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Where Do I Fall in the American Economic Class System? | Family Finance

Understanding where you fall in the American economic class system isn’t as simple as pulling out a calculator or looking at a pay stub.

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Myriad forces shape individuals’ economic class and their views on where they rank alongside other Americans.

When asked how they identify their social class, 72% of Americans said they belonged to the middle or working classes, according to a 2020 survey from Gallup. In determining their social class, people often don’t just think about income, experts say, but about other factors, including education, location and family history.

Larger economic trends may also impact how people view their class rank.

For 2020, one major economic trend is the financial fallout caused by the coronavirus pandemic, which has impacted the wealth and health of workers and businesses.

Unfortunately, recent class-related data, which is from 2019, don’t take into consideration the economic damage caused by the pandemic, and we won’t see the impact in the numbers for another year or so.

Perhaps we’ll see some segments of the population moving backward in terms of income, says Stephen Rose, a nonresident fellow at the Urban Institute and research professor at George Washington University. On the other hand, higher-income folks who can work from home may see less disruption to their financial lives.

In general, much of today’s political rhetoric focuses on the challenges facing the middle class. And although household incomes have risen over the past 50 years or so, it took more than 15 years for households to regain their 2000-level incomes and recover from the short-lived 2001 recession and longer Great Recession, says Richard Fry, senior researcher for Pew Research. “The 15-year period of stagnation was an episode of unprecedented duration in the past five decades,” he says.

Meager income gains likely have contributed to feelings of frustration and downward mobility, Fry says. And while most American households are doing better than they were 50 years ago, “the gains have not been equal,” he says. “Everybody’s better off, but it’s particularly the well-off who are better off.”

So what does this mean in terms of where you fall in the American economic class system? Here’s what to know.

Breaking Down Economic Class by Income

One objective way some researchers divide individuals into economic classes is by looking at their income. From that data, they split earners into different classes such as poor, lower-middle class, middle class, upper-middle class and wealthy. The income cutoffs that divide those income ranges can change from year to year and between methodologies, but here’s a sense of where they stand, according to recent data.

What Is a Middle-Class Income?

Pew Research defines middle-income Americans as those whose annual household income is two-thirds to double the national median (adjusted for local cost of living and household size). For a family of three, that ranges from $40,100 to $120,400 for 2018 incomes in a recent Pew study.

The lowest-income group earned less than $40,100 for a family of three while the highest-income households had incomes topping $120,400 in 2018 dollars.

If those numbers have your head spinning, here’s a breakdown of income and class for a family of three, based on Pew Research’s data:

Income group Income
Low income Less than $40,100
Middle income $41,000 – $120,400
Upper income More than $120,400

According to 2019 numbers run by Rose, the range for a middle-class family of three was an income of $53,413 to $106,827, he says. That same three-person family with an income between $0 and $32,048 per year was considered poor or near-poor. A family earning between $32,048 and $53,413 was considered lower-middle class.

For high earners, a three-person family needed an income between $106,827 and $373,894 to be considered upper-middle class, Rose says. Those who earn more than $373,894 are rich. “In my mind, there’s a big divide today between the upper-middle class and the middle class,” he says.

Some of that divide is cultural, Rose says. “The middle class feels like they’re missing out and they feel talked-down to” by the upper class, he says.

Here’s a breakdown on income class for 2019 incomes for a family a three, according to Rose’s analysis:

Income group Income
Poor or near-poor $32,048 or less
Lower-middle class $32,048 – $53,413
Middle class $53,413 – $106,827
Upper-middle class $106,827 – $373,894
Rich $373,894 and up

Am I Middle Class?

Whether you’re considered middle class depends on more than just your income or the balance of your bank account. Where you fall in the American economic class system may not stay consistent throughout your life, or even from year to year, experts say.

For example, a law student may earn a modest graduate student stipend of $20,000 per year, currently placing her in the low-income class, but her educational attainment and future earnings will most likely catapult her income and class placement to a higher level down the road. “People really need to understand that whatever’s happening (with their class rank) today is part of a trajectory, part of their life,” Rose says.

Other Factors Helping Define the Middle Class

Class identity extends beyond what your W-2 income form claims you earn, experts say.

A factor that individuals may use to determine class is educational attainment, with people who have postsecondary degrees linking their class placement to those degrees.

Your location also has a major impact on how you feel you stack up class-wise. “Making $120,000 per year is a lot different in small-town Indiana than it is in New York City,” says Frank Newport, senior scientist at Gallup.

So where do you place in the American economic class system? You can look at income, education, marital status, location, family history, gut instinct and a host of other factors to find out where you fall. But the bottom line is this: Finding the answer is more complex than just looking at a number.

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