Where Do I Fall In The American Economic Class System?

Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics.

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Decreasing Middle Class.

The latest census numbers indicate what income ranges constitute the middle class (as of 2020). This will depend on family size. For a single individual, a middle-class income ranges from $30,000 - $90,000 per year. For a couple it starts at $42,430 up khổng lồ $127,300; for a family of three, $60,000 - $180,000; & four $67,100 - $201,270.

Middle-Class Income RangesHousehold Size:  Single TwoThreeFourFive Income RangeMedian Income
 $30,000 - $90,000 $42,430 - $127,300$60,000 - $180,000$67,100 - $201,270$76,000 - $210,000
Source: Pew Research Center & U.S. Census Bureau (2020)

Lowest và Highest Bracket Growth

The most interesting part of the Pew report, perhaps, was its finding that the middle class is shrinking not only because more people are poor but also because more people are rich. The percentage of lowest-income earners—those earning less than two-thirds of the median income—had grown four percentage points, from 25% lớn 29% of the population. Over that same period, though, the percentage of Americans in the highest-income households also rose by seven points since 1971, taking that group from 14% lớn 21% of the population.

The shrinking middle class is less a decline in how well the population as a whole is doing. Also, there is more polarization of where growth is coming, at the extreme bottom và top of the economic spectrum. So, it is not just that people are falling out of the middle class into the lower class—they are also rising into the upper class, albeit in smaller numbers.

Demographic Changes

Also, chú ý that the state of the U.S. Economy is changing with—and because of—demographic changes in American society. On average, and according lớn reports by the U.S. Census Bureau, the American population has grown older. This aging makes a big difference khổng lồ the median income because retirees typically live off savings và generate little income. Also, the country is significantly more diverse than it was in the 1970s. Increases in the number of immigrants, for example, push down median incomes because immigrants, on average, make less money.

See the chart from the report below, for these later figures on how the class composition has changed since the 1970s.

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Who Is Losing Ground?

However, the data also suggests that middle-class families continue to thua financial ground khổng lồ upper-income families. While the median income of the upper class increased 9% over the past decade, the median income of the middle & lower classes increased by about 6% over the same period.

If we take a longer view—say, from 2000 lớn 2021—we see that only the income of the upper class has recovered from the previous two economic recessions. Upper-class incomes were the only ones khổng lồ rise over those twenty years.

This segmented rise has contributed to an ongoing trend since the 1970s of the divergence of the upper class from the middle & lower classes. In another piece, Pew reported that the wealth gaps between upper-income families và middle- & lower-income families were at the highest levels ever recorded.

The Racial Wealth Gap

As a growing body toàn thân of research is demonstrating in ever greater detail, there is a substantial racial wealth gap in the United States. The Pew report (see chart below) shows that in that year, 28% of Asian households & 21% of white households were in the upper class, but just 12% of black households and 10% of Hispanic households. (Note that Pew researchers, lượt thích the U.S. Census Bureau, use the term Hispanic, not Latinx.)

Black households did see progress, Pew reports. "Over the longer term, black adults sustained the largest increase in income status from 1971 to năm ngoái and were the only major racial or ethnic group to lớn experience a decline in their lower-income share. The mô tả living in lower-income households among đen adults declined from 48% in 1971 khổng lồ 43% in 2015, and the share of upper-income households grew to lớn 12% from 5% over the same period." Pew also points out that đen adults "are still significantly less likely than adults overall lớn be middle income or upper income." On the other hand, the number of Hispanic households in the lower-income group grew from 34% to lớn 43%, which Pew attributes to an increasing percentage of immigrants in the population group.

The percentage of lower-income white households stayed roughly the same, with increases at the top và a shrinking middle-income group. Và Asian households experienced increases at both the top and the bottom of the income scale.

The đứng top 1%

When we look at the đứng top 1%, it's clear which group of the population has profited the most. According to a recent report from the Economic Policy Institute, the top 1% of U.S. Wage earners take home 21% of U.S. Income. You can see this as you look below at the note from the report. These income shares are near historic levels for the top 1%.

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According lớn the data, the minimum income needed khổng lồ be included in the đứng top 1% of the population in 2021 was close lớn $600,000.