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For many of us, going to work is all about achieving the American Dream.
While self-actualization is great, we are really clocking in for the money and hoping our sweat will buy social mobility and a comfortable life for our families. Many define middle class by the segment of earners who fall in the middle- However, in some states the median income is far from a dream, and even further from financial stability.
We analyzed home costs and other expenses to better understand what salary it takes to actually be middle class in each state.
First, here are the 10 states with the highest needed income to be middle class:
States With The Highest Middle-class Income
Keep reading to see a breakdown of how these states are breaking the bank. And why Southern and Midwestern states are so dang affordable.
Income needed to be middle class: $122,695
Hawaii may be a tropical paradise, but even paradise comes at a price. The average Hawaiian may have a better chance of being near a beach than most of America, but it rings in at a staggering $670,600. Along with other average expenses, Hawaiians would need to earn $122,695 to not be over burdened by debt.
Income needed to be middle class: $111,206
The median income in California is $91,377. That is around 20,000 below what it takes to truly eke out a respectable living in the pricey west coast state.
Income needed to be middle class: $85,567
Massachusetts is the most educated states in the US. However, educational coasts are keeping many from achieving middle class stability. The average student loan payment in Massachusetts is $229. In households where both partners have student loans, the income needed to get by is even higher.
Income needed to be middle class: $81,602
Colorado is known for being high up, but residents know it’s also high in costs. With an average car payment of $336 and student loan payment of $208, that’s $544 gone for many families right from the start. Add in a mortgage and many are no doubt struggling to keep the fridge full.
Income needed to be middle class: $81,203
Washington has a median income of $94,709. Ultimately, that means half of households earn less and half earn more. While that puts the majority of households above the $84,203, it also means an uncomfortable amount of Washington residents aren’t.
6. New York
Income needed to be middle class: $75,403
While $75,403 doesn’t go very far in the Big Apple, in most of the state it can buy the finer things in life- like food and shelter.
Income needed to be middle class: $74,865
Earning $74,865 won’t make you rich in Oregon. However, it might mean homeownership is feasible, even if you’re still paying back student loans and have a car payment.
8. New Jersey
Income needed to be middle class: $74,485
New Jersey is only affordable to those leaving high cost cities in New York. However, many Midwesterners would drop jaw at high costs in the Garden State.
Income needed to be middle class: $71,844
In the shadow of the nation’s capital, it takes a health income of $71,844 to afford a middle-class lifestyle in Maryland.
Income needed to be middle class: $71,034
Utah is one of the fastest growing states in the US. For families struggling to make do, the influx of families from more expensive states such as California and Colorado driving up costs can’t be welcome.
How We Determined This
First, we had to conceptualize what it means to be middle class. While potential for social mobility is an important component, we ultimately decided to focus on financial stability, or roughly how much it takes in each state to pay your bills and have some reserves leftover.
The biggest singular expense to most earners is housing. And, since the American Dream is built on homeownership, we opted to start with average mortgage cost. We started by finding out the average home value in each state from the US Census.
Home costs will vary within a state. Similarly, some buyers choose more or less expensive houses based on income and personal taste. However, since we are going for a top look, the average seemed like a good starting point.
From there, we applied a standard 30-year mortgage with a 3.9% interest rate to work out the monthly payment. We did not take into account PMI, taxes, down payment size, or home insurance, since those differ greatly within states and based on individual circumstances.
After that, we looked at two other large sources of debt weighing down earners- car payments and student loans. While not everyone has student loans or a car payment, just under half the population has either or both.
Our numbers on student loans by state are based on an aggregated analysis of anonymized data from Truebill users that featured nearly 150,000 unique student loan payments. For car loan payments, we used data on average monthly car payment from Autoline.
While some households may have two car payments of two student loan payments (and would require a greater income to live a middle class life), we only applied one average car payment and student loan payment–keeping household close to the national average.
It is recommended by financial advisors that no one have debt payments greater than 36% on total debt servicing. Anyone with greater debt will struggle to pay for other basic necessities or build savings. So from there we simply found the line where the combined monthly payments would be greater than 36% of pay.
Middle Class Living Isn’t Cheap
A few of these states have median incomes below the income actually needed to be comfortably middle class. All of them still have a large chunks of residents who fall below the mark needed to make do.
Ultimately, lifestyle can make a difference in these totals. A family with heftier student loans or multiple car loans might find the middle class income far below what they need to truly thrive. Others who live more modestly or in more affordable parts of the state, might find it perfectly reasonable to make do on less.
You can see a more in-depth breakdown of the average costs calculated below:
Income Needed To Be Middle Class In Each State
|State||Middle Class Income||Average Monthly Car Payment||Average Student Loans||Mortgage Needed For Average Home|