'Middle class' feels more confusing than ever

Marcos Cabello, a writer at Bankrate, makes around $170,000 a year when combining finances with his fiancee. Unfortunately, that doesn’t go as far as he’d like in pricey Boston. Cabello and his fiancee consider themselves middle class, but in a city where homes are typically over $1 million, traditional middle-class benchmarks, like homeownership and taking yearly vacations, are still distant goals. That’s not only true in Boston. Cabello and other families across the country may bring in high incomes, yet they still haven’t been able to achieve a “middle-class lifestyle.”

“I just feel behind, (compared to) my parents. I actually turn 30 in a couple of weeks, and this is coincidentally something that’s been on my mind. There’s no way I’m ready for a house until at least close to mid-30s unless I can get help for a down payment from someone or somewhere,” Cabello says. In today’s rapidly changing economy, “middle class” doesn’t mean what it used to mean only a few decades ago. Although a middle-income salary can feel like it should be enough to live comfortably, many Americans making an average income are still struggling to afford a home, save or pay for discretionary purchases. With those goals out of reach, many Americans feel locked out of the middle class completely.

Part of the confusion is that “middle class” is different from “middle income.” The Pew Research Center defines “middle income” as a household that makes two-thirds to double the national median income after adjusting for household size. That works out to $56,600 to $169,800 annually for a family of three in 2022 dollars, the latest data available.

Conversely, “middle class” is closer to a lifestyle label, although the two are often used interchangeably. Although it varies from person to person, generally, the term “middle class” brings to mind a family who owns a home, doesn’t live paycheck-to-paycheck, has enough money for discretionary spending and is able to save for the future. This is where it gets confusing — that rosy picture isn’t the reality for many middle-income people today.

Over the last year, Bankrate’s surveys of Americans have found that, while middle-income earners are typically more financially comfortable than lower-income people, many still don’t meet those traditional middle-class benchmarks. A sizeable percentage of Americans who make between $50,000 and $79,999 per year can’t afford a house, live paycheck-to-paycheck or can’t afford a summer vacation:

•42% of people who don’t own a home and make between $50,000 and $79,999 annually say they don’t have enough income to afford a house, according to Bankrate’s Home Affordability Survey.

•33% of Americans earning between $50,000 and $79,999 annually live paycheck-to-paycheck, according to Bankrate’s Paycheck to Paycheck Survey. A similar percentage (36%) of those making between $80,000 and $99,999 say the same.

•60% of people who skipped a summer vacation in 2024 and made between $50,000 and $79,999 said they couldn’t afford one, according to Bankrate’s Summer Vacation Survey.

“(Middle class) is often equated with this idea that you’re financially comfortable,” says Megan Doherty Bea, an assistant professor of consumer science at the University of Wisconsin-Madison. “Increasingly, more and more families do not feel financially comfortable.”

A person making $70,000 per year today might be middle income, Bea says, but they might also have high debt, like credit card debt and student loans, which makes homeownership and other significant goals even more out of reach. “That, I think, is part of the disconnect with the middle class,” she says. “Technically, yes, you are middle income, but the ability to be middle income and have the stability that maybe your parents or grandparents had is much harder to find.”

The percentage of American households who are middle income has fallen between 1971 and 2022, according to the Pew Research Center. Richard Fry, a senior researcher at Pew, says that since 1971, more Americans are either lower income or upper income, and fewer are middle income. It’s part of a phenomenon better known as the “vanishing middle.”

The federal minimum wage is $7.25 and hasn’t risen since 2009. In the meantime, high wages haven’t fully caught up to post-pandemic inflation. In other words, families today have less buying power than they did only a few years ago. While wages are on pace to recover from inflation in the second quarter of 2025, that doesn’t change the fact that the past few years of inflation have taken a severe hit to Americans’ finances.