There is a lot of talk about the demise of the middle class. As late as 1975, an annual income of $20,000 could get you there, and typically, only one person in the family needed to work to achieve that goal. We all know those numbers have changed dramatically over the past 50 years, but according to a SmartAsset analysis of 2023 income data released Tuesday, the most recent available from the U.S. Census Bureau, getting to the middle class and staying there not only requires more money than ever but more effort to maintain.
The middle class is widely considered the backbone of the U.S. economy for several interconnected reasons. The middle class represents the largest segment of the population with significant purchasing power. Their spending on goods and services (housing, cars, appliances, food, entertainment, healthcare, education, etc.) drives the majority of consumer demand. This aggregate demand is the main engine of economic growth, fueling production, business investment, and job creation across nearly all sectors. If the middle class doesn’t grow, neither does the economy.
Middle-class households contribute a substantial portion of the tax revenue (income taxes, payroll taxes, sales taxes, property taxes) that funds federal, state (like here in Indiana), and local governments. This revenue pays for essential public services like infrastructure (roads, bridges), education, public safety, healthcare programs, and national defense. A robust middle class ensures a stable tax base. Over the past forty years, the middle class has shouldered much more of the tax base than the higher classes.
The middle class also constitutes the bulk of the nation’s educated and skilled workforce. They are the teachers, nurses, technicians, managers, skilled tradespeople, engineers, and office workers who make businesses and public services function. They also invest heavily in education for their children, ensuring a pipeline of future skilled workers. As economics and the cutback on financial aid hits upcoming college students, that pipeline is significantly at risk.
Even as more households earn six-figure salaries, many middle-class earners are feeling the squeeze. While inflation-adjusted wages have risen since 2022, those gains have been largely offset by increasing costs since the start of the Covid-19 pandemic in 2020. What one needs to house and feed a family of four today is almost double what it was in 2020. Even states that were recently considered ‘affordable’ are becoming too expensive for the lower end of the middle class.
Rising costs help explain why two-thirds of middle-class Americans said they were struggling financially and didn’t expect their situation to improve in a 2024 survey from the National True Cost of Living Coalition. Since then, year-over-year inflation has hovered around 3%, still above the Federal Reserve’s 2% target but far below its June 2022 peak of 9.1%. But although price increases have slowed, the cumulative effect of the past few years has eroded many Americans’ spending power. As a result, a six-figure income may not stretch as far as it once did. If/when the president’s threatened tariffs take effect, price increases are likely to accelerate while layoffs and wage stagnation put a tighter squeeze on the family budget.
More disparity is created as the bottom end of what’s considered middle class increases. For a household of four, the federal government considers the top end of the poverty level to be $32,500. One has to be below that level to qualify for the minimum in aid such as SNAP (food stamps) and childcare assistance. Only in three states, Arkansas, Louisiana, and West Virginia, is the lowest middle class income within $5,000 of the poverty line. In some states, such as Massachusetts, one would need to make double that amount to barely be considered middle class.
Wonder where your family’s income ranks? Here’s the data from the SmartAsset analysis.
Alabama
Low end of middle class: $41,471
High end of middle class: $124,424
Median household income: $62,212
Alaska
Low end of middle class: $57,748
High end of middle class: $173,262
Median household income: $86,631
Arizona
Low end of middle class: $51,538
High end of middle class: $154,630
Median household income: $77,315
Arkansas
Low end of middle class: $39,129
High end of middle class: $117,400
Median household income: $58,700
California
Low end of middle class: $63,674
High end of middle class: $191,042
Median household income: $95,521
Colorado
Low end of middle class: $61,934
High end of middle class: $185,822
Median household income: $92,911
Connecticut
Low end of middle class: $61,104
High end of middle class: $183,330
Median household income: $91,665
Delaware
Low end of middle class: $54,235
High end of middle class: $162,722
Median household income: $81,361
Florida
Low end of middle class: $48,869
High end of middle class: $146,622
Median household income: $73,311
Georgia
Low end of middle class: $49,750
High end of middle class: $149,264
Median household income: $74,632
Hawaii
Low end of middle class: $63,542
High end of middle class: $190,644
Median household income: $95,322
Idaho
Low end of middle class: $49,956
High end of middle class: $149,884
Median household income: $74,942
Illinois
Low end of middle class: $53,532
High end of middle class: $160,612
Median household income: $80,306
Indiana
Low end of middle class: $46,313
High end of middle class: $138,954
Median household income: $69,477
Iowa
Low end of middle class: $47,617
High end of middle class: $142,866
Median household income: $71,433
Kansas
Low end of middle class: $46,884
High end of middle class: $140,666
Median household income: $70,333
Kentucky
Low end of middle class: $40,741
High end of middle class: $122,236
Median household income: $61,118
Louisiana
Low end of middle class: $38,815
High end of middle class: $116,458
Median household income: $58,229
Maine
Low end of middle class: $49,150
High end of middle class: $147,466
Median household income: $73,733
Maryland
Low end of middle class: $65,779
High end of middle class: $197,356
Median household income: $98,678
Massachusetts
Low end of middle class: $66,565
High end of middle class: $199,716
Median household income: $99,858
Michigan
Low end of middle class: $46,117
High end of middle class: $138,366
Median household income: $69,183
Minnesota
Low end of middle class: $56,718
High end of middle class: $170,172
Median household income: $85,086
Mississippi
Low end of middle class: $36,132
High end of middle class: $108,406
Median household income: $54,203
Missouri
Low end of middle class: $45,692
High end of middle class: $137,090
Median household income: $68,545
Montana
Low end of middle class: $47,198
High end of middle class: $141,608
Median household income: $70,804
Nebraska
Low end of middle class: $49,722
High end of middle class: $149,180
Median household income: $74,590
Nevada
Low end of middle class: $50,904
High end of middle class: $152,728
Median household income: $76,364
New Hampshire
Low end of middle class: $64,552
High end of middle class: $193,676
Median household income: $96,838
New Jersey
Low end of middle class: $66,514
High end of middle class: $199,562
Median household income: $99,781
New Mexico
Low end of middle class: $41,508
High end of middle class: $124,536
Median household income: $62,268
New York
Low end of middle class: $54,725
High end of middle class: $164,190
Median household income: $82,095
North Carolina
Low end of middle class: $47,198
High end of middle class: $141,608
Median household income: $70,804
North Dakota
Low end of middle class: $51,012
High end of middle class: $153,050
Median household income: $76,525
Ohio
Low end of middle class: $45,175
High end of middle class: $135,538
Median household income: $67,769
Oklahoma
Low end of middle class: $41,421
High end of middle class: $124,276
Median household income: $62,138
Oregon
Low end of middle class: $53,435
High end of middle class: $160,320
Median household income: $80,160
Pennsylvania
Low end of middle class: $49,211
High end of middle class: $147,648
Median household income: $73,824
Rhode Island
Low end of middle class: $56,642
High end of middle class: $169,944
Median household income: $84,972
South Carolina
Low end of middle class: $45,198
High end of middle class: $135,608
Median household income: $67,804
South Dakota
Low end of middle class: $47,869
High end of middle class: $143,620
Median household income: $71,810
Tennessee
Low end of middle class: $45,083
High end of middle class: $135,262
Median household income: $67,631
Texas
Low end of middle class: $50,515
High end of middle class: $151,560
Median household income: $75,780
Utah
Low end of middle class: $62,274
High end of middle class: $186,842
Median household income: $93,421
Vermont
Low end of middle class: $54,135
High end of middle class: $162,422
Median household income: $81,211
Virginia
Low end of middle class: $59,948
High end of middle class: $179,862
Median household income: $89,931
Washington
Low end of middle class: $63,064
High end of middle class: $189,210
Median household income: $94,605
West Virginia
Low end of middle class: $37,295
High end of middle class: $111,896
Median household income: $55,948
Wisconsin
Low end of middle class: $49,749
High end of middle class: $149,262
Median household income: $74,631
Wyoming
Low end of middle class: $48,272
High end of middle class: $144,830
Median household income: $72,415
Note: Median income is the income level that divides a population into two equal groups: half of the population earns above that amount, and half earns below that amount. This is the most common metric for this type of analysis.
In essence, the health and size of the middle class are critical indicators and drivers of the overall health, stability, and growth potential of the U.S. economy. Their ability to earn, spend, save, pay taxes, and invest creates a virtuous cycle that benefits the entire economic system
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