The dividing lines that define Americans based on wealth class and status have always been blurred.
For many households, where they fit on the income ladder comes down to feelings rather than numbers. But do the facts match your feelings?
Do not miss it
The Pew Research Center income calculator is the fastest way to find the answer to that question.
But after you figure out how to stack up, you may find that the most important question is what to do with that information so you can continue climbing that ladder safely.
Based on Pew’s analysis, a three-person household would need an income of $156,600 to meet the definition of upper class, which is defined as household incomes more than double the national median.
In analyzing the trends, Pew points out that the richest households are the only ones to have seen more wealth after the start of the Great Recession. Between 2007 and 2016, the median wealth of the richest 20% increased by 13% to $1.2 million.
Meanwhile, the lowest earners saw their wealth drop by at least 20% over the same period.
As a result, the wealth gap between America’s richest and poorest families has widened into a chasm — more than doubling between 1989 and 2016.
Many Americans associate themselves with the middle class. In fact, a Gallup poll earlier this year found that just over half of people identify as middle-class or upper-middle class.
According to Pew’s calculator, that feeling matches reality when they make between $52,200 and $156,600.
The survey defines middle-income Americans as those with annual household incomes two-thirds to double the national median when adjusted for local cost of living and household size. In 2021, the median income was $70,784, according to data from the Census Bureau.
Although household incomes have been on the rise since 1970, Pew research shows that most of the increases occurred before 2000. Over those three decades, median income rose 41% to $70,800.
If household income had continued to grow at the same rate after 2000, the current median would be about $87,000 — significantly more than it is today.
Based on Pew’s analysis, that same three-person household would be considered low-income if they bring in less than $52,200 a year.
Keep in mind, though, that geography matters here: In Kansas City, Mo., for example, that national figure represents middle-class income, but would be considered quite low in New York City.
But what is important to emphasize when discussing lower-income households is the potential for progress. While middle-class households rely on equity to build their wealth and upper-class households rely on financial assets and investments to build their wealth, lower-income earners have fewer opportunities to get ahead.
In fact, research suggests that the wider the wealth gap, the harder it is for lower-income Americans to climb the class ladder.
It’s not just about the numbers
It’s important to think of economic status as a holistic snapshot that takes much more into consideration than income alone.
Researchers have determined that education, location, social connections and other factors can determine a person’s class identification.
In addition, less tangible measures of holistic wealth—mental and physical well-being, access to cultural assets, a healthy social network—can all weigh as much as income and lead someone with a technically lower income to feel as fulfilled as any earner with a higher income.
Also consider that some high-income earners can technically qualify as upper-class households, even if debts and other financial obligations leave them practically in a completely different place.
So the numbers matter? Could be. But they can always change.
Perhaps more importantly, seize the opportunities available to your family to keep your household on that ladder.
What to read?
This article provides information only and should not be construed as advice. It comes without any kind of warranty.