The dividing lines that define Americans by class, wealth and status have always been blurred.
For many families, where they fit in the income ladder depends on emotion rather than numbers. But do the facts match your feelings?
The Pew Research Center’s income calculator is the fastest way to find the answer to that question.
But after you find out how you stack up, you may find the most important question is what you do with that information so you can safely climb that ladder.
Based on Pew’s analysis, a family of three would need an income of $156,600 to meet the definition of upper class, which it defines as a household income more than twice the national median.
Analyzing the trends, Pew points out that the wealthiest households are the only ones to have seen wealth gains since the start of the recession. Between 2007 and 2016, the median net worth of the richest 20% increased by 13% to $1.2 million.
Meanwhile, the lowest earners saw their wealth fall by at least 20% over the same period.
As a result, the wealth gap between America’s richest and poorest families has narrowed – more than doubling between 1989 and 2016.
Many Americans associate themselves with the middle class. In fact, a Gallup survey earlier this year shows that just over half of people identify as middle or upper middle class.
According to the Pew calculator, that feeling matches reality as they earn between $52,200 and $156,600.
The research defines middle-income Americans as those whose annual family income is two-thirds to double the national median when adjusted for local cost of living and family size. In 2021, the median income was $70,784, according to Census Bureau data.
Although household income has been rising since 1970, however, Pew research shows that most of the increases were seen before 2000. In 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 — much more than it is now.
Based on Pew’s analysis, the same family of three would be considered low income if they are bringing in less than $52,200 a year.
Keep in mind, though, that geography matters here: In Kansas City, Mo., for example, that national figure is middle-class income but would be considered relatively low in New York City.
But what is important to highlight when discussing low-income families is the opportunities for advancement. While middle-class families rely on home equity to build their net worth and upper-class families rely on financial assets and investments to build their wealth, low-income earners have fewer options to get ahead.
In fact, research shows that the wider the wealth gap, the harder it is for lower-income Americans to move up the class ladder.
It’s not just about the numbers
It is important to consider economic status as a holistic view that considers much more than simple income.
Researchers have determined that education, location, social connections and other factors can inform 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 be just as important as leading a technically lower income class. as compliant as any upper income earner.
Consider, too, that some high-income earners may technically qualify as an upper-class family even because debt and other financial obligations leave them, in practice, in a much different place.
So do the numbers matter? Maybe. But they can always change.
Another thing that may be more important is to take advantage of the opportunities available to your family to keep your family moving up those ruts.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.