Do you really know what income class you’re in? If you’re like many Americans, you might not.
GOBankingRates surveyed over 2,000 Americans to find out if they could correctly define their own income level. Over one-fifth of them identified themselves incorrectly as middle income — and that wasn’t the only thing Americans got wrong.
22% of Americans Incorrectly Define Themselves as Middle Income
Overall, 22% of Americans surveyed incorrectly classified themselves as middle income. The majority of those people are actually low income, with approximately 19% of the lower-income Americans surveyed defining themselves as middle income. Only approximately 2% of upper-income Americans mistakenly defined themselves as middle income.
What Is 'Middle Class' Anyway?
According to the Brookings Institute, the middle class can be defined by “cash, credentials or culture.” In this case, cash refers to economic resources, credentials refers to your education and occupation, and culture refers to your attitudes and aspirations. Keep reading to take a closer look at each of these definitions.
No. 1: Defining the Middle Class in Terms of Cash
For the GOBankingRates survey, “middle class” was equated with “middle income,” which is defined by the Pew Research Center as having an annual household income that’s between two-thirds of and double the national median. The national median is $60,336 in 2017 dollars.
However, the income it takes to be middle income varies by household size, with smaller households requiring less to support the same lifestyle as larger households.
How Much Do Middle-Class Families Make?
Keeping in mind that the income it takes to be middle income varies by household size — and adjusting for inflation — middle income can be as low as $34,400 for a one-person family and as high as $165,748 for a seven-person family. The median income for a four-person, middle-income family in 2017 dollars is $90,748.
No. 2: Defining the Middle Class in Terms of Credentials
Those who see the middle class as not just an income level, but also a status level, might define it by occupation and education.
“Income may be the most direct way of measuring material reward alone, but if social standing is primarily about how we are viewed in society, occupations are much more visible than income,” according to Brookings. “After all, it is commonplace to open a conversation with, ‘What do you do?’ but taboo to ask, ‘What is your salary?’”
Education and occupation go hand in hand, as your level of education often determines the types of jobs you can have.
How Educated Is the Middle Class?
The GOBankingRates survey found that most of the middle-income respondents went to college, with 27% selecting “some college” as their highest education level, and 22% stating that they have a bachelor’s degree.
No. 3: Defining the Middle Class in Terms of Culture
Some people define their class as a state of mind. This definition looks at the aspirations you have for yourself and your family, your self-perception of your class, as well as your norms, preferences and tastes. Race also plays a role, with white people often defining themselves as middle class regardless of their income level, Brookings reported.
What Aspirations Define the Middle Class?
Aspiring for great riches isn’t the definition of the American dream that most people ascribe to, according to a separate GOBankingRates survey. The majority of Americans — 43% — define the American dream as success through hard work, the survey found.
The Middle Class Through the Years: How Has It Changed?
In recent years, the percentage of Americans who fall into the middle class has hovered around 50%, but the percentage dropped drastically from 1971 to 2011 — from 61% to 51%, according to the Pew Research Center.
The median income of the middle class was affected by the Great Recession, dropping from $78,056 in 2000 to $74,015 in 2010. By 2016, the median middle-class income had returned to pre-recession levels, reaching $78,442, Pew reported.
Even though the middle class has recovered from the recession, the income gap between the upper and middle classes has been widening throughout the years. As of 2016, the median income of the upper class is $187,872.
The Future of the Middle Class
Changes in the way America works, including automation and the gig economy, tend to affect the middle class more than others, Brookings reported. These changes can make it difficult for the average worker to find well-paying, stable, full-time employment in the future — and it’s something that is already difficult to find now.
According to the GOBankingRates survey, middle-income earners are able to cover basic expenses, but they struggle to save or pay for nonnecessities. The survey found that 34% of middle-income Americans can’t afford to splurge or buy luxury items each month, and 24% have trouble finding room in their budget to save money.
How To Determine Your Income Class
The Pew Research Center defines middle-income Americans as those who earn two-thirds to double the median income, which is $60,336 in 2017 dollars. That means that if you make between $40,224 and $120,672, you are considered middle income.
However, whether or not you are truly middle income also depends on where you live and the number of people in your household. To find out where you really stand, use the Pew Research Center’s online calculator, which will tell you if you’re middle class based on your state, metro area, pretax household income and the number of people in your household.
Click through to discover why America’s middle class faces a bleak financial future.
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All information in this article is accurate at the time the survey was conducted in December 2018.
This article originally appeared on GOBankingRates.com: Millions of Americans Mistakenly Think They’re Middle Class — Are You One of Them?