Sorry, But $74K Isn’t Middle Class Anymore (Not Even Close) — Signed, Gen Z

Remember when we were growing up and the idea of making $100,000 a year felt like goals? If you hit that benchmark, you’d have arrived... right? Only, a sh*t-ton has changed in the last few decades — and the younger generations of Americans are pushing back on what’s considered “normal” when it comes to income, home buying, and the American Dream. While $74,000 has long been the benchmark for a “middle-class” income, Gen Z is calling B.S.

“Gen Z doesn’t agree that $74,000 is middle class. No kidding. It’s not even close,” Freddie Smith, a realtor in Orlando, Florida, shares in a recent TikTok post. “Check this out. ... Let’s say they have a bachelor’s degree and they’re 25 years old. First of all, $74,000 is much higher than the average income. Most Gen Zers are probably making anywhere from $40-50,000, maybe $60,000.”

He sticks with $74,000 and breaks down monthly expenses like 401(k) contributions, taxes, and insurance to get a person’s average monthly “take home.” Even if a 25-year-old splits rent on a two-bedroom apartment, they’re still spending about $1,200 a month simply on rent. Once he adds in utilities, groceries, phone, and car payments, the average Gen Zer is left with only a couple hundred dollars a month.

“It would take you years to save up the $30,000 you would need for a down payment on a house, with the closing costs,” Smith points out. “But, even if you could get that down saved, you would still need to make $120,000 a year to be considered for a $400,000 loan. The middle class’ goal post has been moved from $70k to $120,000 in just the past two years.”

If you’re reading this and haven’t bought a house in the last several years, you might be shocked at the idea of a home costing almost half a million dollars. Many people bought homes after the last recession for far less. However, according to the National Association of Realtors, the median U.S. home price in November 2023 was $387,600 (that’s the national median for an existing home, not even a new build).

That means newer homes in more expensive cities like Los Angeles, Nashville, Orlando, or Atlanta will cost even more. By comparison, in 2010, the median home price was $173,000, according to the U.S. Department of Housing. If you’re pulling off your socks for that math, know that means prices have more than doubled in the last 15 years.

With COVID, housing costs skyrocketed, but interest rates fell drastically. In those four years, home costs have stayed the same or risen, and interest rates have also begun to creep up. There are no “entry-level” home prices anymore — it’s all or nothing.

One thing that hasn’t increased as drastically? Average income.

According to the Census, the average income in 2010 was $49,000. According to Wisevoter, the average income for 2023 was $68,000. So, home prices have more than doubled, but income hasn’t matched that pace.

There’s evidence all around us that the cost of living is growing exponentially. Even simple “cost of living” increases of 2-3% often written into employment contracts don’t align with the steep rise in the cost of living. The government recently released its calculations for average family grocery bills, which spiked during and after the pandemic, and it’s... disheartening.

In other words, you’re not alone if you’re feeling the pinch. The cost of being alive and having a roof over your head keeps increasing, and incomes simply aren’t keeping up.

We may disagree with Gen Z coming for our flip-flops, skinny jeans, and side parts, but we’re on the same page when it comes to pushing back against these outdated benchmarks.