How much you need to earn to be considered 'middle class' in Indiana

Inflation, the rate at which the price of goods and services increases over time, is moving the goalposts on what it means to be middle class in the United States. The question, experts say, is by how much?

A recent study published by consumer news and advocacy organization ConsumerAffairs analyzed the minimum annual income each state considered middle class with data provided by the Pew Research Center. It then crunched those numbers into an inflation calculator from the U.S. Bureau of Labor Statistics.

The results, researchers said, pointed to a higher threshold Americans needed to reach to be middle class earners, meaning some Hoosiers might no longer fit the definition.

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What does it mean to be middle class in Indiana?

ConsumerAffairs listed the minimum annual income it took for a family of four living in Indiana in 2023 to be middle class at $62,897.

While Indiana tied other states, such as Alaska, Idaho, North Dakota and Tennessee, it found the cheapest place to remain middle class was Alabama with a minimum annual income of $51,798. The most expensive state was Hawaii at $82,630.

Experts caution these numbers should be taken with a grain of salt.

"The $62K figure is a qualitative judgment on what they call middle class," said Ball State University economics professor Mike Hicks. "It isn’t right or wrong."

Rather than a hard line in the sand, the separation between lower, middle, and higher-income earners fluctuates.

The Pew Research Center has traditionally defined middle income as between two-thirds and double the median U.S. household income.

Two years ago in Indiana, the median household income was $61,944, according to the U.S. Census Bureau, meaning the range of being middle class in the Hoosier State rested somewhere between $41.5K and $123.8K.

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A recent study suggests it's easier to be middle class in Indianapolis than other large cities

Indianapolis, one study found, is a more cost-friendly place to remain in the middle class.

In July, financial technology company SmartAsset examined what it took to be middle class in America's largest cities. Indianapolis fared well, ranking 70 on the list with a middle annual income set between $39,181 and $116,958.

Fremont, California, on the other hand, had the dubious honor of ranking at the top of the list. In Fremont, you're considered middle class even if you make $311,000, the highest ceiling for any city in the study, according to SmartAsset.

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What can Hoosiers expect in 2024 with inflation?

“Historically, the middle class has been the engine of American economic growth and prosperity,” Oliver Rust, head of Product at independent inflation data aggregator Truflation, told ConsumerAffairs. “Yet we’re now seeing the middle class capturing a lower share of income than in the 60s, 70s and 80s."

Experts say the middle class has been steadily shrinking over the past 20 years, but it's not all bad news. Inflation is shrinking too, and wages, Hicks said, are trickling up.

The national inflation rate in 2022 hovered at 8%. Then in November, the U.S. Bureau of Labor Statistics reported the inflation rate decreased to 3.2% over the past 12 months leading into October 2023.

"Inflation will almost certainly continue to decline through 2024, and it is possible that the Federal Reserve will respond to lower inflation by cutting interest rates. That would help some families with high credit card bills or variable rate mortgages," Hicks said. "It will also boost housing purchases, new car purchases and spending overall."

John Tufts covers evening breaking and trending news for the Indianapolis Star. Send him a news tip at JTufts@Gannett.com.