Harris and Trump are courting the middle class - but they may misunderstand who's in it

By Venessa Wong

Today's middle class is more likely to have credit-card debt and less likely to own a home than you might think

The middle class is a sought-after voting base, and both Kamala Harris and Donald Trump are casting their visions for uplifting these voters economically - through tax credits, tax cuts and lower child-care expenses.

"On Nov. 5, we will save our economy. We will rescue our middle class," Trump said at a Sept. 18 rally in Uniondale, N.Y.

Harris, in a speech about her economic agenda in Pittsburgh on Wednesday, said: "Building a strong middle class will be a defining goal of my presidency."

Politicians use the phrase "middle class" liberally to describe people who fall somewhere in the middle of America's income spectrum, but who middle-class Americans actually are is more complicated than how much money people make.

Being middle-income - even earning six figures - increasingly does not pay for a middle-class quality of life in many parts of the U.S., particularly as many people rely on debt to get by and struggle to save for emergencies and future goals.

"Admittedly, an income-based definition is not the only way to gauge middle-class status," Richard Fry, a senior researcher at Pew Research Center, told MarketWatch. He said it's also worth considering other measures such as education, "occupational prestige" and the ownership of certain "key assets," such as a home or retirement accounts.

Who is 'middle class' in America today?

Most Americans identify themselves as middle class, according to a May 2024 analysis by Gallup.

But what does that group look like? A new report by the Pew Research Center identifies the middle class on a national level as households with "an income that is two-thirds to double the U.S. median household income." In 2022, that ranged from about $56,600 to $169,800 for a household of three, with some variation based on the local cost of living and household size.

By this definition, 52% of adults are middle class - it is, in other words, the broadest demographic financially, and accounts for the majority of the U.S. adult population.

Yet as Pew pointed out, the share of Americans who fit this definition has declined from 61% in 1971, as growing income inequality pushed people into the lower- and upper-income tiers. As a result, the share of total U.S. household income held by the middle class has fallen from 62% in 1970 to 43% in 2022.

Who are the people who fit this definition of 'middle class'?

People who are middle class are more likely to be: white, male, U.S. born, in the peak of their working years (ages 30 to 64), married and high school-educated, according to Pew.

As for who is less likely to be middle-class: "Black and Hispanic Americans, Native Hawaiians or Pacific Islanders, and American Indians or Alaska Natives were more likely than others to be in lower-income households," according to Pew's report. "Children and adults 65 and older were more likely to live in lower-income households."

Among immigrants, those from Asia, Europe and Oceania were more likely to be upper-income.

In terms of education, people with less than a high school degree are more likely to be low-income. Those who graduate high school or have some college have the highest chances of being low- or middle-income, while those who graduate from college are more likely to be middle- or upper-income.

How is the middle class doing financially?

Though "middle class" has traditionally been shorthand for achieving a measure of financial stability, that status is precarious. "If we want the middle class to be the growth engine of our economy, we need to restore basic economic security for middle-class families," Harris said at the Pittsburgh rally.

Debt is disproportionately a middle-class issue. The run-up on interest rates since 2022 has made debt extremely expensive for them.

Credit cards: Middle-class Americans are more likely to have credit-card debt than lower- and upper-income households. "Households in the upper-middle of the income distribution - those in the fifth, sixth and seventh deciles - were the most likely to hold credit-card debt," according to a May 2024 report from the St. Louis Fed. "In fact, 61% of households in the seventh decile had credit-card debt, compared with only 26% and 28% in the 10th and first deciles, respectively."

Medical debt: Middle-income families also have the highest rates of medical debt, 23.5%, compared to 22% of low-income households and 12.9% of higher-income households, according to the center-left nonprofit Third Way. They are less likely than lower-income families to avoid care because of costs, but less likely than higher-income families to be able to cover high deductibles and other out-of-pocket costs.

"The middle-class medical-debt problem holds across all demographics -race, ethnicity, education level, age, parental status, health insurance status and geography," according to the Third Way report.

Car loans: Middle-class Americans can no longer afford the average-priced new car. While the average household can afford a $400 monthly car payment, the average loan on a new car has been stretched out to 68 months and now has an average monthly payment of $737.

As housing affordability worsens, do the middle class rent or own their homes?

One of the most common signifiers of the American middle class is homeownership. While owning remains more common than renting for the middle class, this group also saw the largest decline in the homeownership rate - falling to 69.7% in 2020 from 78.1% in 2010 - after the Great Recession, according to research from the National Association of Realtors. As a result, the share of homeowners who are middle income fell to 43% in 2020 from 45.5% in 2010, NAR found. As the share of low-income homeowners also declined, the share of high-income homeowners grew from 16.4% in 2010 to 29.8% in 2020.

"The cost of living in America is still just too high," Harris said in her speech Wednesday. "Many Americans who aspire to own a home are unable to save enough for a down payment on a house, and starting to think that maybe home ownership is just outside of their reach."

Are middle-class households saving enough to retire?

In general, no. According to the investment company Vanguard, based on people's retirement savings and expected expenses in retirement, "low-, middle- and upper-income workers who have annual earnings in the 25th, 50th and 70th percentiles of the national income distribution may be unable to meet the spending levels typical of today's retiree." Only the top 5% of earners are on track to finance their retirement, the firm noted in a report last year.

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-Venessa Wong

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09-26-24 1338ET

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