What does it even mean to be middle-class in America these days?
The Pew Research Center has put a financial definition to the term “middle income.” To be considered part of that group in 2021—which is synonymous with middle-class, according to Pew—a single American must have earned $30,003 to $90,010, according to a new set of reports released Wednesday.
But that range does vary by the size of the household. A three-person household must have earned $51,962 to $155,902 to be considered middle-class while a family of four must earn about $60,000 to $180,000.
This comes with a handy-dandy chart:
This is followed by a question none of you were asking because the answer is obvious:
Why the different ranges for different sizes of families? Smaller households typically require less income to support the same lifestyle as larger households, especially if that family includes children who don’t yet earn an income.
Regardless, while these numbers are useful for understanding medians, any measure of income stratification that doesn’t take into account the rather wide cost of living variation in the country is problematic. And, indeed, Pew acknowledges this:
Pew tends to update its definition of middle-class on an annual basis. The research released Wednesday is based on Pew’s analysis of the 2021 Current Population Survey’s Annual Social and Economic Supplement, produced by the U.S. Census Bureau. Pew also has a calculator that’s updated periodically that lets readers enter where they live, how much they earn, and how many are in their household to get a more personalized definition of where they fall on the income spectrum.
But this calculator is suspect. Even with 6 people in the household (counting the college freshman who’s away but not the 22-year-old who’s on her own now) my wife and I combine to make enough to put us in the “upper income” range for the Northern Virginia suburbs. But so are 32 percent of the people in the Washington-Arlington-Alexandria region! It makes no sense to put the top third of households in the “upper income” category.
Conversely, if we somehow kept the same income but lived in the Anniston-Oxford-Jacksonville region of Alabama where I finished high school and college, we’d be in the top 15 percent. But our income would go considerably further, in that our house would be a quarter to a third the price and our tax burden would be considerably lower. Something doesn’t quite compute there.
And that’s to say nothing of the effective 5 percent pay cut we took because of runaway inflation.
Regardless, there’s a continuing gap between perception and Pew’s definition:
Even though incomes have continued to rise, those who can consider themselves middle-class (at least in a financial sense) have shrunk in the past five decades, according to Pew. About 61% of American adults were part of a middle-class family in 1971. Last year, it was just 50%, a level that has stayed fairly consistent since the Great Recession, according to Pew.
Not shockingly, the pandemic had a significant impact:
Yet the early days of the COVID-19 pandemic hit middle- and lower-income families harder financially, says Rakesh Kochhar, a senior researcher at Pew.
From 2010 to 2019, the median income for middle-class families (based on a household of three people) grew 15%, from $79,838 to $92,042. After the pandemic hit, incomes dropped about 2% in a single year, sending the median income down to $90,131 in 2020. Lower-income households experienced a similar rise and fall.
Thanks to this shift, the income gap between upper-class Americans and everyone else widened slightly, stemming largely from pandemic unemployment.
About 15% of Americans suffered some form of unemployment in 2020, with the biggest impact falling on lower-income households. About 14% of middle-class Americans lost their job in 2020, while about 8% of upper-income families experienced a similar income disruption. But a whopping 28% of lower-income Americans experienced joblessness at some point during the first year of the pandemic.
But the effects likely would have been much worse if the federal government had not provided enhanced unemployment benefits, which nearly one in five middle-class families received, according to Pew. “That likely put sort of a floor to how much incomes fell during this time period for lower- and middle-income families,” Kochhar said.
Likely? By definition.
Regardless, there’s obviously a significant data lag. The recession shutdowns ended a long time ago and the problems now are inflation and over-employment, which are of course related phenomena.
