Will Barratt, Ph.D.
The contemporary idea of the middle class is wonderfully
flexible, and this flexibility gives rise to confusion. This flexibility also makes the term a media
and political favorite. One sociologist
will use “middle class” one way, one blogger will use “middle class” another
way, and a politician may use “middle class” in two or three more ways.
So what is and who are the middle class? The European origin of the idea is in 1745 when
it was used first by James Bradshaw in his Scheme
to prevent running Irish Wools to France (OED, 2012). The term was used to describe the group of
people in the economy who were between the peasants and the nobility. The rising merchant class, those people who
bought and sold goods rather than produced goods like the peasants, were the
inspiration for this term. That idea of
the group in the middle between other groups, peasants and nobility, still
provides a framework for describing the middle class. The problem arises when you try to define the
contemporary version of peasants, politely called the working class, and
nobility, politely called the upper class, and identify the boundaries between
these groups.
Divisions
within the middle class
Many scholars divide the middle class into smaller groups,
which creates more opportunities to establish your place in the class hierarchy
when there are smaller groups. The
lower-middle class, the middle-middle class, and the upper-middle class are
traditional ways to discuss this undefined middle class group. Dividing 30% of the population into ever
smaller groups seems a little suspect and this leads to an exploration of how
we choose the dividing lines between working, middle, and upper class groups.
Education
as a dividing line between class groups
Zweig in Working Class
Majority (Zweig, 2000) makes the argument that the distinction between the working
and middle class groups in the US should be a college degree. However if you use the idea of middle class
membership as requiring a college degree, you are only including roughly 30% of
the US population over 25 (United States Census Bureau, 2012a) as middle class. New boundaries for the middle class can be
created to expand this 30% group if you lower the threshold of educational
attainment. Including those with an
Associate’s degree expands the middle class to nearly 40% of the US population. Expanding it further to include those with
some experience in college increases it to nearly 60% (United States Census
Bureau, 2012a). With the boundary between
the working and the middle class set to the right point you can create a
majority middle class.
Conveniently the educational attainment metric also creates
an educational nobility. People with a
Professional or Doctoral degree compose about 3% of the population (United
States Census Bureau, 2012a). Since this
group includes me, along with most of the people who write about social class,
I am in favor of this particular way of defining the nobility. Please note that motives for setting the
boundaries between class lines should be explored carefully.
Pay,
pay periods, and the economic nobility
Another way to define this divide between the working and
the middle class is pay periods.
Bi-Weekly employees, those workers who are paid every other week, can be
seen in the US economy as the working class.
Monthly employees can be seen as the middle class. Those who need not work because their income
comes from investments can be seen as the economic nobility. The criteria for who belongs in the economic
nobility get fuzzy when you consider that retirees don’t work and have income
solely from either social security and / or personal retirement investments. However retirees get monthly checks, so pay
periods may serve as an effective class boundary metric.
People with extreme wealth can be seen as the upper class or
the contemporary economic nobility. There
a few people with a lot of wealth and there are a lot of people with little or
no wealth. What is wealth? At the most basic level wealth is having more
money than you owe. So, if I have $100
dollars and owe $50 dollars then I have wealth.
Having ready money, or cash, is a good thing but not all of my wealth
may be ready to be spent. What about
having things like stocks, bonds, and a family home that can be converted into
money? Assumptions as to what counts as
wealth are slippery. It is easier to turn
a stock into cash than to turn a family home into cash.
One metric to define the economic nobility in the US is to
set an arbitrary bar for income, say at the top 1%. According to the US Census Bureau (2012b) the
median household income in the US was $50,054 in 2011; half of all households surveyed
make more than that and half make less.
The income level of the top 1% earners in the US is in some dispute, but
a good estimate is $700,000. (See the
Congressional Budget Office Trends in the
distribution of household income between 1979 and 2007 for a detailed and
data driven analysis of this topic.) This
$700,000 is personal income, not household income! This income may be from investments or from a
salary and according to the CBO (2011) this income is increasingly from work
related income.
To define the economic nobility in the US we can start with
this $700,000 annual income. Assuming a
conservative 5% return, this would require $14,000,000 in some form of
investments to generate $700,000 in annual income. While the yield from investments would be
higher than 5%, building capital requires not taking all of the yield from
investments. Saving all of your $700,000
a year income for 12-14 years (depending on interest rates) would create
$14,000,000.
Middle
class and identity
Many people who would not meet any of the middle class criteria
above may yet self-identify as middle class.
Their reasons for self-identifying as middle class are probably social
and psychological rather than economic or related to educational attainment. Middle class is normative and lower class / working
class is the losing group. Consequently
self-identifying as working, or lower class, is fraught with psychological and
social issues. Social class as an
identity is not to be underestimated, especially in a turbulent political and
economic climate. It is useful for
politicians and financial institutions to encourage people to self-identify as
middle class.
Summary
The middle class can be defined in any number of ways
depending on your purpose. It can
include up to 60% of the people, using educational attainment as a simple
criteria, or as few as 30%, using the same educational criteria. Adjusting the boundaries between the working
class and the middle class is a value driven decision.
The next time someone uses the phrase “middle class” ask them
what and who them mean. If you cannot
ask them, then think for a minute about their motives for using the term as an
inclusive or exclusive term and who they think it includes. Similarly, when someone uses the current “47%
of people who don’t pay taxes” term think for a minute about their motives for
using that term and who they think it includes.
Congressional
Budget Office. (2011). Trends in the distribution of household income between
1979 and 2007. Retrieved from http://www.cbo.gov
Oxford English
Dictionary. (2012). Retrieved from http://www.oed.com
United States
Census Bureau. (2012a) Educational Attainment in the United States: 2011
Detailed Tables. Retrieved from: http://www.census.gov
United States
Census Bureau. (2012b). Income, poverty, and health insurance coverage in the
United States. Retrieved from: http://www.census.gov/
Zweig, M. (2000).
The working class majority: America’s best kept secret. New York, NY: Cornell
University Press
Special thanks to
Jeff Fabus for helping me with the savings calculations
