The power of a six-figure (or more) salary is seemingly fading depending on where you live, bumping some U.S. earners into a “lower middle class” status.
“In America’s most expensive cities, the bar has definitely been raised to be considered ‘middle class,’” GOBankingRates lead content data researcher Andrew Murray told Fox News Digital. “To escape the lower middle class, you’ll need to earn as much as $150,000, which is substantially higher than what it used to be.”
In some high-cost cities, a $150,000 annual salary is stretched financially thin and qualifies as a “lower middle class” income, according to a recent analysis from GOBankingRates.
Northern California and Virginia top the list, where the maximum lower middle class income range goes from $128,964 to $152,652, among the top five most expensive cities.
The cities that ranked with the highest incomes considered “lower middle class” include, in descending order: Arlington, Virginia; San Francisco; San Jose, California; Irvine, California; Seattle; Gilbert, Arizona; Plano, Texas; Scottsdale, Arizona; Washington, D.C.; and Chandler, Arizona.
“You’ll need to make more than six figures, and as much as $150,000, just to get out of the lower middle class in the top 15 ranked cities. Due to these high income requirements, many Americans might be more comfortable choosing to live in more affordable cities, especially those that make average earnings of around $75,000,” Murray explained.
GOBankingRates noted in the analysis that the top 25 cities also have exuberant housing, childcare and transportation costs when compared to national averages. According to the data analyst, housing and real estate costs can have the biggest impact on affordability and your wealth class.
“Eight of the top 25 cities are in Virginia, Washington and Arizona. While Virginia and Washington state generally have a higher cost of living, the cities that made our list all had exceptionally high median household incomes,” Murray noted.
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“Most notably, Arlington, Virginia, which is located just outside of Washington, D.C., has the highest median household income studywide, at nearly $140,000,” he added. “Meanwhile, Seattle and Gilbert both have a median household income above $115,000. It’s worth noting that all three Arizona cities that ranked in the top 25 are in the Phoenix metro area.”
California dominated the list with seven out of 25 of the top spots due to its housing implications.
“It’s no secret that California housing costs are among the highest in the nation. Californians can expect to pay an average of nearly $30,000 per year on housing costs, according to the Bureau of Labor Statistics,” Murray pointed out.
“This means that anyone who wants to live comfortably in California will need to be a high income earner, which is reflected in our findings. San Francisco, San Jose and Irvine — the three California cities that ranked highest in our study – each have a median household income of more than $120,000,” he continued. “This is nearly $50,000 higher than the national median income.”
U.S. Census data reported that the median household income was just under $75,000 in 2022, and Murray expanded on how this research adds to the argument that being “rich” can be relative to where you live.
“Our findings show that the income considered lower middle class in San Francisco ($152,652) is nearly quadruple the income considered lower middle class in Cleveland ($41,412),” he said. “In another recent analysis, GOBankingRates found that the income needed to be ‘rich’ (top 5%) in Massachusetts is more than $200,000 higher than what it is in Mississippi.”
In terms of the most significant takeaway from the study, Murray emphasized that income expectations are increasing drastically in these high-cost cities.
“A six-figure income is no longer enough to make it out of the lower middle class in 15 cities. In three cities, a $150,000 income isn’t even enough,” he said. “It’s important that prospective homebuyers consider these types of income differences when deciding where to move.”
The cities that ranked with the highest incomes considered “lower middle class” include, in descending order: Arlington, Virginia; San Francisco; San Jose, California; Irvine, California; Seattle; Gilbert, Arizona; Plano, Texas; Scottsdale, Arizona; Washington, D.C.; and Chandler, Arizona.
California: Where Even High Earners Struggle to Keep Up
California cities dominate the list of places where a $150,000 income is considered lower middle class. In addition to San Francisco and San Jose, cities like Irvine, San Diego, and Oakland also have high living costs that strain the budgets of even high earners.
Generally speaking, yes, earning $150,000 a year is considered an excellent salary in most places in the U.S. It surpasses the median income across all states, even in areas with high cost of living, like New York.
Where you rank by income. According to the Census Bureau's Income in the United States: 2022 report, the median household income is $74,580 (a 2.3% decline from 2021), while household income levels for each class level are as follows: Lower class: less than or equal to $30,000. Lower-middle class: $30,001 – $58,020.
"To escape the lower middle class, you'll need to earn as much as $150,000, which is substantially higher than what it used to be." In some high-cost cities, a $150,000 annual salary is stretched financially thin and qualifies as a "lower middle class" income, according to a recent analysis from GOBankingRates.
A middle-class income is roughly in the $50,000 to $150,000 range, according to finance expert Jake Claver. Those in the upper middle class have an estimated household income of $150,000 to $250,000. The exact threshold can fluctuate based on a variety of factors, such as local cost of living and inflation.
Only 15.5% of Americans earn between $100,000 and $149,999 per year. Although, this does make up the largest percentage of Americans who do make over $100k, which only 8.3% earning between $150,000-$199,999, and 10.3% earning over $200k. 45% of Americans earning over $100k live paycheck-to-paycheck.
When you remove demographics such as infants, students, and stay-at-home spouses and focus only on full-time workers, around 18% of all earners in the US make at least six figures. Conversely, the median American household income in 2023 was approximately $44,225.
We've identified 10 cities where the typical salary for a 150K job is above the average in New York. Topping the list is Northwest Ithaca, with Manhattan and New York City close behind in second and third.
$150k income should be able get you a $700k mortgage with that $350k down on a $1M property. There are a handful of 3bd/2ba homes in Pasadena for less than $1M. A $700k mortgage with $300k down on a $1M property will cost you about $3k in mortgage and interest with a fixed 30 year.
If you're naturally frugal and you plan to live a low-key, minimalist lifestyle in retirement then $150,000 might serve you well. On the other hand, if you'd like to enjoy a more lavish lifestyle or you have a serious health issue that results in high out-of-pocket costs, $150,000 may not go that far at all.
In a large U.S. city, a middle-class income averages between $52,000 and $155,000. The median household income across all 345 cities is $77,345, making middle-class income limits fall between $51,558 and $154,590.
One way some researchers divide individuals into economic classes is by looking at their incomes. From that data, they split earners into different classes: poor, lower-middle class, middle class, upper-middle class and wealthy.
According to the study, a middle-class income averages between $52,000 and $155,000 in a large U.S. city. The median household income across all 345 cities is $77,345, making middle-class income limits fall between $51,558 and $154,590.
But data from the U.S. Census Bureau cites a different number as the average salary: just under $75,000. What does this all mean? By the Census data, it means that if you earn between $50,000 and $150,000 a year, you are considered middle class.
As of Jun 8, 2024, the average hourly pay for a 150K in California is $14.41 an hour. While ZipRecruiter is seeing salaries as high as $21.59 and as low as $10.91, the majority of 150K salaries currently range between $12.79 (25th percentile) to $17.79 (75th percentile) in California.
The Pew Research Center defines the middle class as households that earn between two-thirds and double the median U.S. household income, which was $65,000 in 2021, according to the U.S. Census Bureau. 21 Using Pew's yardstick, middle income is made up of people who make between $43,350 and $130,000.
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