The salary required to be considered “rich” has increased in every state over the past five years – as soaring inflation means daily expenses are eating up a larger share of wages.
In fact, new data found that the income needed to be among the richest has soared by more than 40% in some states.
The definition of wealthy has changed the most in Washington state, according to data from GOBankingRates, where Americans now need to earn $544,518 to be among the richest, up from $378,374.
The personal finance site defines the “wealthy” as people in the top 5% of earners in each state.
To belong to this category, in 12 US states, workers must earn a salary above $500,000, it was found, while household purchasing power has eroded.
Washington is home to major pay-as-you-go companies like Microsoft and Amazon as well as Starbucks and T Mobile (Photo: Amazon headquarters in Seattle)
Las Vegas residents say they have been priced out of the once-affordable city as wealthy Californians have flocked to Nevada, driving up housing costs.
GOBankingRates compared U.S. Census Bureau salary data from 2017 and the latest available data from 2022 to see how the income threshold for being in the top 5% had changed over a five-year period.
In Washington, residents needed to earn $378,374 in 2017 to be among the top 5 percent of earners. But in 2022, the median income of the top 5% rose to $544,518.
Washington is home to major fee-based companies like Microsoft and Amazon as well as Starbucks and T Mobile, all based in and around Seattle. We are a long way from the era when grunge and groups like Nirvana were born.
Nevada saw the second largest increase during this period, an increase of 40.41%, from $320,403 in 2017 to $449,872 in 2022.
Las Vegas residents say they have been priced out of the once-affordable city as wealthy Californians have flocked to Nevada, driving up housing costs.
Rents in Sin City, known for its glitzy casinos and glamorous hotels, have increased 35% since before the pandemic, according to a report released earlier this year by Las Vegas Realtor.
Third on the list was Idaho, where the salary needed to be among the richest increased 40.34 percent, from $286,974 to $402,743 over a five-year period.
Idaho, and particularly its capital Boise, has seen an influx of visitors during the Covid-19 pandemic – driving up the cost of housing and living in the state.
South Carolina ranks fourth for the largest change in income needed to be “rich,” and California ranks fifth.
Golden State residents needed to earn $613,602 to be in the top 5% in 2022, an increase of 37.21% from 2017’s $447,207.
Los Angeles is home to some of the richest Americans, including celebrities such as the Kardashians and movie stars like Leonardo DiCaprio, who are drawn to the entertainment capital of the world.
Meanwhile, in the San Francisco Bay Area, typical salaries are rising due to hundreds of thousands of people working in high-paying jobs in the tech sector.
Silicon Valley is home to companies like Apple, Google, Meta, Netflix, and Uber, where even average salaries hover around $300,000 and top executives earn tens of millions of dollars a year.
Among other high-cost states with a high percentage of wealthy residents, the change has been less pronounced.
In New York, for example, the threshold increased by only 29.23 percent over a five-year period, and in Connecticut and the District of Columbia it increased by only 24 percent and 23. 57 percent, respectively.
The state with the lowest five-year percentage increase is North Dakota, where the average income of the top 5 percent increased only 14.68 percent.
North Dakota has seen an influx of immigrants from outside the United States, NPR reported, with the share of the population born outside the country jumping more than 13% between 2021 and 2022.
But these new residents are generally low-income workers and thus have not driven up the cost of housing and living in the same way as in other states.
It increased from $364,954 in 2017 to $418,541 in 2022, according to GOBankingRates.
Housing costs in Las Vegas have increased since before the pandemic
Los Angeles is home to some of the wealthiest Americans, including celebrities such as the Kardashians (pictured, Kris Jenner and Kim Kardashian)
Silicon Valley is home to companies like Apple, Google, Meta, Netflix and Uber (Photo: Mark Zuckerberg, founder of Meta)
In 2017, only Connecticut and the District of Columbia required income above $500,000 to be among the richest residents.
But in 2022, the median income of the top 5% in Washington, California, Massachusetts, Hawaii, Virginia, Colorado, New York, New Jersey, Illinois, Maryland , Connecticut and the District of Columbia was more than $500,000 per year.
The richest are the richest in Connecticut and the District of Columbia, where the highest earners must have an income of $656,438 and $719,253, respectively.
According to Labor Bureau data, the median U.S. income for a single, full-time worker is about $60,000.
The study highlights the effect of galloping inflation and soaring interest rates on household purchasing power.
Rising prices for groceries, housing, child care and transportation have hit the entire United States.
Idaho, and particularly its capital Boise, has seen an influx of visitors during the Covid-19 pandemic – driving up the cost of housing and living in the state.
Inflation reached 3.5% in March, with prices pushed up by the high cost of housing and gas.
New data released earlier this month revealed how much inflation has eroded the purchasing power of a $100 grocery store in five years.
In 2019, the amount would have bought shoppers a healthy 32-item bag containing milk, eggs, cereal, dish soap and more. But today, customers would have to remove at least 10 of these products from their cart to keep the same budget.
Interest rates remain at a 23-year high of between 5.25 and 5.5 percent, and a higher-than-expected inflation report earlier this month dampened hopes for a decline in interest rates. rate in the coming months.
Speaking earlier this month in Washington DC, Federal Reserve Chairman Jerome Powell said it would take “longer than expected” to return inflation to the 2% target. central bank – signaling that it will also likely take longer to cut rates.
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