Only three or four years ago, it was considered relatively normal to have a high debt-to-income ratio. People bought big houses, nice cars, and plenty of toys — for themselves and for the kids. Where did it all go? On credit, of course!
But starting about two years ago, a none-too-subtle shift started. People started losing their jobs, then their homes. Families cut back on expenditures, people took a sudden interest in coupons and… well, you know the rest.
Frugality is, at least for the moment, relatively mainstream. Most families are concentrating on paying down as much debt as they possibly can. They’re forgoing certain pleasures in the name of financial stability. They’re realizing the premium put on convenience.
In short, they’re learning.
Some people even seem to be relieved by it. After a decade or two of relentless consumerism, some people are even finding comfort in minimalism. (Though most are still straining against the yoke of debt in the hopes of a new iPhone or whatnot.)
Even assuming that our thoughts do stray back to consumerism as the economy recovers, I wonder if this has affected our basic societal definitions.
It used to be that you were leveraged to your eyeballs, but were still considered middle class. At least, right up until you couldn’t keep up with the payments. I can’t really see that holding true after all we’ve been through in this recession.
Could people really be considered middle class if they’re riddled with debt? What if they don’t have debt but don’t have savings either?
Will the new middle class mean having some savings in the bank? How about driving slightly older cars because there’s still life left in them?
What do you guys think? What are the parameters of “middle class” in the post-recession years? Or do you think that things will go back to normal?
Do you think people will really be considered middle class if they’re riddled with debt?
What about people who don’t have any debt but also don’t have savings?
Folks, you tell me: What do you think the new parameters of middle class going to be?
Will people feel safe in their middle class status? Or will they be more aware how quickly things can change?
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I wonder about what it means to be middle class quite often. Once, when I was in college a professor described middle class as earning more than 30,000 a year. Technically, my husband and I earn less than that . . . well, I guess it depends on the dollar/euro conversion of the day. BUT we have no debt and quite a bit of savings. So what class are we in? Our net worth may actually be higher than the net worth of someone who earns a LOT more than we do. . .
I sometimes wonder if people's perception of middle class is not based primarily on spending and conspicuous consumption. After all, you can't look at someone and see how much debt or savings he or she has. What you can see is what is on the outside: clothes, cars, house etc. I suspect that class will continue to be 'measured' by others based on these observable terms–I'm not saying right or wrong here–I'm just saying.
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Well, I don't think class has ever been just about net worth, so that's only part of it. There's other factors as well, such as education, income, type of job (probably one of the more important factors), and then a bunch of other things that are about lifestyle.
But I think we've been in real denial about the class system in America. Most people seem to think they're middle class. Just listen to a political speech. It's all middle class, middle class, middle class — on both sides. The presidential debates were a good example. No mention of working class, and definitely no mention of upper class. You'd think there were no working or upper class voters!
And I think easy credit has allowed people to live in denial about being working class. After all, so long as you have a big house and a fancy car the neighbors needn't know that you're working a minimum wage job. And while I can understand the idea of financing tuition to get your kid into college and out of the working class, some people have really went overboard to have a prestigious name on the diploma because that's as much a class sign as having the diploma.
Personally, I think the lengths people have gone to to pretend they're someone they're not — like sacrificing their family's financial security — is ridiculous. But then I'm proud of my working class roots, now that realize that we were working class. I really admire people who do manage to sacrifice and get by on very little. I respect frugality and, frankly, the spend, spend, spend attitude of some people I know is just such a turn-off.
For example, I found myself cringing the other day when we were explaining to someone that we really shouldn't eat out anymore this week because we were already going over budget and had last month as well. And their attitude was just, "Well, sometimes you just HAVE to splurge!" Umm…. we already splurged. And we didn't have to. We wanted to. But when we splurge we have to make up for it elsewhere in the budget and there's only so many ways left to do that. Mostly, that means that we eat a lot cheaper later (or before). To be honest, I felt sorry for them, even though I'm pretty sure they can afford to splurge, because I feel like you if you're just always able to justify splurging then it doesn't feel as special.
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Based on the median income for my city reported in the low 50ks in recent years, I peg the middle class for southeast Michigan as families who have roughly $45k to $75k in income.
If your household income is below that amount, you're on the border of receiving assistance. If your household income is above that amount, you do have a lot more cash flow available than the median income family and "middle class" isn't a fair description. "Upper middle class" is more accurate.
That being said, people often look at middle class as a lifestyle rather than income bracket. And that's where it gets confusing. College degrees may or may not have any real impact on income. Furthermore, stay-at-home or part-time working parents are a common situation among the blue-collar families in my area because factory job schedules can be unpredictable.
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My definition of middle class is income surplus to needs. It's the defining of "needs" that gets tricky.
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