Solutions Economic and Market Watch

Hello, and welcome to the Economic & Market Watch podcast for the week of August 11, 2025. This is John Suter of CFC.

Do you remember Parade Magazine? It was inserted in newspapers nationwide, but it was last published in November 2022. I always found Parade's "What People Earn" report fascinating.

It was interesting to see what Americans do for a living and how much they make, even though I really had no benchmark from which to compare all the different jobs and salaries. I think many Americans, without that benchmark, just aspire to become middle class or stay there. But that designation has changed over the years. In today's dollars, what does that really mean?

Did you know that you can earn $150,000 a year and still be considered middle class in 23 states?

It used to be that a six-figure salary meant you were rich. These days, not necessarily so, according to Smart Asset Analysis of 2023 income data, the most recent available from the U. S. Census Bureau. The report, which crunched the numbers for all 50 states, is based on Pew Research's definition of middle class: two thirds to double the median household income within each state.

I used CNBC's article, "The Salary You Need to be Considered Middle Class in Every U. S. State," to break this down. We'll put a link to that in the show notes so that you can see what your state's values are or follow along as you listen.

Remember, the median is the middle value of a sorted list of numbers. In this case, the middle number is found by ordering the median household income numbers for each state in ascending order. Once the numbers are ordered, the middle number is called the median of the given data set.

To reiterate, the state ranges that were contained in this report are two thirds to double the household median income. So, for example, I live in Virginia. The state's median household income is $90,000. For the state of Virginia, the household income that needs to be earned to be considered middle class, according to Pew Research's definition of middle class, would be two thirds to double that value, which is a low of $60,000 to a high of $180,000. Each state has their own median household income and low-to-high range.

The data highlights the fact that some states have much higher middle class income ranges than others. On that measure, Massachusetts has the highest threshold for middle class salaries with a threshold of $67,000 to $200,000 with a median of $100,000 to be considered middle class, overtaking New Jersey from last year's rankings. The next four highest states were New Jersey, Maryland, New Hampshire, and California.

In contrast, Mississippi has the lowest threshold for middle class salaries, with a threshold of $36,000 to $108,000 with a median of $54,000. The four states above Mississippi were West Virginia, Louisiana, Arkansas, and Kentucky, to round out the bottom five.

Overall, if one were to average all the state median household incomes, it would be $77,000. That's very much in line with the 2023 median household income in the United States at $81,000, which is a 4% increase from the 2022 estimate of $78,000.

Why might you be interested in where you stand in relation to other hardworking Americans across the country, or specifically in your state?

It's often valuable to have an idea of where you stand with regard to your job and the salary that you make. Maybe you have an upcoming annual review or have been thinking about a possible career change, or maybe your co op is facing hiring challenges. Knowing salary data like this can often come in handy when managing financial expectations, deciding to change your career, or hoping to entice other people to change theirs.

Unfortunately, even as more households earn six-figure salaries, many middle class earners are feeling the squeeze. While inflation adjusted wages have risen since 2022, those gains have been largely offset by increasing costs since the start of the COVID-19 pandemic in 2020.

For example, housing and food, in particular, have become more expensive. From January 2020 to December 2024, home prices climbed 52% according to the Case Shiller U.S. National Home Price Index, while food prices rose 30% based on consumer price index data. Over the same period, overall inflation grew 25%. When looking at the US Consumer Price Index food and housing represent significant portions, with food accounting for roughly 14% and housing making up nearly a third (around 32% ) of the overall index.

Rising costs help explain why two thirds of middle class Americans said that they were struggling financially and don't expect their situation to improve, in a 2024 survey from the National True Cost of Living Coalition. Since then, year over year inflation has hovered around 3%, still above the Federal Reserve's 2% target, but far below its June 22 peak of 9.1%.

Unfortunately, while prices have come down, they have not come down fast enough to warrant the Federal Reserve to cut interest rates more aggressively, which is also a concern.

Stubborn, lingering inflation may be here to stay for the foreseeable future. But although price increases have slowed, the cumulative effect of the past few years has eroded many Americans' spending power. A six-figure income may not stretch as far as it once did, and there's a lot of uncertainty in the economic news.

So, while money is not the most important thing in the world, it certainly helps to have during times like we are facing today. Why, even Pink Floyd, on their album, "The Dark Side of the Moon," released in March 1973, when the economy was entering similarly choppy waters, wrote an entire song about money with the infamous line, "Money, it's a hit. Don't give me any of that do goody good bull[bleep]."

That's it for today. As always, we thank you for listening and be sure to download the Economic & Market Watch dashboard and intelligence brief. We'll talk to you soon.

Uh-oh. Kathy, you can bleep that out, can you?