Are you considered part of the middle class?
We hear a lot about America’s shrinking middle class, as changes in the economy alter the rules of work. The Great Recession brought about by the real estate crash is over, but some have never regained their lost ground, and wages don’t always keep up with increases in the cost of living. Here are eight tests to determine if you’re still middle class.
If your family of three earns between $41,869 and $125,609 a year, you’re in the middle class, according to a 2015 Pew Research Center analysis. About half of U.S. adults fit into this category, down from 61 percent in 1971, according to the Pew analysis, which defines middle income as two-thirds to double the national median income. For single adults, middle income is $24,173 to $72,521, and for two-person households, it’s $34,186 to $102,560. The number of upper-income Americans has risen from 14 percent to 21 percent since 1971, while the number of lower-income Americans rose from 25 percent to 29 percent.
Owning your own home has always been a fixture of American middle-class life, though the most recent housing crisis convinced some that renting is a better option. According to the U.S. Census Bureau, nearly 63 percent of American households owned their homes in the second quarter of 2016. That’s down from the high of about 69 percent in the last quarter of 2004. The median home value in the U.S. is $188,100, according to real estate information company Zillow.
A higher level of education has long been associated with greater earning power, especially in recent years. Among Americans 25 and older, 32.5 percent had a bachelor’s degree or higher in 2015, according to Census Bureau data, and 88.4 percent had a high school diploma or GED. Younger people are more likely to have a higher level of education. Just over 36 percent of those ages 25 to 44 have a bachelor’s degree or higher compared to almost 27 percent of those 65 and older.
A “good” job
A full-time job with health and retirement benefits has long been considered one of the cornerstones of middle-class economic security. According to the Kaiser Family Foundation, 56 percent of U.S. workers receive health insurance through their employers. Among all civilian employees, 27 percent have access to a pension plan and 58 percent have access to a retirement savings plan such as a 401(k). Research by Gallup found that only 47 percent of Americans have what the research company considers “good jobs.”
If you’re in the middle class, you’re more likely to have retirement savings. A 2013 study by the National Institute on Retirement Security found that 45 percent of households of working-age people had no retirement savings at all. Among those ages 55 to 64, only about 60 percent had any retirement savings. The median income of households with retirement savings was $76,238, compared with $30,495 for those without retirement savings. Among people ages 25 to 64, the median household retirement account balance was $3,000 in 2010. Among those with retirement accounts, the median balance was $40,000.
Paid vacation and the money to enjoy it are important middle-class perks. Among American workers, 77 percent get paid vacation, according to an Economic Policy Institute analysis of Bureau of Labor Statistics data. But paid vacation is more common among higher-paid workers. Among the top 10 percent based on pay, 93 percent get paid vacation. Among the bottom 10 percent, only 39 percent get paid vacation days. A survey from the travel website Skift found that 42 percent of Americans did not take a single vacation day in 2014, with the amount of vacation days increasing with income levels.
With the average price of a new car exceeding $33,000, many families find that piece of the American dream out of reach. Bankrate.com looked at median incomes and car insurance prices in the 50 largest U.S. cities and concluded that, with a 48-month loan, median-wage earners could not afford a new car in any of those cities in 2016. The “affordable” car price ranged from about $32,855 in San Jose, California, where the median income is $87,210, to about $6,174 in Detroit, where the median income is only $25,769.
Saving for college
While most Americans want to save for their children’s college education, many find they can’t. A 2015 report by Sallie Mae found that only half the parents of children under 18 who want to save for college are actually doing so. The average amount saved is $10,040. According to the College Board, the average cost of tuition, fees and room and board in the 2015-16 academic year was $19,548 at a public, in-state university and $43,921 at a private school.
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