Talking about the middle class in California is no longer as simple as it used to be; What a few years ago represented economic stability, today may mean just enough to cover the basics. The increase in housing, food, transportation and health, in short, the cost of living, has completely changed the level of income needed to live in the state.
According to a SmartAsset study, A household in California is considered middle class if it earns between $63,674 and $191,042 dollars a year. This range is not fixed, it changes depending on the city, type of home and local cost of living.
According to Kevin Marshall, certified public accountant (CPA) and contributor to Smithii Tools, it takes around $63,674 per year, but he clarifies that this changes because some cities are much more expensive than others. In places like San Francisco, the necessary income rises to about $84,488.while in San José it can reach approximately $90,810 dollars.
“That’s because rent, gas and certain expenses are more expensive in different cities,” Marshall said.
Why $100,000 doesn’t always mean being rich anymore?
For years, earning six figures in the United States technology synonymous with financial success; however, that perception has changedespecially in high cost of living states like California.
Today, an income of $100,000 can even place you at the low or middle end of the middle class spectrum.depending on the size of the household and the city. In some analyzes based on the Pew Overview Middle, this income may fall within the so-called “lower middle class,” as it is considered the top third of the middle class range in certain states.
This approach defines the middle class as households earning between two-thirds and twice the state median income.. Within that range, those closest to the outrageous limit are classified as lower middle class.
This doesn’t mean that $100,000 isn’t a solid income, but it does mean that Purchasing power has decreased in the face of rising cost of living.
The great discrepancy between studies and why it occurs
The difference between the SmartAsset data and other studies such as MoneyLion could cause confusion, because the results are considerably discrepant. The main reason is that there is no single definition of “middle class” in the United States and, particularly, each study uses different methodologies.
SmartAsset uses data from the US Census and calculates ranges based on the median income for each state or city. Instead, MoneyLion is based on the Pew Overview Middle methodologywhich defines the middle class as a percentage of the median income (two-thirds to two times the median income).
This causes important differences. While one measure focuses on broad income ranges by location, the other divides the population into narrower segments within that range. For this reason, the same salary can appear as “middle class” in one study and “lower middle class” in another.
A state where living costs more and more
Beyond the numbers, the main problem remains the same: California is one of the most expensive states in the United States. Even with high incomes, many families face difficulties in saving.
Marshall points out that even a family with $130,000 can spend almost $29,753 more than in other states, just because of the cost of living.
“And on top of all that, there are very high taxes. There is a 13.3% income tax and an 8.8% sales tax, and when all that is added up, it is difficult to save money,” he recalled.
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