What’s Considered Middle Class?

Nicolas Cesare
Middle class family standing in front home.
Reading Time: 4 minutes

Many of us would consider ourselves middle class, but what does that really mean? The middle class is associated with hard work and financial stability, but more and more middle class Americans are getting a lot more of the former and a lot less of the latter. Is the middle class shrinking in America, or are middle class people being left behind by the economy?

What Does it Mean To Be “Middle Class?”

Historically, the middle class has been associated with economic stability. To be in the middle class meant that you knew where your next meal was coming from. You could probably afford a decent home in a safe neighborhood and a few children if you so desired. Maybe mansions and yachts weren’t in your future, but you didn’t long for those things because you had stability, and that was what mattered.However, this traditional notion of the middle class is slipping through our fingers. Today, many people who are technically middle class are still struggling with debt — whether it’s in the form of a mortgage, a car loan, or student debt. Today’s middle class is often living paycheck to paycheck, and a report from the Federal Reserve showed that 47 percent of Americans could not produce $400 to cover the cost of a financial emergency.

Middle Class Salaries

Since economic class is associated with income, it makes sense to pin down who the middle class are by looking at their salaries. However, this isn’t as easy as it first seems. One reason why it’s so hard is because salaries among the middle class vary wildly depending on location. The median income in Birmingham, Alabama is $31,200, but that wouldn’t last you very long in a city like Washington, D.C., where the median income is $70,800.Across America, middle class salaries are estimated to be between $35,000 and $122,500. However, these figures might not tell us much. Even at the upper end of this national middle class calculation, a family would be considered low income in San Francisco.

Middle Class as a Lifestyle

Instead of defining the middle class as a salary range, which doesn’t tell us very much at a national level, some people prefer to associate being middle class with living a certain lifestyle; namely, a lifestyle founded on financial security without reaching into the excess of the upper class. Middle class people are associated with stable skilled employment, which funds their lifestyles. According to this view, being middle class means that you can afford to buy a home, raise your family, and probably retire comfortably. You’re not worried about money, per se, but your purchases are modest compared to wealthy people.Defining middle class as a lifestyle has some benefits over using a salary range. It adjusts for regional differences quite well and it also accounts for family size. A single individual could live comfortably with a relatively small income compared to a family of five with that same income split between them.

Who is Middle Class

Most people think that they’re middle class. A 2017 poll by Gallup showed that 62 percent of Americans thought of themselves as belonging to the middle class. However, just 52 percent of Americans actually belonged to the middle class in 2016. That’s down from 61 percent in 1971.Reasons for this discrepancy are many and varied, but one striking feature of the data is that young people are less likely to consider themselves to be middle class compared to their parents. This information and other economic factors have caused some to worry that the middle class in American is shrinking.

Why Is the Middle Class Shrinking in America?

Although the American economy has grown, middle class workers aren’t seeing the kind of gains that they used to. Between the years of 1979 and 2015 the middle 60 percent of earners in the United States saw their incomes grow by just 46 percent after taxes. Compare that to the 242 percent gain seen by the top one percent of earners in that same time period.This data is consistent with calls for concern about wage stagnation here in the U.S. While American workers are seeing raises from year to year, the purchasing power that those raises give them has stayed about the same from 1964 to 2018.

Stagnant Pay vs Rising Costs of Living

It’s difficult to pin down exactly why wages in the U.S. have remained stagnant for the middle class. Some experts point out that, while real wages have stated roughly the same, the cost of supplying employees with benefits such as healthcare and retirement accounts has increased. The former because of an increase in the cost of healthcare in general, and the latter because more Americans are living longer, extending their retirement and raising questions about whether they’ll ever be able to retire.All this comes at a time when the American economy is shifting away from stable long-term employment and more towards the gig economy, which will require new metrics to measure and affect the kind of financial stability that many middle class Americans enjoy.

How to Join the Middle Class or Stay In It

If you don’t make enough money to fund a middle class lifestyle, then you probably wish you were. And if you currently consider yourself middle class, then you’d probably like things to stay that way, if not improve.

Stick To Your Budget

The economic factors that are causing the middle class are largely outside of a single individual’s control. However, that doesn’t mean that you’re completely helpless when it comes to finances. No matter which class you identify as, everyone can benefit from a personal budget.

Go To College

If you haven’t gone to college or you think that you can attain a degree that will increase your earning power, then you can find a way to finance college for yourself. Data from the Bureau of Labor Statistics has shown that income improves dramatically between people with only a high school diploma and those with a Bachelor’s degree.

Advance Your Career

Even if you don’t want to head back to school, you can still improve your income within your current career path. It’s possible to find a higher paying job while maintaining your current employment, and to use that to improve your income.The middle class may not be what it once was, but that doesn’t mean that you have to get kicked out of it. By becoming financially savvy and staying on top of your career, you can maintain or even grow your income, ensuring that you can enjoy the kind of financial stability typically associated with the middle class.

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