The U.S. Census Bureau found that the 2020 median household income was $67,521. This median income decreased 2.9% from 2019 when the median income was $69,560. For comparison, the median was $58,627 in 2010 and $63,292 in 2000 (calculated in 2020-adjusted dollars). Using $67,521 as the base, the Pew definition of middle income would include households earning between $45,239 and $135,042.
How Middle-Class Income Works
The Census Bureau estimated that there were about 130 million households in the United States in 2020. They can be divided into groups that correspond to the Pew definitions of the middle class. The lowest income groups are within range of the federal poverty level. As of 2021, the federal poverty level ranges from $12,880 for one person to $44,660 for a household of eight. The highest income groups roughly correspond to the highest tax brackets for the tax year 2021. These include individuals earning over $523,600, married couples earning more than $628,300, and heads of household earning over $523,600. (For 2022, they’ll include singles making more than $539,900, married couples making more than $647,850, and heads of household making more than $539,900.) This chart shows the breakdown of 2020 income levels using Census data: Pew does this to address discrepancies in the cost of living throughout the nation. For example, housing costs and taxes in San Francisco are very high. As a result, a middle-class income in San Francisco is much higher than the national median.
Alternatives to Middle-Class Income
Former U.S. Secretary of Labor Robert Reich suggested that the middle class should be defined as households with income levels ranging from 50% below the median to 50% above it. That would place the middle class between $33,761 and $101,281, based on the Census median income of $67,521. The Brookings Institution defines the middle class as the middle 60% of households. In other words, everyone from 30% below the median income to 30% above it. Former President Barack Obama said in 2012 that the middle class is occupied by families who make less than $250,000. He said this to support an extension of the Bush tax cuts to the middle class only. He did not want those who earned more to receive the tax cut extension. Congress had a higher definition of the middle class. The American Taxpayer Relief Act extended the tax cuts to anyone making less than $400,000 or couples making less than $450,000. Many experts warn that income isn’t the best way to define the middle class. For example, many people who don’t have high earned incomes can still afford a high standard of living by drawing from high-value retirement funds, investments, or family fortunes. Similar to measuring middle-class income, middle-class wealth would be the middle three-fifths of the spectrum. Those with zero wealth or less are in debt, while those in the highest fifth are considered wealthy. Here’s an example of a breakout of class by net worth: Professor James Sullivan of the University of Notre Dame proposed a consumption-based measure that included housing, transportation, and entertainment. The consumption measure defined the middle class as households that spend between $38,200 and $49,900 a year.
