Being 'Middle Class' In The US Doesn't Mean What You Think It Does Anymore

Economic mobility and a steady rise up the 'ranks' of the financial strata are often heavy on the minds of American consumers. The United States is a place of extremes, financially. The wealthy rake in massive compensation figures, with some of the highest-paid CEOs in the country making well over $100 million per year. On the other end of the spectrum, nearly 37 million live in poverty, according to 2023 Census Bureau data. Sandwiched somewhere between these groups living vastly different lives is the middle class. Middle-class Americans have long been the largest economic group in the country, and the American dream is centered on a lifestyle that vaguely resembles an idealized vision of middle-class America.

But perception and reality are two different things, and in the modern economic landscape of the United States, the realities of the middle class have shifted substantially. In recent years, what it means to be a part of this grouping has been altered as a result of numerous financial shifts. For one thing, the middle class has been shrinking for the last 50 years, and politicians often allude to this change, frequently calling it a 'hollowing out.' So what does it mean to be middle class in America today? The answer hits on many familiar notes, but certainly presents itself in a unique light when considering many of the fiscal changes that have taken place in recent decades.

On a purely functional level, the nomenclature of "middle class" pertains to being at the rough center of American economic experiences. Typically, three financial buckets are rhetorically deployed, with the working class at the low end and the upper class as the group with increased economic mobility. In the middle, then, is the majority group. As a baseline, this makes the middle class largely the "average" experience of American households and individuals. However, there's so much more to consider, and plenty of potential pitfalls along the way as you interrogate what the lived experience of a middle-class American really looks like.

For one thing, those in the middle class are largely able to afford a catalog of niceties and splurges. This makes them accustomed to buying nicer products and investing in upgraded services on a semi-routine basis. Perhaps as a result, middle-class Americans are the most likely to carry revolving debt loads. Unlike upper-class consumers, who have more cash flow to work with, middle-class Americans can find it difficult to shift priorities and pay off credit cards and other interest-bearing bills. They end up trapped, in a way, in the lifestyle they've created for themselves. 

This isn't necessarily a terrible place to be, since middle-class Americans largely live in relatively nice homes and can afford other modest luxuries. But with the stress of living paycheck to paycheck being a major risk here — and a feature of American life at all corners of the economic spectrum — it can be mentally draining to be in this position.

One of the easiest markers to explore when thinking about the middle class is earnings figures. Income thresholds help provide a framework for understanding those in each economic category, but they're an imperfect vehicle for interrogating class divides. This is in part due to the fact that these class distinctions feature differing rough cutoffs based on family size. 

Children, in particular, are exceedingly expensive. One unsettling financial statistic that dominates American life is the reality that 51% of American adults have delayed an important life decision, such as having a child, due to financial strain. The upshot here is that a middle-class couple without children might ultimately find themselves thrust down the ladder by choosing to bring a child into their home.

Middle incomes are tough to pin down. In large U.S. cities, middle-income averages range between $52,000 and $155,000. As a whole, however, a single earner will find themselves as a middle-class income earner with an annual salary between $30,000 and $90,000. A family of three ranges from $60,000 to $180,000, and five demands a figure between $76,000 and $210,000. Importantly, all these ranges are enormous. Top earners within these brackets bring home three times what a low-end earner makes, muddying the water of what a typical middle-class lifestyle might look like substantially. For some additional context, the Federal Reserve Bank of St. Louis reports the real median household income to have been $83,730 in 2024.

Getting out of the weeds, a middle-class consumer is one who can largely pay for mid-level expenses without financial assistance. Americans across the board have plenty of access to credit cards and other lending products. There are even a great many things you should always consider paying for with a credit card. However, typical mid-level splurges don't require the average middle-class American to dig out this payment method and work out how to manage the expense later.

Vacation planning, minor medical expenses, or moderate home renovations are all things largely within reach for middle-class earners. This is perhaps a better method of understanding what makes a person part of the middle class or not. Expenses that go beyond the typical budget elements, such as groceries or gasoline, can help illuminate a much greater picture of financial mobility regarding household personal finances.

Even with this expanded buying power for larger purchases in mind, middle-class earners are still reliant on lending products for large purchases, such as cars. Residential investments often remain beyond the scope of the middle class (outside of vehicles like REITs, which allow stock market buyers to invest in real estate bundles as if they were a stock). And while buying a home is frequently within reach for middle-class earners, it too requires a mortgage loan in the vast majority of cases.

Among the most prominent features of the middle-class experience is that there are fewer homes falling into this category, percentage-wise, than in years prior. In 1971, the share of American households that were considered middle class was over 60%, which meant that the American dream was a feature attainable for the vast majority of Americans. In the 50-plus years since, financial markers underpinning the economy's overall health have been trending negatively. 

As of 2023, that figure now stands at 51%, according to the Pew Research Center. Both the upper and lower income groups have grown in this time, while Pew also reports that the richest households in America are gaining wealth at an increasingly rapid pace. Out of all members of the G7, income inequality is highest in America, and it's trending upward at an alarming rate.

With this contingent of the economic cross-section of the United States shrinking, it's worth asking more meaningful questions about the shift. Inflation is obviously at the tip of nearly every American's tongue these days. Numerous causes of inflation are well understood, but rising grocery prices and an increase in the cost of other essentials like clothing and transportation aren't the only factors at play. Wage stagnation has been impacting the American wallet since the early 1970s, lining up neatly with this contraction of the middle class. In short, prices have risen, and wages haven't kept up with the cost of living for five decades, squeezing middle-class Americans across all areas of their budgets.

Naturally, the share of income wielded by the middle class has fallen precipitously in the 50 years since wage stagnation began to take root. The stagflation of the 1970s started after the dissolution of the Bretton Woods agreement, after which a series of economic crises unfolded. The Bretton Woods collapse removed gold as the underlying value producer for the U.S. dollar. Since 1973, American monetary instruments have been their own value promise rather than being pegged to physical gold. In addition, 1973 saw an oil crisis, and numerous other financial woes befell the American public (as well as globally). 

These events set off a seismic shift in the American economy, and wage metrics have been upended since. In 1970, 29% of total household income was held by the upper class, and the middle class held 62%. With such a high volume of Americans finding themselves in this middle-tier classification and with wages largely in line with overall productivity, this distribution makes surface-level sense.

What doesn't jive with a basic reading of economic balance is what has unfolded since. The middle-income share has dropped substantially, and by 2022 it had fallen to 43%, whereas upper-income households held a larger share of 48%. Lower-income households have held relatively steady, moving downward from 10% of total income in 1970 to 8% in 2022. Another interesting quirk of this data (per the Pew Research Center) is that the overtaking of middle-income household value took place in 2009, as the American and global economies were still roiled by the housing market meltdown.

As was the case decades ago, a primary means of assessing middle-class status remains rooted in housing: Middle-class Americans largely own the homes they live in. Homeownership rates in the United States have stayed largely static on the whole, and stand at 65% in the second quarter of 2025, according to FRED. During the same time period in 1970, this figure was 64%; the rate peaked at 69.2% in 2004 and spiked again in 2020 to 67.9% in the second quarter. 

However, it's worth remembering that homeownership isn't the right course of action for everyone. Therefore, plenty of Americans who are a part of the middle class will choose to continue renting, even if a change in this status were something entirely achievable. Renting alleviates the responsibilities of ownership, and it makes a desire or need for mobility much easier to manage.

Even with this in mind, 84% of Americans say they want to own their own home, according to a 2023 LendingTree survey. At the same time, the housing market has become increasingly difficult to break into. The result is a hostile atmosphere for buyers, and a particularly inhospitable place for first-timers who aren't familiar with the gamesmanship involved in the complex process of buying a property. This has left many younger people without the means or wherewithal to become homeowners, potentially barring them from entry into a classic staple of what it means to be a middle-class American.

There are plenty of high-paying jobs out there that don't require a college education, but many of them involve manual labor that can be hard on the body as you age. White-collar work may not include these physical stressors, but it tends to demand a higher education. Many Americans finance their collegiate pursuits, but that introduces another long-term debt obligation into the mix, compounding their need to remain in a well-paying profession long into the future. Unfortunately, going to college no longer brings about the same prestige it once held. In 1970, roughly 55% of Americans had graduated high school compared to 91% in 2020. These same figures for bachelor's degree holders: 11% to 37.5%, respectively.

Coupled with a much larger population overall, there's an inundation of talent across the job market, and having an undergraduate degree is no longer the gleaming credential it once was. While educational attainment strongly correlates with increasingly valuable salary figures for each new degree earned, it's not a perfect match. Therefore, going to college remains a key element of joining or remaining in the middle class, but it's increasingly an expense that may not ultimately yield the financial results you hope for.

On top of college years for themselves, middle-class Americans tend to prioritize saving to send their children to school, too. This adds yet another wrinkle to the financial gymnastics that feature in a middle-class household's budget. Fortunately, savings schemes like the 529 plan make this a bit more manageable.

Unsurprisingly, those most likely to prioritize spending on a few key niceties in life while seeking to balance paying for a home, college educations, and more will carry the most debt. FRED data from 2022 shows that the share of households with credit card debt is largest in the middle deciles of income. Those at the top and bottom of the earnings scale are the lowest volume of household debt carriers, with both at roughly 30%. On the other hand, the fifth through seventh decile — and third — see a spike, and these three groups in the middle all stand at roughly 60% or greater.

Those in the highest income groups also tend to feature increased savings volumes. Earners in the income threshold between $59,500 and $91,899 have a median account balance of $7,400, while those in the next highest bracket (rising up to $153,099) have a median balance of $15,760. This figure doubles again in the next grouping and jumps up to nearly $112,000 among earners bringing home more than $245,400. Having more cash on hand and greater savings means a greater ability to divert priorities and pay off excess spending whenever it occurs. In contrast, middle-class earners often have plenty of access to debt products, but little additional mobility to manage them aggressively when the need arises.

Aside from data skewed by the top and bottom earners, the highest debt-to-income ratios belong to those in the fifth income decile. A DTI ratio north of 80% is experienced by those in the lowest group, and this falls to around 60% or below for every other bracket except the middle-income group. A DTI of 36% is considered to be the rule of thumb when seeking a mortgage or other lending products, although some lenders will approve new loans for prospective borrowers with a figure as high as 50%. Fifth, sixth, and seventh decile earners all surpass or rub right up against this 50% ceiling, meaning they're more than likely excluded from eligibility for many new debt products without taking measures to improve their standing ahead of a loan application.

In practice, significant debt volumes that hit 50% of your monthly income level or surpass it can mean additional hardship when an emergency happens, and 43% of Americans would borrow money in some form or another to cover a sudden $1,000 emergency. But, without the ability to shed excess debt ahead of a borrowing need, new lending opportunities are somewhat scarce, and so applying for a new personal loan in a pinch may not be a realistic option for many people in the middle class.

As is frequently the case when discussing economic issues that impact Americans, people of color are impacted in a myriad of extreme ways. Average family wealth by race and ethnicity shows a massive separation between white households and every other group except Asian families, according to the Urban Institute. Black Americans are the hardest hit by virtually all metrics of income inequality, according to numerous data sources. 

In 2022, the average family wealth among white households was almost $1.4 million, while the average Black family wealth stood at $211,596. While white Americans tend to accumulate wealth throughout their lives, their Black neighbors are mired in even greater stagnation with little change to their fortunes. Retirement savings figures, inheritances, educational attainment, saved emergency reserves, and even federal tax policies are all skewed away from non-white individuals.

More broadly, systemic barriers to wealth accumulation, generational support, and economic mobility all place non-white Americans at a distinct disadvantage with personal finances. With that being said, it's also worth noting that Black Americans have experienced the largest increase in income status among any group between 1971 and 2015. Even so, progress isn't universal, and aside from Native Americans, Black Americans see the largest percentage of their population in the lower income bracket when compared to other races and ethnicities.