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What Is Middle-Class Income?

Chime Team • July 10, 2024

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Middle-Class Income

The term “middle class” encompasses a range of earnings that typically allows individuals and families to afford a comfortable lifestyle. The middle class can typically meet basic needs like housing, education, and healthcare while also enabling savings for future security and discretionary spending.

The Industrial Revolution gave rise to the middle class when economic changes led to the emergence of a new social layer.¹ This group was positioned between the affluent upper class and the working lower class, characterized by stable employment, home ownership, and the ability to save and invest. Over time, the middle class has come to symbolize economic stability, contributing significantly to consumer spending and driving national economies.

However, a recent report from the Pew Research Centre suggests the American middle class is shrinking.² In 1971, 61% of Americans were classified as middle-class households. In 2023, this number fell to 51%. Since the 1970s, the share of household income held by middle-class families has fallen each decade. Today, there are fewer middle-class households in America, and the income of the middle class has not risen as fast as those in upper-income households.

Why is the middle class important?

Understanding middle-class income is important as it provides a benchmark for evaluating financial health and making informed decisions.

For example, knowing whether your income aligns with the middle-class range in your region can influence career choices, educational investments, and lifestyle decisions. It also plays a critical role in retirement planning, helping people set realistic savings goals and choose suitable investment strategies.

The middle-class income bracket varies widely across different geographical regions due to differences in the cost of living, taxation, and social welfare policies. What constitutes a middle-class income in a high-cost urban area like New York may differ significantly from a place like rural Arkansas. However, the median household income for middle-income families in the U.S. in 2022 was $106,092.²

This variability underscores the importance of contextual understanding when applying the concept of middle-class income to personal financial planning.

The relevance of middle-class income also impacts broader economic and policy-making spheres. The health and size of the middle class are often indicators of economic stability and sustained growth within a country. Policymakers focus on measures that support and expand the middle class, like education, healthcare, and housing affordability.

Understanding where you stand in relation to the middle-class income bracket can empower you to make strategic decisions about budgeting, saving, and investing. It encourages a forward-looking approach to personal finance, emphasizing education, skill development, and financial literacy as tools for economic mobility and security.

Middle-class income is a financial term that encapsulates not only a range of earnings but also a lifestyle and set of opportunities available to individuals and families. It’s an indicator of economic health, social stability, and individual financial well-being. Understanding and striving for a middle-class income can guide personal financial decisions, support economic policy development, and contribute to a balanced and equitable society.

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1 Information from Pew Research Center's "The State of the American Middle Class" as of June 26, 2024:

2 Information from the Library of Congress's "Rise of Industrial America: Overview" as of June 18, 2024:

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