Middle Class

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Middle Class

• middle-income countries globally: 3/4 of world's population; Source: World Bank

• Middle Class (4 billion: 2025) and Rich Class (400 million): collectively spend over $60 trillion annually - outnumber the Poor Class (3.6 billion); Source: World Economic Forum

• upper-middle class households nationwide: earn median income between $117,000 - $150,000; Source: CNBC

• middle class: earning between 2/3 and twice the median household income (which is $75,000: 50% of Americans earn less than this); Source: Visual Capitalist

• Middle Class: 40% of all U.S. households; Source: Visual Capitalist

  • families earning $53,000 - $161,000

  • a strong middle class drives productive investment and economic growth

• U.S. household income distribution (2023); Source: Visual Capitalist

  • Under $35K: 21.0%

  • $35K-$100K: 38.1%

  • $100K-$200K: 26.5%

  • Over $200K: 14.4%

• 1967 median income ($54K) vs. 2023 median income ($81K); Source: Visual Capitalist

  • houses are more expensive: 6X the median income (2022) vs. 3X the medium income (1967)

  • consumer goods are now cheaper relative to incomes due to globalization of manufacturing

  • food is now cheaper: 7% of household income (2022) vs. 15% of household income (1967)

• U.S. Household Income Distribution (2023); Source: Visual Capitalist

  • Under $15,000: 7.4% of all households

  • $15,000-$24,000: 6.7%

  • $25,000-$34,999: 6.9%

  • $35,000-$49,999: 10.3%

  • $50,000-$74,999: 15.7%

  • $75,000-$99,999: 12.1%

  • $100,000-$149,999: 17.0%

  • $150,000-$199,999: 9.5%

  • Over $200,000: 14.4% of all households

• Southern States: highest share of low-wage workers: Source: Visual Capitalist 

  • Mississippi, Louisiana, Oklahoma, West Virginia, Arkansas, Alabama, and North Carolina

• terminology: Source: Business Insider 

  • 1. adjusted gross income (AGI): total gross income minus above-the-line adjustments

    • determines eligibility for certain tax credits; starting point for calculating owed taxes

  • 2. gross income: total amount of money you receive in any given year: wages, tips, capital gains, business income, retirement distributions

  • most common above-the-line deductions (adjustments to income): student loan interest, contributions to a qualified retirement plan/traditional IRA, health savings account contributions, employer portion of self-employment taxes, health insurance premiums for self-employed people, penalty on early savings withdrawals, moving expenses for active military members

• wage growth: 

  • rapid wage growth can increase inflation: Source: Investopedia 

    • workers have more spending money + businesses have increased costs

    • both outcomes could lead to businesses raising prices

  • earnings have not kept up with inflation: (November 2024): real average hourly earnings increased +1.3% from previous year vs. inflation increased +2.7% from previous year; Earnings Source: Bureau of Labor Statistics and Inflation Source: Bureau of Labor Statistics 

• Wage Inequality (1979-2023); Source: Economic Policy Institute

  • Top 0.1% wages grew by 353.9%

  • Top 1% wages grew by 181.7%

  • Bottom 90% wages grew by just 43.7%

• Wage Distribution (2023); Source: Economic Policy Institute

  • Top 1% earned 12.4% of all wages (up from 7.3% in 1979)

  • Bottom 90% earned just 60.7% of all wages (down from 69.8% in 1979)

• Universal Basic Income: has been tested in 16 states (over 100 cities and counties); Source: Business Insider

  • Guaranteed Basic Income: offer low-income participants between $50 and $2,000 a month for a set time period (no strings attached)

  • some programs focus on new and expecting mothers, households with children, or people experiencing homelessness

• Americans need an income of $787,712 to be in top 1% of earners (although the median U.S. income is $75,000); globally, you need an annual salary of $65,000 to be in top 1%; Source: Visual Capitalist