California's middle class is shrinking.
America's wealthiest and most populous state has lost 7 percent of its middle class to wealthy and lower-income families in the 21st century, according to a new report from California Community Builders, a nonprofit housing research and advocacy group.
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As the upper and lower classes expand at the expense of average earners, what is the net worth that counts as poor, middle class and wealthy in California?
GOBankingRates has also previously looked at the net worth levels of the Baby Boomer generation.
California's economic class definition by income
The widely accepted definition of “middle class” from the Pew Research Center is a household that has an income between two-thirds and twice the median. Lower-middle class households have an income less than two-thirds the median, while upper-middle class households have an income more than twice the median.
According to the latest U.S. Census Bureau data, the median household income in California is $91,905.
According to Pew Research Center standards, California households need to earn between $61,270 and $183,810 to be in the state's middle class. An income below $61,269 puts a household in the lower middle class, and an income above $183,811 puts the household in the upper middle class.
According to the Hamilton Project, households earning less than 100% of the federal poverty line drop from lower-middle class into poverty. Once a household's income falls into the top 10%, it graduates from upper-middle class into the wealthy.
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Middle-class net worth in America's richest states
Using Census Bureau data, SoFi estimated the median net worth in California to be $203,000.
Using Pew Research Center's income-based method of determining economic status, Californians need to have between two-thirds and twice the state's median net worth to be considered middle class.
Using the $203,000 base, that would mean net worth between $135,333 and $406,000.
What is the net worth of poor Californians?
Financial expert and author Jeff Schmidt explained on his YouTube channel that a household's net worth in the 20th percentile is considered poor. If $270,000 is the 50th percentile (roughly the middle of the middle-class net worth scale), then the 20th percentile in California would be $10,000.
There are at least three counties in the state where a salary of $104,000 is considered low income, and there are areas in California where you can be considered poor even if your net worth is well over $10,000.
But considering that 31 percent of residents earn less than 1.5 times the state's poverty level, the net worth of most people considered poor in California is probably a lot closer to zero than $10,000.
Net worth of the rich in rich countries
According to the most recent data from the California Legislative Analyst's Office (LAO), Californians own 17% of the nation's net worth, despite making up just 12% of the population.
California residents collectively own more than $6 trillion in net worth, roughly $160,000 per person. But as with the U.S. as a whole, California's vast reserves of wealth are held by a small percentage of households. There are roughly 1,650 ZIP codes in California, and 300 ZIP codes classified as wealthy account for more than two-thirds of the state's net worth, according to the LAO. But even among the wealthy ZIP codes, “extremely wealthy areas” skew the average.
“The state's 30 wealthiest zip code areas comprise only 2 percent of the state's population but account for 20 percent of the state's total net worth. The net worth of these 30 wealthiest zip code areas is equal to the combined net worth of the state's 1,200 least wealthy zip code areas,” the LAO wrote.
So, it depends on where you live.
Nearly all of California's 10 wealthiest residents (including the four with twelve-figure net worths) live in the San Francisco Bay Area, according to the San Francisco Chronicle, and Charles Schwab says you need at least $4.7 million to be considered wealthy in the area.
In Southern California, where Los Angeles and San Diego are located, it's $3.5 million.
Meanwhile, in Tulare County in central California, where more than 28% of the population lives in poverty, most people would consider themselves wealthy if they had $10,000, the statewide poverty line.
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This article originally appeared on GOBankingRates.com: Californians' Net Worth: How much do you need to be poor, middle class and wealthy?
