Sunday, November 16, 2008

Who actually is the Middle Class?

By LindaBeth

(See here for part 1.)

So who is the middle class?

McCain and Palin have a conception of who the middle class, "average" Americans are. Their statements struck me because their conception does not at all correspond to the reality of Americans' lives.

The Tax Foundation has an excellent paper on income distribution in the United States that sheds light on the "middle class" definition problem, and the income statistics might shock you. First, the paper very rightly points to the fact that "middle class" is an imprecise, political term, meant to appeal to those people who "feel" they are middle class, average Americans, not the statistical average or median income earners. As such, middle class becomes a political term that serves as shorthand for not-millionaires and the not-poor; indeed, those individuals are invisible in American politics. It indicates policies that are supposed to be for "regular" Americans, regular being defined as not uber-rich and not for "welfare dependents."

Almost 80% of people see themselves as middle class and only 2% of people see themselves as "upper class." So clearly, many Americans don't recognize their economic privilege in defining themselves as "average" when they are much better off than most. Yet these folks are feeling a financial strain in our tough economic times. I'm not denying their plight, but if so many Americans see themselves as financially burdened, average Americans, when they are in fact not at all average, then an awful lot of people have a warped conception of what the plight is of the actual middle class, working class and working poor!

To bring this point home, let's look at who actually is middle class, or more accurately put, middle income. There are two different ways that economists describe middle income: either the middle 20% (the 3rd quintile), with 40% higher (4th and 5th quintiles) and 40% lower (1st and 2nd quintiles), or as the middle 60%, with 20% higher and 20% lower.

According to the 2006 U.S. Census, among all households (married, single, with and without children),

Median income among all U.S. households in 2006 was $48,201. The middle 20 percent ranged from about $38,000 to $60,000; and the middle 60 percent—the "Baucus middle class"—stretched from about $20,000 to $97,000 [...] The range of the middle 20 percent [of married households] was approximately $57,000 to $83,000, and the range of the "Baucus middle class"—the middle 60 percent—was about $35,500 to $122,000. This $122,000 figure, then, represents the highest possible income that a married household could accurately call middle income, or "middle class."

By contrast, for all single households, the middle 20 percent of incomes fell between $22,000 and $36,000 with a median of $29,000. That's less than half of the median for married households. The middle 60 percent stretched from about $12,000 to $60,000. (emphasis added)

Did you catch that? Half of married households earn less than $69,716; half of single people earn less than $29,000. The most you can earn as a married household and call yourself middle class is $122,000; the most you can earn as a middle class single person is $60,000. If you make over those incomes, you are earning more than 80% of those in your household type. And we had a presidential candidate suggesting that married households earning over $250,000 weren't rich? And that singles making over $200,000 weren't either? Say what?! Saying those incomes are not rich, and Palin suggesting she is middle class, makes a mockery of the actual middle class, not to mention makes the working class and the poor completely invisible, as if they don't exist.

Regarding Sarah Palin's middle-class-ness: clearly her income puts her outside of what qualifies as middle income. But from a sociological perspective, class isn't all about income; rather, it includes wealth (net worth), education, and prestige. And with her college education, job as governor with associated prestige and power, as well as her $1 million+ net worth, she is clearly and upper-middle class American.

Next parts: socialism, poverty, and the right's rhetoric on those who pay no income tax.

(Cross-posted to Speak Truth to Power.)

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5 Comments:

  • But class depends a lot on your local region, not only on your income. What one makes in New York City could render a completely different lifestyle than if one made the same amount in Kansas or Tennessee.

    Cost of living determines a lot of how "wealthy" one is, which means that a middle-class person in Oklahoma might be poor in Chicago. That also means that for high-cost-of-living-Alaska, money simply doesn't go as far.

    The trust-fund elitists in D.C. have no concept of what it means to meet bills in many parts of the states - they're used to a certain standard of living. The liberal illuminati rarely are so connected to the Common Man as they'd like to think.

    In as far as wealth is contextual to one's surroundings, I think Palin is well within her rights to describe herself as middle class, even if it's upper-middle class.

    By Blogger Unknown, at 11:12 PM  

  • Sure, cost of living does factor into the value of your income. Perhaps we need a way to look at income adjusted for the cost of living to have an even more accurate way to assess income distribution--fair point.

    However, I think you're overestimating the impact of cost of living on the validity of the income data. Even if we adjust by $12k (an extra $1k/month for pricey housing) of the median income figures for those in high cost of living areas, we're still at $134k as the middle class max in those areas. That's still no $250k. And the areas with the lower costs of living (i.e. the south) are also often the areas with a significant more low-wage jobs. For example, in Alabama, Louisiana, Mississippi, Montana, New Mexico, Oklahoma, South Carolina, South Dakota, Texas, and West VA, more than 30% of their jobs are in occupations that paid below poverty levels in 2006. Compare this to the top 10 states with the lowest percentages: Alaska, Massachusetts, Connecticut, Washington, New Jersey, Colorado, New Hampshire, Vermont, Oregon, and Minnesota, all at 15% or below.

    A definition of the middle class being the middle 60% of incomes is a pretty generous span--enough to compensate for regional variations in housing costs, especially since regions with quite high living costs (i.e. NYC, Boston) also have inflated incomes, at least for upper-middle class and upper class jobs, which partly cancels out the skewing of housing costs. If anything, the high cost of living in certain areas disproportionately affects the lower-middle and working classes, since those kinds of jobs aren't as likely to offer higher pay in light of higher cost of living. Sometimes, however, they do--for example, a clothing store that I worked for about 10 years ago as a teenager paid a quarter above minimum wage to its associates in Rochester, NY (Western NY), then, $5.50/hour. Meanwhile, the associates in NYC earned $8/hour at the very same store.

    With regards to Palin and Alaska:

    -The AK cost of living ranges from 15-30% above the national average.
    -AK pays no state income tax or state sales tax.
    -Alaskan residents get an annual check for their personal cut of the state's oil revenues ($3,269 this year). That is more than an extra 10% of the median income. If you lived in Anchorage, that would just about wipe out your higher COL.
    -AK receives over 75% more in federal tax dollars than it pays
    -as govenor she received some tax funding for her housing
    -the median per capita income in AK per capita is $28,891, or %57,782.

    So in short, cost of living might be higher, but Alaskans pay no state tax and get a hefty return on their federal taxes. So I'm unconvinced that their particular experience is so different as to make the generous median income stats not applicable to Palin, especially considering that her income was twice what the maximum middle class income is--no cost of living is that high.

    I criticized McCain and Palin because they were the ones who made the remarks. If a Dem had said that, I'd be just as concerned. I'm not suggesting that the Republicans are off and Democrats understand--I'm actually suggesting that a host of American citizen taxpayers are in the dark as to their economic privilege and have no idea how privileged their $100k incomes are. If they're having a hard time (largely because of health costs for one, but also unrestrained spending, encouraged by our consumer-driven culture and economy), image how the half of Americans that earn less than $48k feel. My point is that when Americans who are upper earners think they're middle class, they have no sense of the lives of those whose suffering is much greater than theirs...and who make up the real middle and working classes.

    By Blogger lindabeth, at 1:37 AM  

  • Lindabeth is absolutely right describing the confusion Americans hold about the middle class. Everyone wants to be in it, but not everyone qualifies. Americans generally do not like to think of themselves as a class. They are much more comfortable defining themselves by race or ethnicity than they are by class, unfortunately. If the average or median incomes of the majority of middle income Americans are well below $250,000 or even $100,000, then where in the heck is the working class? I would venture to say that in real money terms more of us who think we are middle class are actually working class but we shun that label because of its rough, blue collar origins or heavens to betsy it's proximity to dark skinned immigrants and minorities.

    People with a net worth of $1 million are rich, plain and simple. That money may go less far in San Francisco than in Mississippi but a million is a million is a million. Ask any professional fundraising executive how to find a major donor capable of making a gift larger than $4,999! You don't look at people earning their incomes from ordinary salaries and certainly not from anyone earning an hourly wage. Come on now.

    Claiming to be just an ordinary middle class person with a net worth of 1/4 mil. to 1 mil., which many do is disingenuos at best. Such claims serve to hide the rich and the poor. Reminds me of that dumb photo column in "Us Weekly" featuring wealthy celebrities like Britney Spears coming out of Starbuck's looking 'just like us.' The rich are different silly, even when they drink Starbuck's. Imagine some of her former drunken and crazed antics coming from an 'ordinary' person earning an hourly wage. You can't. You don't want to go there.

    Furthermore, if a middle class single person can be designated as such at just under $30,000 something really needs to be done about the numbers used to compute the federal poverty level for a family of four. The assumption that anyone earning a minimum wage could ever dream of entering the middle class is a cruel joke.

    There may be one GOOD that comes out of the current economic meltdown: the truth about class in America. Welll , there is this,too: we now have a President Elect who actually lived with a college educated, divorced mother who nevertheless qualified for food stamps!

    By Anonymous Anonymous, at 4:02 PM  

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