The Truth About Social Classes and Net Worth in America

How Do Social Classes and Net Worth Define Us as Americans?

Class distinctions have long played a major role in shaping American culture and identity. While class is strongly tied to wealth and income, it encompasses much more than just money. Our social status heavily influences our beliefs, attitudes, and expectations in ways that profoundly impact how we think and behave over the long run. But how exactly do we define the different classes in America today? And what is the average net worth for each?

Family With American Flag

In this article, we’ll take an in-depth look at the upper, middle, and lower/working classes. We’ll examine how factors like income, net worth, occupation, and education contribute to class status. While class lines have blurred in recent decades, there are still noticeable divides that affect everything from opportunity and social mobility to lifestyle and values. Read on to learn more about the complex relationship between social class and net worth in America.

Defining the American Middle Class

A 2020 Gallup poll found that 72% of Americans identified themselves as middle or working class when asked how they would define their social class. Beyond just income and net worth, people also consider factors like education, location, and family background when determining their class status, experts note.

Larger economic forces may also shape how people perceive their social standing. Trends like high inflation, waves of employee resignations, struggling small businesses, and other impacts from the COVID-19 pandemic have affected worker and business prosperity in recent years. Unfortunately, the latest class-related data is from 2019 and does not account for the pandemic’s economic effects. We likely won’t see the numbers reflecting this until late 2022 or beyond.

What Does Class Mean for Income and Net Worth?

While related, class and wealth are not one and the same. Our social status powerfully influences attitudes, beliefs, and expectations. These impressions profoundly impact our mindsets and behaviors over the long haul. For most people, our class heavily determines which income bracket we will stay in.

There are three main classes:

  • Upper class
  • Middle class
  • Lower or working class

The U.S. Census Bureau further segments Americans into quintiles to delve deeper into the country’s wealth distribution. A quintile represents one-fifth of a population, just like a quartile is one-fourth. Examining quintiles helps better understand the middle class by dividing Americans into five economic tiers.

The bottom wealth quintile represents the 20% of households with the lowest net worth. The top wealth quintile encompasses the richest 20% of households. Younger households and those with less education comprise the bottom quintile. This makes sense since younger generations have had less time to accumulate wealth, and research shows links between education and wealth building. The top quintile contains more older households and those with the highest levels of schooling.

Defining the Middle Class

The middle class is often defined as the three middle quintiles of the income distribution. Terms like lower middle class, middle class, and upper middle class describe this group. There is no single definition for middle class. Wealth and financial security depend on factors like income, net worth, schooling, and job type. Ultimately, middle-class individuals enjoy a moderate sense of financial freedom but still rely on things like continued earning ability and credit to fund major expenses and purchases.

The Pew Research Center defines middle class as households earning between two-thirds and double the median American household income. With the median at $61,372 in 2017 per the U.S. Census Bureau, Pew categorizes those earning $42,000 to $126,000 as middle income. The middle class makes up 52% of the U.S. population, though it is the smallest it has been in nearly 50 years.

The middle class’s share of aggregate income decreased from 62% in 1970 to 43% in 2014. Growth at the extremes of the economic spectrum, rather than in the middle, explains the shrinking middle class.

“You have to judge yourself within the context of where you live and cost of living to know if you’re truly middle class,” Katie Gatti of Money with Katie explained. “For most people, the bulk of their net worth is tied up in their home, which is the biggest signifier of someone being middle class.”

In other words, if your net worth is $500,000 and your home makes up $450,000 of that, you’re middle class. The lower middle class includes managers, small business owners, teachers, and secretaries. Doctors, lawyers, stockbrokers, and CEOs comprise the upper middle class of highly educated professionals with high earnings.

Inside the Exclusive Upper Class

The upper class, making up just 1-3% of America’s population, owns over 25% of the country’s wealth. There are two tiers within this group: lower upper and upper upper. Respondents to Schwab’s 2021 Modern Wealth Survey said a net worth of $1.9 million defines someone as wealthy. However, the median U.S. household net worth is less than half that amount. Ultimately, perceptions of wealth depend on factors like location, job, community, and background. As new generations mature and redefine success, such views may shift.

Indeed, Schwab’s annual survey shows people lowering the bar for what they consider wealthy. Compared to 2021 standards, respondents to the 2020 study cited a $2.6 million net worth as the wealth threshold. Rising inflation and low unemployment are factors affecting wealth perceptions, along with COVID-19 impacts, according to Amy Richardson, a certified financial planner on Schwab’s Intelligent Portfolios Premium team.

“We don’t know how this bout of inflation will play out, but in the short term, regardless of their unique notions about wealth, many people feel they need to acquire more to get where they want to go,” Richardson stated.

The lower upper class consists of those with “new money” earned from investments, business ventures, and other sources. The upper-upper class contains those aristocratic “old money” families who have been wealthy for generations. Inherited wealth supports these extremely affluent people. The upper-upper class enjoys higher status than the lower upper tier.

Life in the Lower or Working Class

For many, poverty is more an identity or series of experiences than a financial gauge. You may feel poor if you’ve overdrawn your account at the store or spent nights sleeping in your car. If your parents were poor or you can’t afford new clothes or a good education, you could feel impoverished.

Poverty, however, means more than just a feeling or life event. Government poverty measures and various income thresholds separate the poor from near poor and lower middle class. Defining poverty can be complex.

“You may feel like you’re really struggling and you are, but your income could be far above the poverty line,” says Urban Institute’s Gregory Acs, vice president for income and benefits policy.

Individuals and families can use various methods to determine if they fall under a specific definition of poverty. According to the U.S. Census Bureau, the official poverty rate was 12.3% in 2017, with much higher rates among Blacks and Hispanics.

Per the 2017 poverty thresholds from the U.S. Census Bureau, an individual under 65 without children falls below the poverty line at $12,752 annual income. This number grows as the household size increases. A four-person household with two kids under 18 falls below the poverty line at $24,858.

With revised methodology and data, the supplemental poverty measure tries to improve how the U.S. assesses income and poverty. The supplemental poverty rate was 13.9% in 2017. Per the supplemental poverty measure, the 2017 poverty threshold for a two-adult, two-child household without a mortgage was $23,261. For a similar household with a mortgage, it was $27,085.

The Complexities of Class in America

There are many ways to define poverty beyond just one method. Meeting an official poverty definition doesn’t necessarily mean you are not struggling. Conversely, those with low incomes but access to assets and money may not actually feel poor.

Government programs like Social Security, unemployment insurance, and refundable tax credits such as the earned income tax credit aim to help people exit poverty. Understanding eligibility for benefits and how to access them can help build a financial safety net. It’s also wise for able-bodied, relatively healthy people in poverty to work hard at finding and keeping a decent job with room for advancement.

Working for a company without paid sick leave has even been linked to poverty, according to one study. So seeking out or advocating for those benefits is critical. For others, no amount of wealth accumulation will be enough. And many meeting these benchmarks may not consider themselves prosperous. Those dealing with debt or job loss may feel dismayed seeing these wealth standards.

Experts say understanding how you compare to peers can provide insights on money management and sound financial practices. They recommend taking income cues from coworkers, competitors, and developing net worth goals accounting for possibilities found in peers along with your own unique circumstances.

One key indicator of financial health is your net worth. It shows critical information about your ability to repay debts and have assets available for long-term living costs, retirement, and estate planning since it quantifies the difference between what you own and still owe. Quite simply, the more equity you have, the greater financial freedom you’ll enjoy.

So where do you stand in the American economic hierarchy? To find out, consider your earnings, education, marital status, location, family background, gut instinct, and other factors. But the bottom line is that determining the answer is more complex than just looking at one number.


Class distinctions have shaped American culture and identity for generations. While strongly tied to wealth, class also relates to beliefs, attitudes, and expectations. Factors like income, net worth, job type, and education contribute to perceptions of class status.

The upper class sits atop America’s economic hierarchy with vast wealth and status. The middle class contains a majority of households with moderate wealth and financial freedom. The lower or working class struggles with poverty, low wages, and limited opportunity. While class lines have blurred over time, divides still exist affecting social mobility and economic outcomes.

Understanding where you fit can provide motivation to strengthen financial skills. But class involves more than just income and net worth. No matter your social status, maintaining sound money management and practicing healthy financial behaviors will help build stability and prosperity over the long run.