What Is The American Middle Class Anyway?
Where Is The US Middle Class?
Before we can find out if the size of the US middle class is changing, we must define it. This is actually tough to do since experts do not agree on what this term means. It is also tough because it could be defined by income, living standard, education, or some combination of these things. Beyond that, the term gets spliced into groups like the working class, middle class, and upper middle class. To make this job even tougher is the fact that most people consider themselves middle class! So how do we figure out what the term means anyway.
You can find a lot of different opinions on the matter. You may go here for one writer’s take on the subject: What Is Considered Middle Class? I enjoyed the article, but it leaves as many questions open as it answers. I do not think this is the fault of the author, but just that the topic is hard to pin down!
I also think that any income figures would have to be balanced against a lot of other factors like family size, area cost of living, etc. A $40,000 income would produce a better standard of living for a single person in a small midwestern town than it would for a single mom in an expensive urban area.
In addition, a graduate student who is scraping by on on a fellowship may be considered middle class because of his education while an unskilled worker, who actually makes more money, may not be. Somehow our notion of classes does not just come down to income, but maybe also has something to do with potential.
So Is The US Middle Class Getting Smaller?
This question is tough to answer to with the type of hard statistics that you may be looking for. In fact, the midde income in America has gotten smaller in the last couple of decades, but more people have actually moved up into the upper income groups than moved down into poverty.
But the numbers are not huge, and when you take inflation into account, it does not look like we are making the type of progress in growing our incomes that we used to expect. And when you take a growing trend towards two income families, or of breadwinners holding down two jobs, the growth is even less spectacular.
Here are some shocking statistics from a Yahoo Finance article which claim to prove that the middle class is being wiped out.
- Sixty-one percent of Americans say they live paycheck to paycheck. This is up dramatically from the same survey a coupe of years ago.
- Thirty-six percent of Americans say they make no retirement contributions at all right now.
- Over forty percent of us have less than $10,000 saved for retirement.
- The top ten percent of US income earners actually bring home about fifty percent of the national income.
Americans Are Downsizing
Some things are certain. People who fall into the wide category of making $25,000 – $75,000 a year (or even more) are cutting back on luxuries, watching their credit, and have stopped expecting the automatic income growth they used to think would be a given. Older people are pushing back their retirement age. Workers wages are not keeping up with increases in health care costs. And a larger percentage of people in Rwanda have health insurance than the percentage of Amercians. (OK, I admit that our health care is better if we can access it.)
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There does seem to be a middle class squeeze – but I think that most 2 income families who make even – say $100k today – do not feel rich. All that income makes people just tend to buy a better house, cars, etc., so they squeeze themselves – and it makes it hard for them to qualify for college aids for kids etc. This is a complex question, but it is very central to how Americans view themselves.