In today’s economy, making six figures is still considered doing quite well.
However, new research from GOBankingRates shows that in some major U.S. cities, an annual income of $150,000 is only enough to qualify as “lower middle class.” This is especially pronounced in two Northern California cities and Arlington, Virginia.
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In these high-cost cities, the exorbitant price of basics like housing, childcare and transportation means that middle-class families find themselves stretched thin financially even on relatively high household incomes. It raises questions about what it means to be “rich” versus “middle class” in different parts of the country.
Here’s a closer look at cities where making $100,000 to $150,000 a year isn’t enough to break you out of the lower middle class.
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San Francisco, California
Lower-middle-class income range: $91,126 to $151,877
“In San Francisco, the median home price hit $1.2 million in December 2023. If you’re making $150K a year before taxes, that puts you in a tough spot for buying a home,” said Jeff Rose, founder of Alliance Wealth Management.
The mortgage math simply doesn’t add up for the typical middle-class family in San Francisco. “Monthly payments on a $1.2 million home, even with a substantial down payment, could easily exceed $5,000 or more, depending on the mortgage terms and interest rates,” said Rose. “This could account for more than 40% of your gross monthly income [if you make $150K], far above the recommended 30% or less.”
Faced with unrealistic home prices, renting is often the more affordable option — or the only option — for middle-class families.
“Sadly, renting isn’t much better!” said Rose. “With the average rent for an apartment in San Francisco at $3,267, that’s about 26% of your gross monthly income if you’re earning $150K a year. This percentage is on the high side but might seem manageable until you factor in taxes, healthcare, transportation and other living expenses, which can quickly eat up the remainder of your salary.”
According to Payscale, the cost of living in S.F. is 79% higher than the national average. The cost of housing is 207% higher.
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San Jose, California
Lower-middle-class income range: $90,673 to $151,122
While a $150,000 salary would provide a comfortable living in most parts of the country, in San Jose it may only qualify as lower middle class. That’s because the cost of living in the Silicon Valley city is 49% higher than the national average.
Housing expenses are the biggest burden, running 142% above the national norm with median home prices around $1.1 million. Utility bills average 24% higher as well. Though transportation costs like gas and transit are only 5% above average, that adds up.
Even basic costs like groceries (21% higher) and healthcare (18% above the national mean) make budgeting on a $150,000 income in San Jose a challenge. While still a solid salary in most places, careful financial planning is essential for those hoping to live well in the Bay Area.
The tech industry has flooded Silicon Valley with high-paying jobs, driving up home values and living expenses considerably. For those moving here from other regions, the sticker shock can be huge. A $150,000 income that may have meant upper middle class elsewhere puts you in the lower middle here.
Arlington, Virginia
Lower-middle-class income range: $91,591 to $152,652
The cost of living in Arlington is 41% higher than the U.S. national average —and 121% higher if you take into account just housing.
Financial advisor Rodney Griffin with Northwestern Mutual’s Washington, D.C. office says Arlington’s economic and population growth has created lucrative job opportunities for professionals drawn to proximity with the nation’s capital. However, it’s also driven up the cost of living considerably.
“Clients I work with in Arlington are seeing that impact with the cost of housing, transportation, healthcare, education and general lifestyle,” Griffin shared. “While $150,000 may be a comfortable salary in some places, high demand from many people with comparative salaries can create an increased cost of living.”
In Arlington and similar high-cost cities, Griffin believes $150,000 a year puts a household firmly in the lower-middle-class range when accounting for expenses. Though still a solid income, families making this income must mind a budget to avoid becoming house poor or cash strapped. “No matter your salary or where you live, a good financial plan with a solid professional can alleviate any anxiety one may have about a high cost of living,” he advised.
More Cities Where $100K Is Still Lower Middle Class
While no other cities quite compared to San Francisco, San Jose and Arlington, the GOBankingRates study identified 12 more cities where making $100,000-plus still leaves households in the lower middle class.
Irvine, California
Lower-middle-class income range: $81,965 to $136,609
Irvine’s reputation as one of the safest and most affluent cities in the U.S. comes at a price — Payscale data shows the cost of living is 51% higher than the national average here. As an Orange County tech, healthcare and education hub home to renowned companies and universities, the housing market is especially expensive with costs 142% above average. But Irvine’s sustainability focus, outdoor amenities, impressive retail and overall quality of life attract residents willing to pay a premium.
Seattle, Washington
Lower-middle-class income range: $77,379 to $128,964
Seattle has transformed into a global tech center as Amazon, Microsoft and innovative startups establish roots, contributing to rapid economic growth. However, this influx has driven up costs considerably; the cost of living is 50% higher than the U.S. average. Though offering abundant career opportunities, Seattle’s housing crunch poses budgeting challenges for new residents lured by its vibrant atmosphere.
Gilbert, Arizona
Lower-middle-class income range: $76,786 to $127,977
The Phoenix suburb of Gilbert offers small-town charm and big city access at a price — housing is 76% costlier than the national norm. Still, its family friendly vibe, growing employment options in healthcare, retail, manufacturing and more make budgeting the higher costs worthwhile for many relocating here. Amenities like charming downtown shops and trails at San Tan Mountain Regional Park add appeal.
Plano, Texas
Lower-middle-class income range: $70,453 to $117,421
As an upscale Dallas suburb, Plano’s thriving business community, downtown amenities and top-rated schools come with a 21% higher cost of living than the U.S. overall. But its corporate headquarters, low unemployment and UT Dallas satellite campus make it attractive for career-driven families able to absorb the premium for Plano’s costly lifestyle.
Scottsdale, Arizona
Lower-middle-class income range: $69,465 to $115,774
Scottsdale’s reputation as a ritzy oasis for celebrities and travelers is validated by data revealing housing costs 42% above the national average. Famous for world-class resorts, spas and golf courses amidst stunning desert scenery, the city caters to those able to splurge on its luxe living in pursuit of sunny indulgence and a vibrant social scene.
Washington, DC
Lower-middle-class income range: $67,815 to $113,024
As the nation’s capital, government and politics dominate D.C.’s economy along with tourism. Its cost of living is 39% higher than average. Though a budgeting challenge, Washington’s global significance, iconic attractions and central locale make it a worthwhile investment.
Chandler, Arizona
Lower-middle-class income range: $66,249 to $110,416
In the Phoenix metro area, Chandler’s 66% costlier housing is offset by its emphasis on technology and manufacturing. The city’s pro-business policies, infrastructure and skilled workforce attract innovators willing to embrace higher living costs.
San Diego, California
Lower-middle-class income range: $65,771 to $109,619
While beautiful beaches and military presence shape San Diego’s industries, costs run 44% over national averages. But idyllic climate, attractions like beaches and zoos, plus the booming biotech sector help justify these prices.
Anchorage, Alaska
Lower-middle-class income range: $63,821 to $106,368
High commodity, energy and transportation prices contribute to Anchorage’s 27% higher cost of living. Still, Alaska’s largest city lures residents and businesses with oil, military and tourism jobs plus unmatched natural beauty.
Oakland, California
Lower-middle-class income range: $62,926 to $104,877
Across the bay from San Francisco, Oakland’s appeal is tempered by a 46% higher cost of living. But the city strives to increase affordable housing stock and address root causes to ease housing burdens and create more equity.
Chesapeake, Virginia
Lower-middle-class income range: $61,802 to $103,003
As a Virginia Beach-Norfolk suburb, Chesapeake’s economy is built on the military, shipping and healthcare. Most sources estimate it just 3% or 4% above the national average cost of living, meaning that while housing may be expensive due to its proximity to major Virginia metro areas, its more affordable than many cities on this list.
Jersey City, New Jersey
Lower-middle-class income range: $60,767 to $101,279
Just across from Manhattan, Jersey City lures New Yorkers priced out of the boroughs. Housing runs 74% higher and utilities 10% over national norms. But its cultural scene and transit access make budgeting for higher costs worthwhile for many pursuing an enriched life within commuting distance of the Big Apple.
Methodology: For this piece GOBankingRates first used the 2022 American Community Survey to find the 100 largest cities in the US, in terms of total households. Once those cities were isolated GOBankingRates found the median household incomes for all those cities. Then, we found the lower-class middle-income range following the Pew Research Center’s definition of middle-class income as “two-thirds to double” the median income of an area. All data was collected and is up to date as of Jan. 30, 2024.
Cost-of-living data was sourced from Payscale.
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This article originally appeared on GOBankingRates.com: A $150K Income Is ‘Lower Middle Class’ In These High-Cost Cities
