The median household income is about $65,000, according to the most recent Census Bureau data. And while this can give a sense for what a typical American family is earning, income quintiles can shed light on the disparity between the top and bottom earners. In fact, the minimum threshold to be among the top 20% of earners nationwide ($130,545) is more than two times greater than the median household income and nearly five times greater than the maximum threshold to be among the bottom 20% of earners nationwide ($26,685).
In this study, SmartAsset examined income distributions in the 100 largest U.S. cities. Specifically, we analyzed data from the Census Bureau to determine the income needed to be in the top 20% of earners (or 80th percentile of earners) in those cities. For details on our data sources and how we put all the information together to create our final rankings, read the Data and Methodology section below.
This is SmartAsset’s fourth study on the income needed to be a top earner in America’s largest cities. Check out the 2021 version here.
Key Findings
- The difference between the high- and low-earning households is vast across the 100 largest cities. The difference between the minimum threshold for the top 20% of earners and maximum threshold for the bottom 20% of earners exceeds $100,000 in 36 cities. In fact, the range between the threshold to be a top 20% earner and the median household income exceeds $100,000 in four cities.
- California cities have the highest thresholds to be a top 20% earner and Ohio cities have the lowest. Five of the top 10 cities with the highest minimum income needed to be a top earner are in California. Those incomes range from roughly $172,600 to over $250,000. Comparatively, two Ohio cities fall within the 10 cities with the lowest minimum incomes, ranging from about $70,400 to $78,800.
City Income Distributions
Two households located in the same city can have vastly different experiences when you compare income quintiles.
In San Francisco, California, the difference between the bottom 20% and top 20% is the largest in our study. It exceeds $213,000, with the top 20% earners in the Golden City earning nearly seven times more than the bottom 20%.
The city with the narrowest gap between the bottom and top 20% of earners is Cleveland, Ohio, with a difference of $59,249. However, that still works out to an over six times difference between the bottom and top 20% of earners in Cleveland.
Cities With Highest Thresholds to Be a Top 20% Earner
Five California cities rank in the top 10 cities with the highest threshold to be in the top 20% of earners. In both San Francisco and Fremont, households must earn upwards of $250,000 to meet the 80th percentile threshold. That’s over $100,000 higher than the median household income in each city.
The top five cities all require at least $200,000 to be in the top 20% of earners. Across the East Coast, the nation’s capital Washington, D.C. is the highest ranking city where around $200,000 is required to be in the top 20% of earners (specifically $198,673).
Cities With Lowest Thresholds to Be a Top 20% Earner
Across the 100 cities in our study, 14 cities require less than $100,000 to be a top 20% earner. Detroit, Michigan has the lowest threshold overall, requiring at least $70,444 to be a top 20% earner. This is over two times higher than the median household income of roughly $32,500.
As previously noted, two of the 10 cities with the lowest minimum threshold to be a top 20% earner are in Ohio: Cleveland ($70,645) and Toledo ($78,843). Those cities are followed by Hialeah, Florida ($80,436) and Newark, New Jersey ($83,386), which take the No. 4 and No. 5 spots, respectively.
Data and Methodology
The data for this report comes from the Census Bureau’s 2020 5-year American Community Survey. We considered only the 100 largest cities and ranked them according to the household income needed to be in the 80th percentile of the income distribution.
Tips for Maximizing Your Paycheck
- Negotiate for a higher salary. If you haven’t received a raise and have worked at your place of employment for at least a year, it could be a good time to ask for a compensation increase. Use our paycheck calculator to see how a raise could impact your take-home pay after taxes and retirement contributions.
- Understand how far your income will stretch. If you’re considering a move to a new city, learn how much you would need to earn to maintain a similar cost of living to what you are used to. While your salary may put you in a higher income bracket in a new city, it could negatively affect your spending in a more expensive city. Use our cost of living calculator to compare places.
- Work with a professional. All workers, but especially top earners, can benefit from professional financial advice. A financial advisor can help you manage your assets and guide you through major purchases. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Questions about our study? Contact press@smartasset.com.
Photo credit: ©iStock/MayLim