8 Surprising Facts About Middle-Class Income in America

Did you know that the middle class makes up the majority of America’s population?

According to the Pew Research Center, in 2020, approximately 50% of adults in the United States were considered part of the middle-income tier. Since the 1970s, this number has gradually decreased as more people dispersed into the lower-income and upper-income categories.

With most Americans in the middle, many surprising facts about middle-class income in America often go unnoticed.

What Is the Middle Class?

The term “middle class” often refers to a socio-economic group that falls between the upper and lower classes. The income class is generally defined as individuals or families with a moderate income, education, and wealth.

What Is Considered Middle-Class Income?

There are different ways to calculate middle-class income. For example, there is an average income approach, where the middle class is defined as households earning between 75% and 125% of the median household income in a particular area. Another approach is the percentage approach, where a specific percentage range of the population defines the middle class.

According to the US Census Bureau, the median income in 2021 (most recent data) is $70,784, with a range of $47,000 to $141,000 being considered middle class.

Middle-Class Income Varies Greatly by Region

The cost of living differs significantly from one part of the country to another, resulting in varying middle-class income thresholds. For example, making six figures a year may be considered middle-class income in some regions but could fall into the upper-income category in others.

For example, $47,000 (lower-middle class) might allow a relatively comfortable lifestyle in the Midwest. In coastal states, such as California or New York, making ends meet may be challenging (or impossible) even with a higher middle-class income.

American vs Global Middle Class: What’s the Difference?

While the concept of the middle class may be similar across many countries, its definition and characteristics can vary greatly. For example, in developing countries, a middle-class income could mean having access to basic necessities such as food, water, and shelter.

In America, however, the middle class is often associated with a certain standard of living that includes owning a home, having health insurance, and being able to afford luxuries such as vacations and leisure or extracurricular activities.

To put this in perspective, a 2021 Pew Research Study illustrates that the global middle class is defined as those living on $10.01-$20 a day or an annual income of about $14,600 to $29,200 for a family of four. 

The other income groups are as follows: people experiencing poverty live on $2 or less daily, low income on $2.01-$10, upper-middle income on $20.01-$50, and high income on more than $50 per day.

Globally, 60% of the population is considered low or poor income level. Thus, American middle-class income makes a household wealthy globally.

8 Surprising Facts About Middle-Class Income in the US

With a better understanding of who is middle class, what is regarded as middle-class income, and how it differs globally, let’s dive into some surprising facts about middle-class income in America:

1. The Middle Class Is Shrinking

As mentioned earlier, the middle class in America has been gradually shrinking since the 1970s. Theories for this change include rising income inequality, stagnant wages for middle-class workers, and an increase in low-paying service jobs.

Current inflation rates will also affect the middle class, bumping more people into lower income over time. 

2. The Middle Class Is Diverse

Contrary to popular belief, the middle class is not a homogenous demographic. It includes American adults from diverse backgrounds and occupations, such as teachers, engineers, nurses, and small business owners.

In the past several decades, people of different socioeconomic backgrounds, races, and genders have increasingly joined the middle class.

3. The Middle Class Is Struggling With Debt

Despite having a moderate income level, many middle-class Americans struggle with debt. According to Experian, the average American had about $90,460 in debt (excluding mortgages) in 2021. Of that amount, $14,750 was credit card debt.

What’s the cause of this debt? It could be due to student loans, unrestrained consumerism, medical expenses, living above one’s means, and a high cost of living. Unfortunately, these debts are unlikely to decrease with current inflation rates, an impending recession, and soaring daily living costs.

4. The Middle Class Is Not Guaranteed Financial Stability

While not specific to the middle class, a shocking 28% of Americans have no retirement savings, as The Motley Fool Ascent reported.

While being part of the middle class may provide a certain level of financial stability, it is not guaranteed. With the rising cost of living and stagnant wages, many middle-class families struggle to save for retirement and unexpected emergencies.

5. The Middle Class Is Vital for Economic Growth

The middle class is essential for sustaining economic growth in America. As consumers, they drive demand for many goods and services, which creates job opportunities and boosts the economy.

6. The Middle Class Is Highly Educated

Education plays a significant role in determining an individual’s potential for upward mobility in the middle class and beyond (upper class). Households with heads that have college educations (a bachelor’s degree or higher) are significantly more likely to be in the middle class (or above) than their counterparts with high school diplomas (or less).

7. The Middle-Class Faces Unique Challenges

Middle-class Americans often face unique challenges, such as affording medical care, balancing work and family life, paying for their children’s education, and caring for aging parents. These challenges can put a strain on their financial stability.

8. The Middle Class Has Different Perspectives on Financial Success

For some, being part of the middle class is a stepping stone to achieving the American Dream and striving for upward mobility. Others view it as a comfortable and stable lifestyle without aspirations for significant wealth or status.

Regardless of the motivation or underlying beliefs, the middle class remains integral to America’s social and economic fabric. However, as we continue to see changes in income levels and societal norms, it will be crucial to monitor the state of the middle class and address any challenges they face.

Middle-Class Income FAQ

Do you still have questions about the middle class? Review these frequently asked questions.

Is middle-class income reserved for a particular class?

The short answer is no. While some associate the middle class with a certain income level or lifestyle, it is not reserved for any specific social class. It is a broad and diverse group that includes individuals from different backgrounds and occupations.

How does the cost of living affect middle-class income?

The cost of living varies depending on location, making it challenging to determine a universal income level for the middle class. In areas with a higher cost of living, individuals will need to earn more to maintain their standard of living.

Are there any benefits or drawbacks to being middle class?

Being part of the middle class can have both advantages and disadvantages. Some benefits include potential financial stability, access to certain luxuries and opportunities, and social mobility. However, challenges such as debt, balancing work and family life, and retirement savings can also arise. 

How can I earn a middle-class income?

Earning a middle-class income typically requires obtaining an education beyond high school and securing a stable job with growth opportunities. However, location, industry, and personal choices can also impact income. Ultimately, balancing earning enough to maintain a comfortable lifestyle while pursuing personal fulfillment is essential.

Additionally, entrepreneurship is a viable path to achieving a middle-class income in today’s open market. With the rise of technology and online platforms, individuals can create their own businesses and generate revenue through various means, such as selling products or services.

What opportunities exist for the middle class?

Numerous opportunities are available to the middle class, including access to education, employment in various industries, homeownership, and entrepreneurship. However, access to these opportunities may vary based on location, education level, and personal circumstances.  It’s essential to stay informed about available resources and continuously strive for self-improvement to take advantage of these opportunities. 

The middle class also has the potential to influence social and economic policies through their consumer behavior and voting power, creating opportunities for positive change.

There’s No Such Thing as a Typical Middle-Class Earner

The concept of the middle class is complex and ever-changing. While being part of the middle class brings financial stability and access to various opportunities, there is no specific type of person who defines it.

Instead, the middle class is a diverse group striving for economic mobility and stability in today’s society. Thus, its impact on the economy and culture cannot be underestimated or overlooked. It will continue to evolve and face challenges, but ultimately, the middle class remains integral to the American Dream.

This article originally appeared on Wealth of Geeks.