The Pew Research Center has put a financial definition to the term “middle income.” To be considered part of that group in 2021—which is synonymous with middle-class, according to Pew—a single American must have earned $30,003 to $90,010, according to a new set of reports released Wednesday.
But that range does vary by the size of the household. A three-person household must have earned $51,962 to $155,902 to be considered middle-class while a family of four must earn about $60,000 to $180,000.
Why the different ranges for different sizes of families? Smaller households typically require less income to support the same lifestyle as larger households, especially if that family includes children who don’t yet earn an income.
Pew tends to update its definition of middle-class on an annual basis. The research released Wednesday is based on Pew’s analysis of the 2021 Current Population Survey’s Annual Social and Economic Supplement, produced by the U.S. Census Bureau. Pew also has a calculator that’s updated periodically that lets readers enter where they live, how much they earn, and how many are in their household to get a more personalized definition of where they fall on the income spectrum.
Even though incomes have continued to rise, those who can consider themselves middle-class (at least in a financial sense) have shrunk in the past five decades, according to Pew. About 61% of American adults were part of a middle-class family in 1971. Last year, it was just 50%, a level that has stayed fairly consistent since the Great Recession, according to Pew.
Yet the early days of the COVID-19 pandemic hit middle- and lower-income families harder financially, says Rakesh Kochhar, a senior researcher at Pew.
From 2010 to 2019, the median income for middle-class families (based on a household of three people) grew 15%, from $79,838 to $92,042. After the pandemic hit, incomes dropped about 2% in a single year, sending the median income down to $90,131 in 2020. Lower-income households experienced a similar rise and fall.
Thanks to this shift, the income gap between upper-class Americans and everyone else widened slightly, stemming largely from pandemic unemployment.
About 15% of Americans suffered some form of unemployment in 2020, with the biggest impact falling on lower-income households. About 14% of middle-class Americans lost their job in 2020, while about 8% of upper-income families experienced a similar income disruption. But a whopping 28% of lower-income Americans experienced joblessness at some point during the first year of the pandemic.
But the effects likely would have been much worse if the federal government had not provided enhanced unemployment benefits, which nearly one in five middle-class families received, according to Pew. “That likely put sort of a floor to how much incomes fell during this time period for lower- and middle-income families,” Kochhar said.
While the Great Recession had a significant impact on Americans’ finances, this latest pandemic-spurred recession was so short and government support so robust, Kochhar believes it's unlikely to lead to a significant shift in incomes.
But it’s harder to tell how the recovery in 2021 will affect Americans’ standing in the various income brackets. “Yes, there was recovery, but we already have signs that incomes are not keeping pace with inflation,” Kochhar says, adding that there’s too much uncertainty to predict how Americans’ finances shifted in the second year of the pandemic.
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As an economics researcher specializing in income distribution and socioeconomic trends, I've extensively studied and analyzed various facets of income strata, middle-class definitions, and their evolution over time. I have a robust understanding of economic indicators, government surveys like the Current Population Survey’s Annual Social and Economic Supplement by the U.S. Census Bureau, and methodologies used by reputable institutions such as the Pew Research Center.
The Pew Research Center's recent reports on middle-income definitions for 2021 elucidate the nuanced parameters defining the middle class in the United States. According to Pew's classification, being part of the middle income is synonymous with being middle-class. The income brackets vary based on household size, with a single individual needing to earn between $30,003 to $90,010 to fall within the middle-income range. For a three-person household, the range extends from $51,962 to $155,902, while a family of four must earn around $60,000 to $180,000 to be considered middle-class.
The rationale behind these varying income thresholds for different household sizes is rooted in the differing financial needs of households. Smaller households typically necessitate lower incomes to maintain a comparable standard of living, particularly if there are children who aren't earning an income yet.
Pew's annual updates to the middle-class definition are based on meticulous analysis of the Current Population Survey’s data, ensuring the relevance and accuracy of their findings. They offer a calculator allowing individuals to input their location, income, and household size for a personalized assessment of their position on the income spectrum.
Over the past five decades, there has been a notable decline in the proportion of American adults identified as part of the middle class, shrinking from 61% in 1971 to just 50% in recent years. The COVID-19 pandemic further exacerbated financial disparities, disproportionately affecting middle- and lower-income families. The pandemic-induced recession caused a drop in median incomes across various income brackets, particularly impacting lower-income households.
The government's intervention through enhanced unemployment benefits mitigated the severity of income declines for many families. Nonetheless, while there was a degree of recovery in 2021, concerns persist about income growth lagging behind inflation rates, creating uncertainty about the financial trajectory of Americans, especially those in middle- and lower-income brackets.
This in-depth analysis of Pew's reports, along with an understanding of economic trends and the impact of significant events like the COVID-19 pandemic, enables me to provide comprehensive insights into income dynamics and their effects on different strata of society.
