Is it really enough to be considered middle class in these American cities?

October 13, 2023

Is it really enough to be considered middle class in these American cities?

Single family homes with skyscrapers in the background.

The middle class has long been considered the backbone of the American economy. But the American middle class is shrinking. The percentage of adults living in middle-income households in the United States has declined by more than 10 percentage points over the past 50 years¹which indicates a continuous shrinkage of the middle class.

To find the true pulse of today’s middle class, SmartAsset calculated the middle class earnings limits in 100 of the largest US cities, plus all 50 states.

Finding a financial advisor doesn’t have to be difficult. Free SmartAsset tool It matches you with up to three vetted financial advisors serving your area, and you can interview your own advisors at no cost to determine which one is right for you. If you are ready to find a counselor who can help you achieve your financial goals, let’s start.

Main findings

The Northeast’s salaries are about 20% higher than the South’s – even after accounting for cost-of-living differences. The Northeast dominates the top 10 middle-class salary ranges, with many middle-class salaries in the $60,000 to $170,000 range. Meanwhile, the middle class bracket itself is between about $35,000 to $100,000 in many southern states. wWhile the top-ranked Northeastern states cost about 50% more to live than those lower-ranked southern states, the middle-class salary range is almost 70% higher.².
New York City’s middle class does not earn enough to keep up with the cost of living. While other notoriously pricey cities like San Francisco and Seattle have middle-class incomes that trend closely with the general cost of living, wages in New York City lag far behind. While the middle-class wage range was in the middle of the road for all of the cities examined, the cost of living in Queens, Brooklyn, and Manhattan is 43%, 70%, and 138% higher than the national average, respectively.
Middle class status is hard to come by in tech cities. Three out of the five cities with the highest middle-class income thresholds are located in California’s San Francisco Bay Area. These middle-income residents need to make at least $81,623 in San Francisco, $84,673 in San Jose and $104,499 in Fremont. Similarly, Seattle residents need to make at least $74,223.
You’re middle class even if you made $310,000 in this California town. Families earning up to $311,936 per year in Fremont, California, are still technically considered middle class. This is the highest cap of any city in our study—median household income in Fremont ($155,968) is about $30,000 more than the next highest.

Cities with high ceilings are middle class

1. Fremont, California

Fremont has the highest middle class minimum at $104,499, and it comes out to nearly $312,000. Families here need a minimum income of $104,499 to be considered middle class. Fremont’s proximity to high-paying jobs in Silicon Valley contributes to its high median income of $155,968. This city in the Bay Area has a population of nearly 230,000, and roughly a tenth of that population works for Tesla.³.

2. San Jose, California

San Jose is the third largest city in California and is home to high-profile technology companies, including Adobe, Cisco Systems, eBay, PayPal, and Zoom. Middle-class families here earn between $84,673 and $252,754.

3. Arlington, Virginia

Located on the banks of the Potomac River, Arlington benefits from its proximity to Washington, D.C. and a highly educated workforce. More than 76% of residents age 25 and over have a bachelor’s degree or higher, more than double the national average⁴. The federal government is the largest employer in Arlington, with the Department of Defense and a number of other agencies located there⁵. Middle-class families here earn up to $251,302 annually, while those earning less than $84,186 miss the threshold.

4. San Francisco, California

While some big tech companies are headquartered in San Francisco, including Salesforce, Uber, and Twitter, the city is also home to non-tech brands like Wells Fargo and The Gap. Middle-class families here earn between $81,623 and $243,652. But buying a home in the city by the bay can be a challenge. The median home value in Frisco is $1.2 million⁶.

5- Seattle, Washington

In Seattle, households with incomes of $221,562 are still considered middle class. However, those earning less than $74,223 are not yet in this middle-income group. Roughly 66% of the population 25 and over have a bachelor’s degree or higher and there are plenty of high-profile local companies to work for, including Amazon, Starbucks and Boeing.

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6. Irvine, California

While the healthcare and technology industries contribute to Irvine’s economy, University of California, Irvine remains the city’s largest employer with more than 25,000 faculty and staff⁷. Middle-class families in this Orange County city earn between $70,869 and $211,548 annually.

7. Gilbert, Arizona

Gilbert is located in the Phoenix metropolitan area. Gilbert’s population has grown by 31% from 208,000 residents in 2010 to 273,000 in 2022⁸. Median household income of $104,802 sits comfortably in the middle-class range of $70,217 and $209,604 per year.

8. Scottsdale, Arizona

Scottsdale is a popular tourist destination with many resorts, spas, and golf courses. Located about 30 minutes north of Gilbert, this city is also home to healthcare and technology companies⁹. Middle-class families here earn between $66,395 and $198,194.

9. Plano, Texas

Located in the Dallas-Fort Worth Metroplex, Plano is home to 287,000 residents. The local economy is supported in part by the presence of some of the biggest names in the banking sector. JP Morgan Chase, Capital One, and Bank of America are the three largest employers in Plano, with a combined total of nearly 20,000 workers.¹⁰. Middle-class families here earn between $63,651 and $190,004. Plano has the lowest median home value out of the top ten, averaging $487,000.

10. Chandler, Arizona

Chandler is the third city in the Phoenix area among the top 10 cities. Among the largest employers here are Intel, Wells Fargo and the local school district¹¹. Middle-class families here earn between $63,391 and $189,226 annually, while the median home value in Chandler lies just above Plano at $492,000.

What does it take to be middle class in the 50 states?

Maryland, Washington, D.C., and Massachusetts have the three highest middle-class states statewide. In all three places, it requires an annual income of more than $60,000 for families considered middle-class. New Jersey ($59,828) and New Hampshire ($59,272) round out the top five.

At the other end of the spectrum, Mississippi is the state that requires the lowest annual income to be part of the middle class ($32,640). Magnolia State follows West Virginia ($34,336), Louisiana ($34,898), Arkansas ($35,194) and Alabama ($36,122).

Data and methodology

To determine the income thresholds in the middle class, SmartAsset analyzed the 2021 American Community Survey data on median household income in all 50 states, as well as the 100 largest US cities. We relied on a variation of Pew Research’s definition of middle-income households, which sets the middle-class salary range at two-thirds to double the median salary in the United States. We used the local average salary for states and large cities to calculate the variability of financial realities between regions.

¹Pew Research Center

²Society and Economics Research Cost of Living Index, Third Quarter 2022

³Comprehensive Annual Financial Report for the City of Fremont, CA 6/30/2022

⁴US Census Bureau ACS 1 2021

⁵Comprehensive Annual Financial Report for the City of Arlington, VA 6/30/22

⁶Zillow, data pulled 4/6/23

⁷Comprehensive Annual Financial Report for the City of Irvine, CA 6/30/22

⁸US Census Bureau Population Estimate Program 2022

⁹Comprehensive Annual Financial Report for the City of Scottsdale, AZ 6/30/22

¹⁰Comprehensive Annual Financial Report for the City of Plano, TX 6/30/22

¹¹Comprehensive Annual Financial Report for the City of Chandler, AZ 6/30/2021

Advice for middle-income people

Reassess housing costs. Households that spend more than 30% of their income on rent, mortgage payments, and other housing expenses are considered housing costs charged by the Census Bureau. If your housing costs exceed this limit, you may want to consider downsizing. SmartAsset has it several tools To assess your housing budget, including a calculator designed to help you decide if you want one Rent or buy in a specific market.
Consider deferring retirement. Middle-income earners nearing retirement may want to consider delaying it for a few years. Postpone retirement until the age of 70 It means you will reach your limit Social security Benefits and give your retirement savings extra time to grow. Not everyone is in a position to continue working until age 70, but this may be an option if you’re worried about running out of money in retirement.
Work with an expert. Financial advisors Not just for the rich. Many counselors work with middle-class families, helping them save for homes, plan for retirement or save for college. Finding a financial advisor doesn’t have to be difficult. Free SmartAsset tool It matches you with up to three vetted financial advisors serving your area, and you can interview your own advisors at no cost to determine which one is right for you. If you are ready to find a counselor who can help you achieve your financial goals, let’s start.