Earning $200,000 a year might seem like enough to live a life of luxury.
But in six of America’s 25 largest cities, soaring inflation over the past two years means that six-figure salaries are only middle-class enough.
In San Francisco, even a family earning more than $250,000 a year would be considered middle class, although they would be at the top of the category.
In Washington DC, a city full of highly paid lawyers, politicians and consultants and probably a similar number of poorly paid congressional staffers, the situation is not much better. A family in the nation’s capital can earn as much as $235,000 and still be firmly in the middle class.
Earning a little over $200,000 is what’s needed in Seattle and Boston, both tech hubs like San Francisco.
One of the most common definitions of middle class, as specified by the Pew Research Center, is earning two-thirds or twice the median income in your area.
The figures below represent double the median income in the cities listed.
If most Americans’ paychecks even remotely reflected these figures, there might not be any cause for concern.
But since incomes peaked in 2019, the amount Americans earn from their jobs has been steadily declining for three years in a row.
Uncontrolled inflation devoured the dollars in their pockets and price growth hit a 41-year high in June 2022.
For the average person, costs associated with staple foods like meat and eggs skyrocketed after the pandemic.
Some families are still struggling to stock their pantries on less than $400 a week.
Relatively new homeowners, in addition to having to pay high interest rates, face record premiums to insure their home.
If we focus back on San Francisco, yes, incomes may be high, but the median home price hit $1.2 million in December 2023.
Jeff Rose, founder of Alliance Wealth Management, explained how difficult it can be to make these numbers work, even for a household earning $150,000, which is significantly higher than the median of $136,692.
‘Monthly payments on a $1.2 million home, even with a substantial down payment, could easily exceed $5,000 or more, depending on the terms of the mortgage and interest rates.
‘This could represent more than 40 percent of your gross monthly income if you earn $150,000.’
Car insurance is also becoming a burden: the average annual premium will reach $2,019 in 2023 and is projected to rise 7 percent this year.
This is especially serious for the United States, a country that depends on cars more than many others.
Mark Hamrick, senior economic analyst at Bankrate, said: “Many Americans are caught somewhere between the continued shock of high prices, the lack of income growth and the feeling that their hopes and dreams are out of touch with their financial capabilities.”
Not all economists agree on what actually constitutes a middle-class wage, and there is certainly some controversy with Pew Research’s definition of a range between two-thirds and twice the median income.
Let’s say you live in Holmes County, Mississippiwhich has one of the lowest median household incomes in the country, at $28,818. By this definition, you could earn as little as $19,212 a year and still technically be middle class.
It is important to note that not even the government has intervened to officially define what the middle class means.
Lawmakers are often much more interested in ranking poverty and wealth.
San Francisco has the highest threshold for being considered middle class according to Pew Research’s definition. A family earning more than $250,000 per year would be considered at the top of the middle class.
Washington DC was not that close to San Francisco, as a household with income over $230,000 would be considered middle class.
In Seattle, pictured, a household could earn up to $214,000 per year and still be considered middle-income.
Boston families earning more than $200,000 could still be considered middle class
For example, the poverty line in the United States for a family of four is $31,200 a year, according to health and human services.
And President Joe Biden often talks about how Will not raise taxes on families earning $400,000 or lessessentially revealing where the line is drawn on who is rich and who is not.
But is the middle class really contained between $31,200 and $400,000?
Most economists and policy think tanks Don’t give it such a big range.
So maybe it’s best to rely on people’s intuition about how much money they need to feel “comfortable.”
A Bankrate survey found that the “magic number” the average American feels they would need to earn to be financially stable is $186,000 per year, which is more than double the typical American salary of $79,000.
Additionally, only 6 percent of Americans say they earn enough to feel secure, and most believe they probably never will, the survey found.