During his first speech to a joint session of Congress, President Trump blamed the shrinking of the middle class on America's trade policies, repeated his promise to provide "massive tax relief" to this group and said that a merit-based immigration system will help struggling families enter this category.
But which Americans are actually middle class?
The median household income in the U.S. is $56,500 according to the most recent government data. Approximately half of all Americans will fall below this household income amount, and the other half will fall above. Although this may help you learn which half you and your family fall under, this figure doesn't help us compare households of different sizes. Moreover, there aren't universally accepted definitions of the various economic classes.
So, where do you and your household fit in? This article will attempt to explain what constitutes each income class.
The Income Classes
The Upper Class
At the top of the income classes is the upper class. There is no single definition of whom this includes. Many think of the upper class in terms of the 1%. To be in the richest 1% nationally, a household needs to have the annual income of at least $389,436, according to the Economic Policy Institute. But one could argue that the upper class is larger than that if you look at America as a whole.
The Upper Middle Class
According to census data from 2015, 6.1% of households bring in $200,000 and higher every year and 14.1% bring in between $100,000 and $150,000. This is the upper middle class.
An Urban Institute paper argued that what they referred to as upper middle class, or those with a three-person household income between to $100,000 and $350,000, has grown from 12.9% of the population in 1979 to 29.4% in 2014. It found that people with higher incomes saw their earnings grow faster than those with lower incomes.
"The idea that the real divide is between ordinary members of the bottom 99% and the rich 1% is a dangerous one, since it makes it easier for those in the upper middle class to convince themselves they are in the same economic boat as the rest of America; they’re not," wrote Nathan Joo and Richard V. Reeves of the Brookings Institution.
The Middle Middle Class and Lower Middle Class
Given that "upper middle class" turns out to be a synonym for wealthy, the true middle class includes the middle middle class and the lower middle class.
The Census Bureau says that 41.5% of American households brought in between $35,000 and $100,000 in 2015. Twenty-six percent of American households earn more than that and 32% earn less. While this gives us a good idea of the incomes of the average American middle class household, the definitions of this group vary.
The Urban Institute defined the middle class as adults with size-adjusted household incomes of between $30,000 and $100,000 for families of three.
The Pew Research Center defines the middle-income category as including adults with family-of-three equivalent incomes between two-thirds and double the national median. This brings the range from $37,666 to $113,000 according to current levels. To see where you fit in, use the Pew calculator to make your household’s income equivalent to that of a three-person household (the whole number nearest to the average size of a U.S. household, which was 2.5 in 2014).
President Trump is right: The middle class is shrinking. This group used to make up the vast majority of the American population, but now stands at roughly 50% of the American population, according to a Pew Research Center analysis of government data. (See also: Why the American Middle Class is Shrinking)
And there's one more group in the middle class. Those belonging to the lower middle class do not live in poverty, but they are often one misfortune away from being hurtled below the poverty line. Brookings Institution defined this group as including those with income between 100 and 250% of the federal poverty level, or between $18,871 and $47177 for a family of three according to the current numbers.
The Poverty Level
The lowest class includes any American household that falls under the poverty line, meaning families or individuals who don't earn enough money to meet their basic needs. The Census Bureau estimates that about 14% of the U.S. population (approximately 43 million people) live below the poverty line and fall into this class today.
The current official poverty threshold is an income of $24,257 per year for a family of four and $18,871 for a family of three. This figure has often been hotly debated because many poor Americans live in urban areas that have a high cost of living, making it likely that people earning more would fit the definition of poverty in a high-cost city or region.
As you can see, the U.S. population consists of a variety of different income classes, and the shrinking middle class points to growing income inequality.
It's not all bad news, however. Last year the Census Bureau stated that the median inflation-adjusted American household income increased 5.2% between 2014 and 2015, the first annual increase since 2007. The number of people in poverty also fell by 3.5 million between 2014 and 2015 (see Good News: Long-Awaited Wage Growth Is Finally Happening).
The Bottom Line
Politicians love to use the term "middle class" because it evokes images of vigorous, respectable, hard-working Americans with good moral values. Most people tend to think of themselves as middle class. But the truth is, the middle class includes people with vastly different lifestyles and concerns.