Mar 13, 2024
Many Americans who grew up in the 1980s and 1990s watched their parents achieve the perfect middle-class life — complete with the white picket fenced home, car and children.
But one real estate agent says this dream feels out of reach for many of these now-grown adults today.
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"I think most of us in America would define the middle class as somebody who can work a 40-hour-a-week career and can have the income to purchase the average home in America," Orlando-based real estate agent Freddie Smith told Fox News Digital in an interview.
"If you are someone who bought a house before 2020 and you have it paid off or you have a 3% interest rate, you are not burdened by the housing costs like the 2024 adults are now,” Smith says, pointing to a “three-layered cake” that’s impacting many young Americans today — made up of housing, student debt and daycare.
Smith believes Americans now need to earn $120,000 a year to afford a typical middle-class life and purchase a home — here’s why.
Breaking down the layers
The real median household income in the U.S. is just $74,580, according to the latest Census Bureau data.
Smith says older Americans — especially those with grown children or who have paid off their debts — are more likely to manage a middle-class lifestyle on just $70,000 today and don’t understand why younger generations are struggling.
“‘These millennials are whining. These Gen Zers, just work harder,” Smith mimics.
In a November 2023 TikTok video, he explains that a $120,000 salary would cover your monthly mortgage payment, utilities, insurance, groceries, gas and phone plan — as well as one person’s student, auto and credit card debt and some other discretionary expenses.
Smith further notes a $120,000 salary might still not be enough to manage the costs of having kids, setting aside funds for your savings or Roth IRA or even just being able to have fun.
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Here are the three “layers” he says are blocking many millennials and older Gen Zs from achieving a middle class lifestyle.
Housing
Smith notes the average home in the U.S. now costs more than $400,000 — creating a significant wage-to-housing gap.
"Nowadays, what has moved the goalpost more than anything is the housing market," the real estate agent told Fox News Digital.
Higher home prices have, in turn, led more Americans to rent instead of building wealth through homeownership. However, a recent report from Harvard’s Joint Center for Housing Studies reveals half of all renters are “cost-burdened” — paying more than 30% of their income on rent and utilities.
Student debt
More Americans are questioning the value of a four-year degree, especially when it leaves them buried in student loans with a salary that doesn’t guarantee them a middle-class lifestyle.
More than 43 million Americans owe $1.73 trillion in student debt according to the Federal Reserve, and pay about $300 a month on average.
"The millennials, they're the pinched generation where college essentially stopped working for most,” Smith says. “The debt piled up, and the old American dream died, and we got left holding the bag.”
Child care
Millennials and older Gen Z adults are also more likely to be caring for young children at a time when the skyrocketing costs of child care are fuelling a major crisis across the U.S..
In fact, a stunning 67% of parents are spending 20% or more of their annual household income on child care, according to a recent survey from online child care marketplace Care.com.
With parents shelling out thousands of dollars for daycare — especially for multiple kids — Smith says, “when you add in somebody who's renting for $2,500, $2,000 for daycare, $1,000 for two college loans, just that alone, you need $100,000 as an income just for that.”
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
