What is a middle class income in America? A lot less than you think and Americans are getting poorer by the day.

Questions around being middle class are coming up a lot in the last few years.  This inquiry is coming up because people are grasping at straws trying to maintain a quality of life that reflects a middle class lifestyle but many have incomes that simply do not support their spending.  Americans are set to become poorer this year.  As we penned an article talking about the destruction of the middle class economy, for the first time in a generation the middle class is now a minority.  The economic engine that made us the envy of the world is now rare.  In the US we have a small upper-class that is only getting wealthier while the ranks of the poor and working class is expanding.  What is a middle class income in America?  The answer may surprise you.

The new middle class in America

It is always surprising to see politicians talk about income because it truly reflects how out of touch they are with the public.  Many of them think that $250,000 a year is middle class.  That is not only incorrect it is completely incorrect.  If you are making $250,000 a year you are in the top 2 percent of earners in the country.  So no, that is not middle class.

What most of think of as the middle is the median.  In other words, the line where half make more and half make less.  Averages can get skewed by ridiculously high income earners (think of hedge fund managers, CEOs, actors, etc).

So here is the actual middle class income figures:
income levels

Is this higher or lower than what you expected?  Some of these figures are off so you actually have to check various sources.  Take a look at median household income which is a good measure of household spending power:
household income [median householdincome]

Source:  Census

The typical US household has a median household income of $53,700 according to latest Census figures. And for most households, this means two working people living the two income trap.  That income level isn’t much when you actually look at a detailed budget of where this money goes.  And the bigger problem of course is that the middle class is now officially a minority for the first time in over a generation:

middle class minority

Why is this happening?  First, half of Congress is made up of millionaires and corporate policies over the last generation have been designed to strip away any worker protection.  Health benefits?  Push costs to workers.  Pensions?  Get rid of those for the working class however high level executives still have gold plated pensions.  Job security?  Forget about it.

So middle class income in the US is actually fairly low especially when you factor in the insidious nature of inflation.  You don’t think inflation exists?  Just look at the cost of items in 1938 before purchasing power was slammed:


Inflation is driven around by this digital printing press that we have.  Instead of making the middle class grow it has made it into a minority while making the top 1 percent even wealthier.  The above data should highlight that a middle class income today is simply not providing a very good quality of life for many and that is why this election season has gotten so rancorous.  People need only look at their paychecks and the cost of living to see what is really going on with the economy.

RSSIf you enjoyed this post click here to subscribe to a complete feed and stay up to date with today’s challenging market!     

TAGS: , ,

3 Comments on this post


  1. Mark Nesselhaus said:

    Interesting….I am 59 and my wife is 43. She is on disabilty and I work in assisted living food service at 25 hours a week. Combined, we earn about $19k per year and bairly get by. Oh yea, North Carolina says we make too much for SNAP food assist.. Go figure…

    January 15th, 2016 at 5:06 am
  2. sth_txs said:

    Inflation is a big deal. The second big deal is taxation. Years ago, my first job was a low $40k’s salary. I paid half my health insurance and put a small percent into a 401k. I lived in a state with an income tax. Before and after my check, I determined that I worked 4.5 months of the year that I could visibly count for local, state, and federal taxes. Sales tax on food, electricity, phone. Car registration. That is only what I could count. Who knows how much tax was in my apartment rent among other things I would buy.

    January 21st, 2016 at 7:22 pm
  3. Edward said:

    $32k/year or $15/hour is enough to get by in RI, $50 for 2 people or about $12/hour each, or mininum wage ($9.60/hour) and ~60/hours a week of work. Being healthy I can do that, but it would (did) suck.

    June 19th, 2016 at 11:28 pm


Subscribe Form

Subscribe to Blog

Enter your email address to receive updates from My Budget 360:

100% Private & Spam Free.

Popular – All Time

  • 1. How much does the Average American Make? Breaking Down the U.S. Household Income Numbers.

  • 2. Top 1 Percent Control 42 Percent of Financial Wealth in the U.S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth.

  • 3. Is college worth the money and debt? The cost of college has increased by 11x since 1980 while inflation overall has increased by 3x. Diluting education with for-profits. and saddling millions with debt.

  • 4. The Perfect $46,000 Budget: Learning to Live in California for Under $50,000.

  • 5. Family Budget: How to go Broke on $100,000 a year. Why the Middle Class has a hard time Living in Expensive Urban Areas.

  • 6. Lining up at Midnight at Wal-Mart to buy Food is part of the new Recovery. Banks offering Mattress Interest Rates. The Invisible Recovery Outside of Wall Street.

  • 7. You Cannot Afford a $350,000 Home with a $75,000 Household Income!

  • 8. Crisis of generations – younger Americans moving back home in large numbers. Student loan default rates surging largely due to for-profit college expansion.

  • 9. The next massive debt bubble to crush the economy – 10 charts examining the upcoming implosion of the student loan market. $1 trillion in student loans and defaults sharply increasing.

  • 10. Welcome to the new model of retirement. No retirement. In 1983 over 60 percent of American workers had some kind of defined-benefit plan. Today less than 20 percent have access to a plan and the majority of retired Americans largely rely on Social Security as their de facto retirement plan.
  • Categories

    wordpress stats