Definitions of who is middle class covers a huge range of incomes

Just what is the middle class and who belongs to it? This a question that is often asked, and there are a broad range of definitions.

In the US, the Brookings Institution has done research on the topic. It found that some people identify as middle class based on subjective rather than quantitative reasons. Other common definitions are based on wealth or income but also often take into account educational level and occupation.

According to Brookings, this results in a wide range of outcomes, with income-based estimates varying widely from as little as $US13,000 ($AU17,100) per year to as much as $US230,000 ($AU303,400) per year.

If we take median income as a guide, the US Census Bureau estimated the median household income in 2016 was $US59,039 ($AU77,900) per year.

Academic experts using bands around the median income have generally come up with a guide to the middle class in the US as having an income between $35,000 ($AU46,200) and $US139,000 ($AU183,400).

As well as income, wealth is also an important measure of resources available to a household. The Brookings study notes that greater wealth may provide greater economic security, as a buffer against economic shocks, especially in later life. It highlights the example of retirees, who may report very little annual income but place toward the top of the wealth distribution given the value of their homes, pension assets, and bank accounts.

In Australia, the RBA has previously published research on this topic. The RBA estimated that the average household income in Australia in 2010 (the latest data they had available) was just over $AU90,000 ($US68,200) per annum.

The RBA data shows that the third or middle quintile had an annual household income of around $AU80,000 ($US60,700). A common definition of middle class is to take the middle three quintiles of income (leaving out the lowest and highest income bands). On this definition, the RBA data would suggest household income in 2010 between around $AU60,000 ($US45,500) and $AU110,000 ($US83,400) would put you in the middle class.

Ultimately, Brookings found that credentials, mindset, and salary are all indicators of middle class. But while definitions vary, economists would generally agree that the middle class is broadly those in the middle three quintiles of income.

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