Econ Quiz: Middle Class Households

(Image Source: Johnson Johnson / Unsplash)

July 2024

The Pew Research Center recently released its semi-regular report on income distribution across the United States. The report notes that the middle class makes up a smaller portion of households than it once did, in part because the proportion of households in the upper income group has increased from 11% in 1970 to 19% in 2023, but also because the proportion of households in the lower income group has grown from 27% to 30% of U.S. household in that same time period.

That prompts the question, what income levels are considered lower income, middle income, and upper income? Middle income households are defined as those with annual incomes two-thirds to twice the national median income after adjusting for household size. Using a household of three people as an example, lower income households were those earning less than $61,000 annually, middle income households of three earned between $61,000 and $183,000, and upper-income households of three earned more than $183,000.

We can make an interesting comparison by looking at incomes that fall squarely in the middle of each group. Within each category — lower, middle, and upper — household median incomes have grown since 1970. After adjusting for inflation, median annual earnings for lower income households grew by 55%, moving from $22,831 to $35,318. Median annual earnings for upper income households grew by 78%, moving from $144,068 in 1970 to $256,920 in 2023.

That brings us to today’s question. Using inflation adjusted dollars, the median income of middle-income households was $66,417 in 1970. What was the median income of middle-income households in 2023?

A. $82,068

B. $106,092

C. $198,701

D. $101,401

E. $75,213


Answer: B. Households earning $106,092 fell squarely in the middle of middle income households in 2023.

Kochhar, R (2024). The State of the American Middle Class: Who is in it and key trends from 1970 to 2023. Pew Research Center.

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