burger and Brewery in Durham, North Carolina. His restaurant was the first one in the state to receive B-corporation status.

“We were asked how many of our ingredients came from local farms, and I’d have to gather proof to show that we are buying local, and that the majority of our ingredients come from local farms,” Gross says.

You’ll also probably be asked to provide supporting documentation and other paperwork.  Gross says he provided payroll records to show that his restaurant pays fair wages, promotes from within and that percentage-wise, management salaries are not excessively higher than other employees’ compensation.  (In many companies, CEO salaries have risen sharply while employee pay has been flat or decreased, and this has had a negative impact on the workforce).

After you turn in the self-audit to B Lab, you can expect to hear from them within a week, George says. Your answers will be examined and checked against those from other companies that also have applied to see if there are any responses that seem unusual or statistically unlikely, she says.  You may be asked to follow up and clarify some of your responses.

“It’s a lot of work, and so the reason for doing it has to be because you really want to,” Gross says. “It’s easy to just say ‘we support local,’ but this is a way to show that you are putting your money where your mouth is.”

3. Sign the B Corp Declaration of Independence and Term Sheet

To be certified, you need to score 80 out of a possible 200 points on your audit. Once B Lab determines that your business meets that standard, you’ll be asked to sign a B Corporation Declaration of Independence and Term Sheet documents.  The term for B-corporation status is two years, and after that you will need to recertify.

The fee for B-corp status is based on annual sales, with a minimum of $500. To keep certification, the company must pay a renewal fee each year and recertify every two years.

4. Spread the word and continue to support your community

You would seek B-corp status because you want to make a positive change in your community, and the work doesn’t stop with the signed declaration, Gross says. He continues his sustainability efforts by supporting organizations such as ShopLocal Raleigh and Sustain-a-Bull, which support locally owned small businesses (Durham’s nickname is “Bull City.”).

“In our community there is a strong grass-roots movement to buying local.  I’d recommend to other business owners look for similar organizations in their communities,” he says.

Once you have a B corporation, your efforts can be combined with these other organizations to have a bigger effect in your community, George says.  “You’re in a different group of likeminded people that deliver more than just economic impact, locally and internationally,” she says.

For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Margarette Burnette is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @margarette and on Google+.

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Top photo, from left, Amy George, Melissa Nathan, and Paige Davis.

All photos courtesy of Blue Avocado.

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How to Get Entry-Level Tech Jobs in San Francisco

San Francisco is one of the hottest cities for new grads who want to work in tech, and for good reason. The number of employees in San Francisco who work in computer and mathematical occupations is more than twice the national average, according to the Bureau of Labor Statistics — plus, they earn an average salary of $103,780 a year.

There are plenty of jobs in San Francisco that will give you the chance to explore the tech scene, whether or not you studied computer science. The trick is breaking in. So what are your options? Let’s take a look at some of the most popular entry-level jobs in tech.

If you’re looking for a software engineering job: Try developer, engineer or programmer roles with “Level I” or “Entry-Level” in the title. If you’ve done internships or taken courses on programs like C++ or Ruby on Rails, focus your search on position descriptions that mention those specific skill sets.

Economics or statistics majors might enjoy analyst roles, says Jaimie Lynn Craig, senior recruiter at Premier Staffing in San Francisco. Employers are especially interested in candidates with advanced data analysis and Excel experience. “They love to see on your resume that you know how to use pivot tables,” she says.

If you’re looking for a non-tech role: “Anything with the title ‘coordinator’ or ‘associate’ that requires one to two years [of experience], that’s your way in,” Craig says. Start out as a marketing coordinator or assistant to a product manager to learn the ropes.

“Go and assist that person and be their apprentice, just like they did in old-school Italy.” — Jaimie Lynn Craig, recruiter

Landing an entry-level tech job in San Francisco is all about getting your name out there and meeting as many people as possible, says Wendy Saccuzzo, director of career development at San Francisco-based nonprofit Women Who Code and a tech recruiter at Riviera Partners. Follow these steps to get your foot in the door at a company you’ll love.

Step 1: Set goals

“Maybe you don’t know what you want to be when you grow up, but set a goal for what you want to be in your first year,” Saccuzzo says.

Decide what you want to accomplish at your first job and create a list of three to five companies that will help you meet that goal, Saccuzzo says. Perhaps you studied communications or marketing in undergrad and you’re interested in helping tech companies build their brands. If you were an art major, maybe you’re thinking about a career in user experience (UX) design. Once you have a few target companies in mind, start making connections one by one.

“Create a game plan for how you would network your way into the company.” — Wendy Saccuzzo, tech recruiter

Step 2: Network

LinkedIn is the best place to up your networking game. Fill out your profile with your job, internship and campus leadership experience. Join alumni groups or search for industry groups that align with the tech job you’re looking for. Go to Interests > Groups at the top of the LinkedIn homepage and click “Find a group” on the next page.

Then start messaging. Contact people in your network who have jobs similar to the ones you want. Reply privately to someone who has published a blog post you like on one of your LinkedIn groups; in that case, you don’t have to be connected to that person directly to reach out, Saccuzzo says.

Pro tip: Search for fellow alumni in the Connections > Find Alumni drop-down menu at the top of your profile. You can message people who also graduated from your college even if they’re not in your first-degree LinkedIn network.

Step 3: Know what you’re getting into

You’ve met for coffee with connections you’ve made, you’ve gotten referrals for a few jobs in San Francisco and you’re ready to interview. But before you commit to working for a tech company, research the CEO and the organization’s track record.

Especially if you’re interested in working for an early-stage startup, get a sense for who the founders are and whether they’ve had experience building successful companies. Search databases like crunchbase.com to see how the company is funded. Every job seeker is comfortable with a different level of riskiness, says Saccuzzo, but it’s always a good idea to ensure you trust the leader’s decision-making before you sign on the dotted line.

“It’s really important to make sure the executive knows what they’re doing and that they’re heading in the right direction,” she says.

What’s next?

Both Saccuzzo and Craig suggest taking stock of what companies and career paths are out there by going to San Francisco-area meetups. “We’re a hotbed for meetups here in the Bay Area,” Saccuzzo says.

Search for San Francisco groups on meetup.com by typing in the tech track or position you’re interested in — “product management,” for instance, or “web developer.” Go to relevant meetups and plan to have at least one meaningful conversation with a fellow attendee. Connect with him or her on LinkedIn the next day and start building your network of contacts in the area. And most importantly, stay positive and willing to work hard. “Attitude trumps experience,” Craig says. “When you don’t have experience, your attitude is going to win.”

Brianna McGurran is a staff writer covering education and life after college for NerdWallet. Follow her on Twitter.

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5 Ways to Recover After Your Car Is Repossessed

When your car is repossessed, you may not even know why it happened — or how you’re going to get to work the next day. But what you do next – whether you decide to reinstate the loan, pay what you owe or ignore everything – may have long-term credit consequences. Here’s what you can do to take care of your transportation needs and protect your credit from further damage:

1. Ask why your car was repossessed

If you’ve fallen behind on car payments, you may know exactly why your car was repossessed. Other times, it’s not so obvious. In some states, not getting insurance stipulated in a loan or lease contract can count as a default, and your car can be repossessed because of it. Call your lender before jumping to conclusions so you can clarify how you can set things straight.

2. Find out if you can get it back

Often, a bank or repossession company will let you get your car back if you pay back the loan in full, along with all the repossession costs, before it’s sold at auction. You can sometimes reinstate the loan and work out a new payment plan, too. The repossession may not be removed from your credit report in these situations, but your new payments will generally be reflected if you make a deal with your lender (but not if you buy the car back at auction). Before getting your car back, think through these questions:

If you got your car back, would you be able to afford insurance, maintenance and gas? Neglecting important repairs or getting into an accident while uninsured may land you in an even more difficult financial situation. And without gas, you still wouldn’t be able to get from A to B. If you can’t afford these expenses, redeeming your car may not be your most cost-effective alternative.

Do you have access to affordable public transportation or a carpool? Getting to work by bus or other means may be a better option than reinstating your loan or paying your balance and repossession expenses in full.

Are you going to declare bankruptcy? If you’re extremely behind on all your bills and have no way of turning things around, you may already be considering bankruptcy.  File before the bank or repo agency sells your car, and there’s a good chance you can keep your car and work out a plan to catch up on payments. Talk to your bankruptcy lawyer about whether this would be possible, based on the type of bankruptcy you’re filing.

3. Know your rights

Even when your car is towed away, you still have certain protections:

The lender or repo agency can repossess the car but not the items inside. If you left your world-class CD collection on the front seat, for instance, the lender can’t keep or sell it. In some states, the bank or repo agency may be required to give you a list of items inside the car and tell you how you can retrieve them. If that’s not the case, you may have to ask. Generally, this does not apply to accessories you may have installed in the car, such as new rims or a souped-up audio system.

Your property shouldn’t be damaged in the process. If your car is locked in your garage, for example, a repo agent can’t break down your garage door to get your car. Such actions would generally be considered “breaching the peace.” If you feel that your rights have been violated, consider contacting a consumer lawyer.

4. If the car is sold, ask if you still owe money

When a bank or repo agency repossesses your car and sells it at auction, you might think that you don’t owe any more money on it. That’s not always the case. Say a bank gave you a $10,000 car loan and you still owed $9,000 on it when you defaulted. If the repossessed car sold at auction for $7,000, you’d still owe $2,000 on the car, plus repossession expenses, in some cases. This is called a deficiency balance.

Deficiency balances are common, especially when your auto loan was for a new car. You can sometimes lose about 10% of a new car’s value just by driving it out of the lot. Even so, the lender or repossession company still has the responsibility to conduct the sale in a “commercially reasonable manner.” If the repossessed car is sold for a price far less than the fair market value, you may be able to dispute the high deficiency balance in court.

If you ignore this deficiency balance entirely, the account may be sent to collections. The lender can also sue you for this balance, generally, if the debt is within the statute of limitations. Accounts in collections and public judgments can stay on your credit report for seven years, so if you have the money, it’s usually a good idea to pay off the remainder to minimize the damage to your credit.

5. Work on improving your credit

A repossession typically stays on your credit report for up to seven years, so a big part of boosting your credit afterward is just waiting. But you can also be proactive in building your credit by paying your bills on time and chipping away at your existing balances. This way, by the time your negative history comes off the record, your credit score will be much higher than before, and you’ll be in a better position to rebuild.

Claire Davidson is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @ideclaire7 and on Google+.

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Cities Where the Middle Class is Rising

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.

Methodology

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.

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