4 Reasons Salaries Over $100K Still Land You in the Middle Class in the Midwest

The American dream for many people includes a house in a good neighborhood surrounded by a white picket fence, a nice car and maybe a little bit of extra cash on the side to enjoy a vacation or two. You may assume that if you made a six-figure salary you would be far ahead of the working class or even middle class. However, you might be shocked to find out where high salaries are still landing people squarely in the middle class.

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GOBankingRates has conducted several surveys to research not only which income ranges constitute middle class, but also compared those to the cost of living for varying regions. The Bureau of Labor Statistics recognizes 12 states as part of the Midwest, and here are the two-person family middle-class salary ranges for each for reference:

• Illinois: $52,969 to $158,922
• Indiana: $45,935 to $137,820
• Iowa : $49,881 to $149,658
• Kansas : $49,580 to $148,756
• Michigan : $46,581 to $139,756
• Minnesota : $56,232 to $168,712
• Missouri : $45,523 to $136,582
• Nebraska : $50,910 to $152,744
• North Dakota: $55,153 to $165,476
• Ohio : $46,369 to $139,122
• South Dakota: $50,294 to $150,896
• Wisconsin : $50,244 to $150,746

Historically, earning over $100,000 was seen as a gateway to wealth and a comfortable upper-middle-class lifestyle. However, in today’s economic climate, even in regions like the Midwest, where the cost of living is comparatively lower, it doesn’t necessarily catapult individuals into the upper echelons of financial comfort. Here are six reasons even high salaries still keep Midwesterners in the middle class .

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The Rising Cost of Living

While the Midwest is often regarded for its friendly charm and lower cost of living compared to coastal areas like New York City or San Francisco, prices have gotten a little meaner to your wallet. The cost of housing, groceries, healthcare, education and even entertainment has increased across the board.

In urban hubs such as Chicago, Minneapolis or Kansas City, these costs rival those in other major cities — chipping away at the purchasing power that a six-figure salary once provided. For instance, GOBankingRates found that in a Midwestern city such as Chicago, the average total expenditures come to about $40,179 per year.

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Stagnating Real Wages Can’t Compete With Costs

A salary of over $100,000 per year is nothing to stick your nose up at, but wage growth has not kept pace with inflation and the rising cost of goods and services. According to data from the U.S. Bureau of Labor Statistics, wages have stagnated across many sectors, which means that a six-figure income today doesn’t have the same purchasing power it might have had 10 or 20 years ago. When inflation outpaces wage growth, even relatively high incomes can feel stretched thin.

Healthcare Doesn’t Care How Much You Make

Healthcare costs have skyrocketed in every area of the country, and the Midwest is no exception. Premiums, deductibles and out-of-pocket costs can quickly make a lot of income feel like a lot of outgoing checks. For families, healthcare expenses can be a significant burden, even with employer-sponsored insurance plans.

GOBankingRates looked at the cost of healthcare in Detroit to see how a major metropolitan area in Michigan would compare. It was discovered that on average, if you lived in Detroit you would pay about $4,785 a year on your medical needs and coverage.

Housing Prices vs. Housing Crisis

A housing crisis can mean a lot of different things for sellers and buyers alike, but what it typically boils down to is the pricing in a consistently volatile market. Even a high salary can’t compete with the costs that go into homeownership in many cities. In fact, in places like Madison, Wisconsin, you can expect to pay an average of about $4,785 a year on housing alone.

Your Salary vs. Your Bills

As salaries increase, so do expectations around lifestyle. This phenomenon, known as lifestyle inflation, leads many to upgrade their homes, cars, vacations and dining habits as their income grows. The desire to live a comfortable, modern lifestyle — especially in suburban or urban areas — can quickly eat up the additional income. Your tastes may be in a different class than your wallet.

Essentially, if you buy a bigger house, you pay more for utilities; if you buy a nice car, you pay more for insurance, and so on. However, as an example of what your bills would look like in a Midwestern city like Indianapolis, GOBankingRates found the following annual averages:

• Grocery bills per year: $5,338
• Utility bills per year: $4,103
• Transportation costs per year: $7,170

Final Take To GO

The bottom line is that earning $100,000 or more in the Midwest certainly offers advantages compared to other regions of the country, but even that doesn’t lead to the financial freedom of being in the upper class. You can’t start growing your wealth when you are constantly battling things like student loan debt or high rent payments. If it’s any consolation, many Americans making killer salaries are also stuck in the middle with you.

Methodology: GOBankingRates found how much the middle class earns in every state by analyzing the U.S. Census Bureau’s 2021 American Community Survey 5-year data to determine how much a two-, three- and four-person middle-class family earns. Pew Research Center defines the middle class as making two-thirds (66.66%) to double (200%) the national median income. For this study, GOBankingRates assumed that a middle-class family earns two-thirds to double the median income for a family of its size in its state. In order to find out how much a middle-class family is earning, GOBankingRates multiplied each median income by 0.67 for the lower limit and by 2 for the upper limit. All data was collected on and is up to date as of March 27, 2023.

This article originally appeared on GOBankingRates.com : 4 Reasons Salaries Over $100K Still Land You in the Middle Class in the Midwest