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III. Income and Class in America Degrees vs. Diplomas. Education is the leading factor in determining how much income people earn . BLS statistics prove that college graduates out- earn high school graduates by far. In 2015, the median salary of young adults with a bachelor's degree was $59,124. The median salary of a worker with only a high school diploma was $35,256. Woe be the poor soul who never even graduates high school: Their median wage was just $25,636. Over a lifetime, a college graduate stands to make almost a million dollars more than a high school graduate. Households with higher incomes tend to have higher levels of education. Households with lower incomes tend to have lower levels of education. Income by Class. American society is divided by socioeconomists into three income classes: upper class, middle class , and lower income class . Each of these is further divided into subdivisions . It is the amount of income earned annually which primarily determines what class a person or household fits in to. Let’s take a closer look at America by socioeconomic class : Upper Class. The upper class is often referred to as the “5 percent” which is the percentage of Americans who make more than $200,000 annually . This is the smallest and wealthiest class but ironically, the class with the broadest range of incomes because it includes subcategories of The Rich and the Super Rich . The Rich make up the top 1 percent of the nation’s income with incomes of $500,000+. The Super Rich make up the top .01% of the 1%, earning in excess of $77 million per household each year. Much of their income is derived from investments, so even their money makes money! Typically, people in the Upper Class are very well-educated.
The Super Rich = 0001% of 1%
The Rich = 1%
aka “5%”
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Middle Class. About 50% of American households qualify as middle class . That means they earn an income of about $35,000 to $200,000. The middle class has two subdivisions: upper middle and lower middle. Upper Middle Class. This is a sub-division of the middle class . It is generally composed of people who are well-educated, often with post- graduate degrees such as a master’s degree or law degree, who earn higher salaries. Many have prestigious occupations such as doctors, lawyers, financial managers, software developers, and business managers. These are referred to as white collar workers . They have low unemployment levels. Incomes in this group range between $100,000–200,000.
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Disparity Despair? In 2014, the richest .01% of the American population — the Super Rich — owned 11% of all wealth in the country. Source: National Bureau of Economic Research
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THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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