- New study reveals how the income needed to enter the middle class has skyrocketed
- Maryland households need the most amount to reach the threshold
- Meanwhile, the people of Mississippi need at least a new graphic show.
This is an age-old question that is sure to spark debate. What does it actually take to be middle class in modern America?
That answer has changed dramatically over the past decade, according to a new study by personal finance website GoBankingRates.
The analysis shows that the income needed to be considered middle class has increased by nearly $15,000, from $35,364 in 2012 to $50,099 in 2022. (latest data available).
And the findings may vary even more by state.
For example, the highest-earning households in Maryland are considered middle class. The income brackets that reach the threshold range from $65,641 to $196,922.
By comparison, Mississippi has the lowest salaries, ranging from $35,323 to $105,970.
To be considered middle class, Maryland households must have higher salaries than any other state in the United States. The income brackets that reach the threshold range from $65,641 to $196,922.Photo: Baltimore, Maryland
The study defined the middle class as people with household incomes two-thirds or twice the median income in each state.
That data comes from the 2012, 2017, and 2022 American Community Surveys by the U.S. Census Bureau.
Numbers suggest that the composition of the economies of Oregon, Washington and Colorado has changed most dramatically over the past decade.
The income range considered middle class increased by more than 50% between 2012 and 2022.
The results of this survey reveal just how high the cost of living is rising.
But the real answer is likely to be even higher in 2024, as rampant inflation and the Federal Reserve's aggressive interest rate hikes further hurt household budgets.
The annual inflation rate, tracked by the Consumer Price Index (CPI), reached 3.5% in March, down from a high of 9.1% in June 2022.
Another report recently released by NielsenIQ found that inflation has eroded the purchasing power of $100 at the grocery store by about a third over five years.
In 2019, shoppers could have bought 32 healthy bags of items like milk, eggs, cereal and dish soap for that amount.
But today, customers have to remove at least 10 of these products from their baskets to maintain the same budget.
By comparison, Mississippi has the lowest salary required to be considered middle class, with households needing an income between $35,323 and $105,970.Photo: Jackson, Mississippi
Another report by NielsenIQ recently found that inflation eroded the purchasing power of $100 at the grocery store by about a third over five years.
In response, the Fed raised funds rates to a 23-year high in an effort to rein in consumer spending and lower prices.
The Fed's benchmark interest rate has a ripple effect on credit cards, mortgages, and personal loans.
However, households are getting some respite from the soaring cost of living in the form of higher wages.
Average wages in the United States rose 4.2% in the 12 months ending in March 2024, according to figures from the Bureau of Labor Statistics.
