Montgomery County is a great place to live, work, and visit, but it faces economic challenges. One of the most serious problems is that residents’ incomes are stagnating, which is a sign that overall prosperity and quality of life might be stagnating also. The county’s median household income has not kept up with inflation since 2005.¹ The third quarter 2023 Montgomery County Economic Indicators Briefing ² noted that Montgomery County had the slowest growth rate in per capita personal income from 2004 to 2021 among 30 similarly sized counties, barely keeping up with inflation.³

But these top-line statistics don’t explain the full story. While multiple factors could underlie this stagnancy, one trend we can examine is how Montgomery County’s population has changed along the income distribution. If the low-income end of the distribution is growing faster than the middle- or high-income populations, then the average and median incomes may be depressed.

The analysis we performed for this blog series showed that uneven growth along the income distribution is occurring in Montgomery County. Specifically, our analysis shows that between 2005 and 2022:

• Montgomery County’s low-income population grew faster than the other groups.
• Montgomery County’s middle-income population shrank.
• Montgomery County’s income-based population shifts are the most pronounced in the region and among the most pronounced in the entire country.

To conduct this study (see the Navigating Income Shifts in Montgomery County: Towards Shared Prosperity research brief for full methodology and report), we divided the population into low-, middle-, and high-income groups, based on the American Community Survey’s (ACS’s) ratio of income to poverty level (Table 1), and tracked how these statistics changed from 2005 to 2022. While this method of income classification accounts for family size, its main limitation is that “five times the poverty level,” the highest reported income category in the ACS, falls just below Montgomery County’s area median income for a family of four in 2022. As a result, much of what would still be considered “middle-income” in Montgomery County falls in the high-income category. The research brief provides more detail on the methodology.

Income Dynamics in Montgomery County

Montgomery County added almost 88,000 low-income residents from 2005 to 2022, the largest share of which came from the lowest income group—those living under the poverty level. At the same time, Montgomery County lost over 26,000 middle-income residents. Even though the county gained over 67,000 high-income residents, these gains weren’t enough to offset the changes at the other segments of the income distribution, which play a large role in Montgomery County’s overall stagnating incomes.

These changes led to a significant shift in the composition of the population along income lines. While the high-income share of the population remained at just over 50%, the low-income share rose by five percentage points to 30%, while the middle-income share declined by five percentage points to 18%.

The next blog in the series will show how Montgomery County’s trends compare with its neighbors in the Washington, DC region, as well as the entire nation. The last blog will discuss what these statistics mean for the county and what we can do to improve them.

Before moving on, it is important to note that these blogs do not advocate for any income group over any other. People’s income levels do not reflect their value as humans, and there is no ideal population composition that a community should target. The fact that a significant portion of the population struggles to afford necessities like food, healthcare, and housing is a failure on the societal—not individual—level, and the causes of which extend far beyond the scope of this research brief. As a local land use agency, Montgomery Planning has a limited set of tools to address these problems, but Thrive Montgomery 2050, the recent update to the county’s General Plan, details the comprehensive approach we will take to promote economic growth and social equity for the next 30 years or so.

Ultimately, these blogs will suggest that by creating enough space for everyone who wants to be here, mainly through increasing market-rate housing production, the zero-sum game between income groups can be minimized and low-income people can continue to see the county not only as a springboard to economic mobility, but as a place where they can remain as they grow their families and climb the economic ladder.

[1] Using Consumer Price Index from St. Louis Federal Reserve Economic Data. American Community Survey Median Household income for Montgomery County in 2005 (in 2022 dollars) was $123,110, and Median Household Income in 2022 was $118,323.

[2] https://montgomeryplanning.org/wp-content/uploads/2024/01/MoCoEconomicIndicatorsBriefingQ32023_010824_Final.pdf

[3] Using Consumer Price Index from St. Louis Federal Reserve Economic Data. Bureau of Economic Analysis Per Capita Personal Income in 2004 (in 2021 dollars) was $87,902, and Per Capita Personal Income in 2021 was $92,741.

About the author
Benjamin Kraft is a research planner in Montgomery Planning’s Research and Strategic Projects Division. His research and planning work focus on topics related to the economy and employment. Ben has a Ph.D. in city and regional planning from Georgia Tech and a master’s degree in urban planning from the University of Michigan.