Earning

The 5 U.S. cities where you need to make the most money to count as middle class

To qualify as middle class in San Jose, California, you need to make at least $107,000 a year.

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Nearly 70% of Americans consider themselves "middle class," which can mean very different things to different people. Social scientists say that people perceive themselves as middle class based on a variety of lifestyle factors, including education, family history, and even their neighborhood. For simplicity's sake, a lot of experts focus on household income.

Since the same salary could go much further in some places than others, geographic location also has a lot to do with determining whether someone falls into the middle class. Using the definition from the Pew Research Center, Grow calculated that a typical American household of three people would have to earn between $54,050 and $161,344 a year to qualify as middle class, based on 2020 salaries. That could mean a luxurious lifestyle in southern Texas — or a not-so-luxurious one in San Francisco.

With well-paying jobs increasingly concentrated in pricey metros, fewer Americans qualify as middle class by Pew's standards: Only about half of adults fell into that category in 2020, compared to 61% in 1971.

Using Pew's definition of "middle class" as a household of three earning 67% to 200% of the area median income, Grow calculated which U.S. metro areas require the highest annual income to qualify as "middle class" — and which allow for a middle-class lifestyle on a comparatively low income.

Here are the top five areas where you have to have the highest income to be in the middle.

San Jose-Sunnyvale-Santa Clara, CA

Lowest income considered middle class: $96,319
Highest income considered middle class: $287,520         

San Francisco-Oakland-Hayward, CA

Lowest income considered middle class: $87,100
Highest income considered middle class: $260,000

Washington, D.C., and surrounding areas of Maryland and Virginia

Lowest income considered middle class: $83,037
Highest income considered middle class: $247,871

Bridgeport-Stamford-Norwalk, CT

Lowest income considered middle class: $76,591
Highest income considered middle class: $228,631

Boston-Cambridge-Newton, MA   

Lowest income considered middle class: $73,524
Highest income considered middle class: $219,474

The Bay Area leads the pack, thanks to high housing costs

It's not surprising that the two cities where it's most expensive to be middle class are in California, given the state's sky-high housing costs. The Golden State's median home value is around $668,300, according to Zillow, compared to a national median of $287,100. In San Francisco and San Jose, the median home runs $1.4 million and $1.2 million, respectively. 

Everyday necessities also cost more. Take San Jose: The cost of living there is 49% higher than the national average, says PayScale. Utilities cost 26% more, groceries are 21% pricier, and transportation is 11% above average. Throw in pricey housing, and these nondiscretionary costs can consume most or all of a typical household income.

Of course, California doesn't have a monopoly on high prices. Homes cost more than double the national median in Washington, D.C., and the cost of living there is almost 40% higher than average. The median single-family home price in Boston reached $761,000 in May.

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What to consider before moving to a lower-cost city

Whether you want to break into the middle class or move into an even higher echelon, relocating to a lower-cost city to save money may not be a bad idea.

"From the unemployment highs of the Great Recession to the unemployment surrounding the pandemic, Americans have been forced to consider their finances in choosing where to live," says A.J. Schneider, president of van line company the Wheaton Group. And as many companies begin to allow remote work, people "no longer have to stay within the pricey area codes they've been stuck in previously."

But look at the full picture before you pack your bags. Leaving a high-cost state like California could also mean saying goodbye to a higher salary, as jobs in more affordable areas tend to offer lower wages. Plus, some employers are cutting salaries for remote workers who relocate to cheaper areas.

From the unemployment highs of the Great Recession to [economic effects of] the pandemic, Americans have been forced to reconsider their finances.
A.J. Schneider
Wheaton Group

"You'll need to understand whether you'll incur a cost of living adjustment to your pay if you relocate," Roger Ma, CFP, founder of financial help website lifelaidout.com, told Grow. That's not always a negative: "If you get your pay adjusted downward, you'll generally pay less in federal taxes," he adds, on top of potentially lower state income taxes and property taxes in your new home.

If you're ready to move to a lower-cost area, try to have employment already lined up if you can. That way, you can anticipate your monthly income and make sure your new expenses won't outweigh it. And if your new hometown helps you save more, remember to funnel that money towards financial goals like retirement.

Check out Grow's middle class calculator to see what qualifies as a middle-class income in your current city — and where you'd stand if you moved elsewhere.

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