Experts Explain How They Define Middle Class Today

Aerial view of residential houses at autumn (october).
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The middle class contains about half of America, according to the Pew Research Center — 50%, to be exact. Another 21% fall into the upper class and 29% are in the lower class. But what is the middle class, exactly, and who gets to decide who’s a member?

Certainly not the 50% that Pew categorizes as something else.

“Ninety percent of people interviewed say they consider themselves to be in the middle class,” said Jeff Webb, author of “American Restoration: How to Unshackle the Great Middle Class.”

If nine out of 10 people consider themselves to be middle class, but only half truly are, perhaps the definition of the demographic has changed.

GOBankingRates talked to several experts who think that’s precisely the case. Find out what it truly means to be middle class in the US.

Middle-Class Money: What Are the Income Requirements?

Money — and the security it brings — is at the heart of what it means to be middle class, but the concept also includes intangibles that are harder to quantify.

In an age where more than 40% of the country’s six-figure earners live paycheck to paycheck, it’s getting harder to tell the haves from the have-nots. But in its simplest form, the middle class is neither poor nor rich, so what are the income parameters?

According to the Pew Research Center’s definition, individuals belonging to the middle class have an annual household income ranging from two-thirds to double the national median. A middle class household of three in Mississippi would need an income between $38,130 to $113,820. On the other hand, a family of two in California would need an income of $36,373 to $108,586.

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It’s Not How Much You Have, It’s How Much You Can Buy

The problem with specific dollar amounts, of course, is that a dollar buys a whole lot more or less depending on where you spend it.

A more accurate accounting would probably be to measure against the earner in the middle.

“In the United States, the term ‘middle class’ refers to households with incomes between two-thirds and twice the median income in their area,” said Jensen Lee, founder and managing member of BidetsPLUS.

The Rich Have Grown in Wealth and Numbers at the Expense of the Middle Class

The American middle class emerged as a force after World War II, but about 30 years later, it began contracting and continues to shrink to this day.

“While the middle class is declining — from 61% in 1971 to 50% in 2021 — it is still alive and attainable, despite challenges,” said Lilian Chenco, founder and chief operating officer of Bar None Games. 

Those challenges are not insignificant.

Pew backs up Chenco’s numbers. It also points out that as the middle class has steadily contracted over the last half-century, the ranks of the rich have swelled and the wealth gap has widened.

In 1983, upper-income households owned 60% of the country’s wealth. By 2016, their share had grown to 79% — that’s four dollars out of five for the rich, with everyone else left to divvy up the scraps. The wealthiest Americans now have 12-figure fortunes and it’s plausible that one of them will become the world’s first trillionaire in the near future.

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For middle-class Americans, the fortunes have been flowing in the other direction.

The problem is that many people are now finding it harder to maintain the same level of financial success as their parents or grandparents did. Wages have been stagnant for decades, the cost of living has increased and the ability to save money has diminished. The issue gets even thornier as people are on the verge of a global financial recession. The middle class still exists but the entry barrier got steeper — and it got more difficult to stay within the middle class.

The Middle Class Is the American Dream — Or, It Used To Be

In the abstract, the middle class has always represented the American dream — economic security, a safe and comfortable life and a future for your children. But is the dream becoming a fantasy? For many, it already has.

“While middle-class Americans have always been generally optimistic about their economic security and future, the COVID pandemic and today’s brutal inflation are taking their toll,” said Webb.

Attaining things generally associated with being in the middle class — like homeownership, some level of savings, a retirement fund and job security — are now seen less as certainties. What’s worse, Americans feel abandoned by big business, the wealthy professional class and their government. And while the perception that working hard, getting an education and being a good citizen were always seen as the path to economic security and a relatively comfortable lifestyle, today’s economic challenges are rocking the foundation of middle-class confidence and optimism.

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