The practice of accumulating debt at a faster rate than the rise in asset values continued from 2001 to 2007. Moreover, it became entrenched among upper-income families as well. Middle-income families raised their debt level by a further 61% from 2001 to 2007, compared with an increase of only 18% in the mean value of their assets. This trend likely placed families in a more vulnerable position prior to the Great Recession than they might have been if the growth in debt and asset values had been more balanced.
Families in all income tiers put the brakes on debt accumulation after the onset of the Great Recession. But these attempts were in vain from 2007 to 2010 as asset values plunged even more. Middle-income families cut their mean debt level by $11,624, or by 11%. But the value of their assets fell by $79,626 (19%). Thus, their mean wealth dropped by $68,002 with the Great Recession. Upper-income families were not immune to the downturn. They reduced their debt burden by 6%, but their asset holdings lost 17% in value.
Lower-income families, with more limited financial resources in general and greater exposure to job losses, were unable to reduce their debt burden from 2007 to 2010. Their level of debt increased 15% in this period. This increase was more modest than in previous periods, but it was damaging in light of a loss of 2% in asset values. Thus, the mean wealth of lower-income families fell by $8,214 with the recession.
Families in all income tiers succeeded in continuing to reduce debt burdens from 2010 to 2013. Middle-income families knocked off $14,675 of their debt, but even that did not keep up with a loss of an additional $34,377 in their asset holdings. Likewise, lower-income families cut their debt by $7,708, but that was insufficient in the face of a loss of $32,321 in asset values. Thus, the mean wealth of lower- and middle-income families dropped again from 2010 to 2013.
Only upper-income families experienced a gain in mean wealth from 2010 to 2013. Their debt level decreased by $21,186, and their asset values increased by $23,183 in this period. Thus, the mean wealth of upper-income families increased $44,369 from 2010 to 2013. But the mean net worth of upper-income families remains less than in 2007, and that is also the situation among middle- and lower-income families.
- Data on wealth are collected for families, as opposed to households. Technically, they are slightly different. As per the Census Bureau, a family consists of all related people living in the same dwelling unit. A household is all people who live in the same dwelling unit. See Methodology for more detail. ↩
- See Kochhar, Fry and Taylor (2011) for more detailed data on rates of asset ownership among U.S. households. ↩
- Equity in a home is the difference between the current price of the home and the mortgage debt outstanding. ↩
- These developments and their implications for household wealth are analyzed in greater detail in Kochhar, Fry and Taylor (2011). ↩
- An exception to this trend is that the value of assets held by upper-income families increased at a faster rate than the level of their debt from 1983 to 2001. ↩
- The analysis in this section is based on mean wealth, not median wealth. This is because mean wealth equals mean asset values less mean debt levels. A similar arithmetic relationship does not hold for medians. ↩
BY RICHARD FRY AND RAKESH KOCHHAR
About half of American adults – 120.8 million out of 242.1 million – live in middle-income households as of early 2015, according to a new Pew Research Center analysis of government data. In percentage terms, 50% of adults now live in middle-income households, 29% in lower-income households, and 21% in upper-income households.
Our new calculator below lets you find out which group you are in – first compared with all American adults and then compared with other adults similar to you in education, age, race or ethnicity, and marital status:
A Pew Research Center analysis of government data shows that after more than four decades of serving as the nation's economic majority, the U.S. middle class is now matched in size by those in the economic tiers above and below it.
Step 1: See where you are in the distribution of Americans by income tier.
My annual household income is and there
are people in my household.
Based on your household income and the number of people in your household, you are in the MIDDLEincome tier, along with 50% of American adults overall.
IN EACH INCOME TIER
Step 2: Now compare yourself to others with your demographic profile.
Due to sample size limitations, estimates of the income status of adults who identify as "other or multiracial" could not be separately estimated. The results displayed for these adults are the national average for all adults in the chosen age, education and marital status category.
Pew Research Center does not store or share any of the information you enter.
Your size-adjusted household income is the sole factor we use to determine your income tier. Middle-income households — those with an income that is two-thirds to double the US median household income — had incomes ranging from $41,869 to $125,608 in 2014. Lower-income households had incomes less than $41,869 and upper-income households had incomes greater than $125,608 (all figures computed for three-person households and expressed in 2014 dollars).
One limitation of the calculator is that the income range that defines each income tier does not vary across regions or cities within the US. If you live in a relatively expensive area, such as New York City, it is possible that the calculator places you in a higher income tier than it might if a cost of living adjustment had been made. Conversely, if you live in an inexpensive part of the country, the calculator may place you in a lower income tier than it otherwise might. But this is likely to affect you only if your household income falls near the boundaries separating the three income tiers. An upcoming analysis from Pew Research Center will focus on U.S. metropolitan areas and adjust for cost of living differences across them.
The second part of our calculator asks you more questions about yourself, such as age, race or ethnicity, and marital status. This allows you to see how other adults who are similar to you demographically are distributed across lower-, middle- and upper-income tiers. It does not recompute your economic tier, which is based strictly on your household’s income and size.
*Pew Research Center is a nonpartisan fact tank that informs the public about the issues, attitudes and trends shaping America and the world. It conducts public opinion polling, demographic research, media content analysis and other empirical social science research. Pew Research Center does not take policy positions. It is a subsidiary of The Pew Charitable Trusts.
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