New report highlights critical turning point for middle class families
Escalating costs in housing, childcare, transportation, and most every household budget item can only be tackled through cross-sector solutions
CHICAGO, IL (September 25, 2024) — A “middle class” income no longer guarantees financial security, threatening both the nation’s economy and its social fabric, according to a new report released today by the Financial Health Network, the leading voice on financial health. The report, Households Under Financial Pressure, describes how daily economic challenges have heightened pessimism and political polarization; previous research found that only about one-third of Americans are considered “financially healthy.”
Financial health is broadly defined as the ability to spend, save, borrow, and plan in ways that allow people to be financially secure and withstand financial shocks. The report stresses the need for urgent collaboration across key sectors like housing, childcare, and transportation to restore the financial security and well-being of America’s middle class.
“The middle class might be a hot campaign topic, but let’s be clear: financial health isn’t a red or blue issue — families are struggling financially and it’s happening across race, geography, and politics,” said Jennifer Tescher, president and CEO of the Financial Health Network. “Rising costs for essentials mean more middle-class households struggle with the day-to-day and can’t save for the future, regardless of how much they work or plan ahead. No matter the outcome of this election, we all have an opportunity — and a responsibility — to build a bold new coalition that transcends political divides and is fully committed to securing financial health for all.”
What is “Middle Class”?
A May 2024 Gallup poll found that 54% of Americans identify as middle class … but are they?
- Pew Research Center defines middle class as earning two-thirds to twice the national median income, or $67,819 to $203,458 in 2022 for a family of four. However, only about 50% of adults fall into this category, a figure that has declined steadily over the past five decades.
- An Obama Administration Task Force on the Middle Class defined the middle class as “one’s ability to achieve common goals, like home and car ownership, college education for children, health and retirement security, and occasional family vacations.”
- A February 2024 Washington Post study used “basic lifestyle elements” to define middle class achievement: a secure job, ability to save money for the future, ability to afford an emergency $1,000 expense without going into debt, ability to pay all bills on time without worry, having health insurance, and the ability to retire comfortably. With this criteria, just 35% of the population classify as “middle class.”
Recommendations for Shaping the Future of Financial Health
The report is part of a new initiative aimed at identifying the needs, challenges, and opportunities for financial health. Financial Health Frontiers, a new Financial Health Network initiative supported by the Citi Foundation, will explore the headwinds and tailwinds that will shape financial health in the years to come. The effort is being guided by an Advisory Council of industry experts, business leaders, policymakers, advocates, and researchers.
The report makes several broad recommendations, including:
- Expanding measurement, evaluation, and research efforts to assess how housing, labor, and environment policies and investments in education can support the middle class.
- Looking more holistically at the interconnected expenses families face – things like childcare, housing, and transportation – with a particular focus on how different communities experience the barriers to a middle class lifestyle to design new solutions.
- More intentionally fostering collaboration among business leaders, community-based organizations, and government agencies, along with policymakers and advocates working in housing, education, transportation, finance, and health care to build the middle class.
This report will be followed by deep dives into how other financial headwinds and tailwinds – shifting demographics, the changing nature of work, climate change, and tech/artificial intelligence – will impact financial health in the future.
About Financial Health Network
The Financial Health Network is the leading authority on financial health. We are a trusted resource for business leaders, policymakers, and innovators united in a mission to improve the financial health of their customers, employees, and communities. Through research, advisory services, measurement tools, and opportunities for cross-sector collaboration, we advance awareness, understanding, and proven best practices in support of improved financial health for all. For more on the Financial Health Network, go to www.finhealthnetwork.org and follow us on Twitter at @FinHealthNet.
