In certain high-cost areas of the United States, even a six-figure salary may not guarantee a comfortable middle-class lifestyle. According to GOBankingRates, in some of America’s most expensive cities, a $150,000 annual income may only qualify as "lower middle class." This represents a significant shift, with the bar for middle-class status being raised in these areas. In key cities such as Northern California and Virginia, the maximum income range for lower-middle-class designation ranges from $128,964 to $152,652. Notably, Northern California and Virginia top the list of places where a $150,000 income is considered "lower middle class." The cities with the highest incomes seen as "lower middle class" include Arlington, Virginia; San Francisco; San Jose, California; Irvine, California; Seattle; Gilbert, Arizona; Plano, Texas; Scottsdale, Arizona; Washington, D.C.; and Chandler, Arizona.
According to GOBankingRates, an annual $150,000 salary is considered lower middle class in cities like Arlington, Virginia; San Francisco; San Jose, California; Irvine, California; and Seattle. (Getty Images)
"You’ll need to make more than six figures, and as much as $150,000, just to get out of the lower middle class in the top 15 ranked cities. Due to these high-income requirements, many Americans might be more comfortable choosing to live in more affordable cities, especially those that make average earnings of around $75,000," Murray explained.
GOBankingRates noted in the analysis that the top 25 cities also have exuberant housing, childcare, and transportation costs when compared to national averages. According to the data analyst, housing and real estate costs can have the biggest impact on affordability and your wealth class.
"Eight of the top 25 cities are in Virginia, Washington, and Arizona. While Virginia and Washington state generally have a higher cost of living, the cities that made our list all had exceptionally high median household incomes," Murray noted.
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"Most notably, Arlington, Virginia, which is located just outside of Washington, D.C., has the highest median household income studywide, at nearly $140,000," he added. "Meanwhile, Seattle and Gilbert both have a median household income above $115,000. It's worth noting that all three Arizona cities that ranked in the top 25 are in the Phoenix metro area."
California dominated the list with seven out of 25 of the top spots due to its housing implications.
"It’s no secret that California housing costs are among the highest in the nation. Californians can expect to pay an average of nearly $30,000 per year on housing costs, according to the Bureau of Labor Statistics," Murray pointed out.
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"This means that anyone who wants to live comfortably in California will need to be a high income earner, which is reflected in our findings. San Francisco, San Jose and Irvine — the three California cities that ranked highest in our study – each have a median household income of more than $120,000," he continued. "This is nearly $50,000 higher than the national median income."
U.S. Census data reported that the median household income was just under $75,000 in 2022, and Murray expanded on how this research adds to the argument that being "rich" can be relative to where you live.
"Our findings show that the income considered lower middle class in San Francisco ($152,652) is nearly quadruple the income considered lower middle class in Cleveland ($41,412)," he said. "In another recent analysis, GOBankingRates found that the income needed to be ‘rich’ (top 5%) in Massachusetts is more than $200,000 higher than what it is in Mississippi."
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In terms of the most significant takeaway from the study, Murray emphasized that income expectations are increasing drastically in these high-cost cities.
"A six-figure income is no longer enough to make it out of the lower middle class in 15 cities. In three cities, a $150,000 income isn’t even enough," he said. "It’s important that prospective homebuyers consider these types of income differences when deciding where to move."