It seems like a question with an obvious answer. Of course, middle class is real — just look at income levels and the middle sector is, well, middle class.
But beyond a mathematic sense, does “middle class” really exist?
Maybe not
An anthropologist in a recent Yahoo! article argues that it may be nothing more than a concept. She says that the term isn’t strictly defined in any culture and is more about the idea of social mobility than an actual status.
It’s an interesting, if dense, read; and it got me thinking: What is “middle class” and is it concrete or merely a concept?
The struggle is real
There’s a lot of talk about how difficult things are for middle-class folks these days — the squeeze they increasingly feel as housing prices, health care and other basic life expenses rise (not to mention the skyrocketing cost of tuition).
And maybe it’s for that reason that around 70% of people claim to be middle class (though only about 50% are). Even those making good salaries may feel as though they are just hanging on.
While some of that might be lifestyle inflation, there may also be something to the feeling of financial worry.
The $100k standard
Since at least the early ’80s, $100,000 has been something of a magic number to the majority of us. Many folks would consider that rich. It’s certainly hard to think of it as middle class when only about 20% of the country’s population hits (or exceeds) that threshold.
But.
According to Bankrate, to get the same purchasing power that $100,000 had in the ’80s, you’d now need to make about $287,000.
So $100,000 — while still a lot of money — just doesn’t mean as much as it did a few decades ago, when conspicuous consumption really started taking off. And conspicuous consumption has caused a lot of otherwise-available funds to turn into gadgets and luxury items. So $100,000 can feel like even less these days.
That’s not to argue that people making $100,000 are middle class. As I said, only about 20% of people make that or more, so I’d be hard-pressed to argue that the benchmark falls within the middle class. (Though the Pew Research center disagrees, labeling households making up to $122,744 as middle class.)
The point is, $100,000 — in may people’s minds the sign of “making it” and moving from the middle class into the upper class — just doesn’t have the same impact that it used to.
Meanwhile, you also have the problem of relative expenses. How far a dollar stretches varies wildly based on geography. So $100,000 is going to give you a very different experience in the Midwest of the South than it will in New York City or LA. It’s why geo-arbitrage is so popular among FIRE folks.
So what is middle class?
Again, if you don’t look at it mathematically, it’s pretty hard to pin down.
Does it have to do with homeownership ala the American dream? A certain amount of material goods, like status symbols or having the latest gadgets? Or is it just financial breathing room?
Well, with home prices continuing to climb, it’s harder and harder for average earners to afford houses. Not to mention that some people simply prefer to rent. So homeownership as a defining factor seems to be out.
As for having status symbols or all of the latest gadgets… Thanks to the wealth (as it were) of available credit in this country, people can manage to have all of their pick of goods at a variety of income levels.
An easy(ish) lifestyle
So maybe financial breathing room is the best indicator.
Except some people can live on very little money. Heck, my mom lived on $12,000.
So counterintuitively someone might have more breathing room on a lower salary than someone on a higher one, simply due to life choices and some luck (like good health).
A Purple Life manages to live in Seattle for $18,000 a year. So she’d have quite a bit of financial breathing room even if she only made the average U.S. salary, which was just under $47,000 in 2018.
Another person — someone who doesn’t have a partner to split rent with, someone who pays $1,000+ a month for daycare, or someone with expensive insurance or health problems — might be barely scraping by (or might actually be falling into debt) on an average salary.
Is someone who’s barely making ends meet really considered middle class? Doesn’t feel like it to me, even with the increasingly common concept of a struggling middle class.
Competing versions of “middle class”
See, I still have in my head what’s probably a more historical version of a middle class family. It looks like people who are comfortable financially. (So I guess for my own purposes, financial breathing room has something to do with the definition.)
To me, being middle class means being able to afford to live comfortably. That is, you can pay bills without too much worry, probably in a house you own, have a car (or two cars, if you’re a couple) and even at least some of the latest gadgets, yet still be able to save some money.
I think that’s the thing many of us default to when we think of stereotypical middle class. The problem is, that version no longer reflects the reality in America today.
Because there’s a competing archetype of the American middle class, arguably based more in the concrete reality of today.
It’s one where the middle-class folks are mired in debt just from getting the house and cars. And yes, perhaps some of that debt is from getting the latest gadgets. But certainly not all of it.
Because the archetype is also one where the exponential rise of basic costs is eating up the money of even the financially careful. Therefore, it’s one where the current signifiers of the middle class (house, cars, gadgets, etc.) are generally — and with surprising widespread acceptance — accompanied by bills that can’t (or can barely) be paid.
Thus the new idea of the middle class emerges. It’s one in which people are struggling to keep their heads above water, and are either barely managing it or are slowly, inextricably sinking below the surface.
On the other hand, plenty of frugal people live comfortably on below-$100,000 salaries/household incomes.
So which depiction is right? Or is neither correct?
Running the numbers
I mean, the struggle for the middle class is real, right? Or is it a self-inflicted problem from indulging in too many wants?
Frugal folks would certainly have you believe the latter. We tout all of the ways you can find space in the budget. And while that’s all good advice, at least some middle class folks are struggling even while being smart with their money.
Take the average wage I mentioned earlier. Now $47,000 seems staunchly middle class on the face of it. But let’s say you have an effective tax rate of even 10%. Now you’re down to $42,300. Then there’s rent/mortgage. It’s increasingly common to see $800-$1,000 in rent. And the average mortgage is around $1,000 a month. So now you’re down to around $30,000-$33,000.
Not bad. That’s $2,500 to $2.750 a month. But if that sounds like a lot, remember that that amount has to cover life expenses like increasingly expensive health care (at an average $403 a month), car insurance (about $200 a month on average), any car payment you have — with the average being $479 a month — and any student loan payments (at an average $393 per month).
That takes you down to $1,075 to $1,325. Which has to cover all other life expenses. And if you have daycare? Kiss $800 to $1,000 (or more) goodbye.
Now even with all of those expenses, the median salary could still provide some financial breathing room — especially if you can avoid a pricey car, stay healthy and/or have a partner splitting the expenses with you. But the breathing room is far less certain (or ample) than you’d think when you first hear the $47,000 figure.
Another way of looking at it
Of course, that’s based on the average wage. Perhaps a different way to look at it is the median wage of $61,000. That is, half of people were below $61,000 and half answered that they make more than $61,000. Maybe that’s a better benchmark to know what kind of incomes people are working with.
And with a $61,000 income (assuming average student loan/car payments and no pricey illnesses) there should definitely be more breathing room than there seems to be among the middle class.
And let’s not forget that middle class often means a nuclear family, which often means two incomes. How are people still struggling on $94,000, let alone $122,000? Surely, some of the struggle is due to frivolous expenses.
Maybe. Although as already discussed, money just doesn’t stretch as far as it used to.
But even if the middle class struggle is a manufactured feeling of desperation — derived from an overindulgence in wants rather than sticking to needs — does that really matter? If financial struggle is rampant, regardless of the cause, doesn’t that make it as (or more) real as any other descriptor?
So what does “middle class” do?
But maybe it doesn’t even matter how we define it. I mean, if it’s so ephemeral as to elude definitive parameters, then why does it even exist? (If it does at all, of course.)
I mean, if we can’t quite put our finger on what “middle class” means, if it’s only a vague idea in our heads, the question becomes what purpose it serves.
Well, according to the anthropologist in the Yahoo! piece, its existence engenders aspiration: for middle class folks to be socially mobile into upper-class life. Presumably, it also creates something for the lower income to aspire to.
According to the anthropologist, we keep the idea around because we need to believe that hard work and the right investments — money, house, education — can boost us up the societal ladder.
But it’s more than that
The anthropologist’s theory is all well and good. I’d say we certainly like to see the middle class as more of a stepping stone toward wealth than a stopping point.
But I’d argue that being middle class is about more than aspiration. It’s also a way of reassuring ourselves that we’re doing just fine.
After all, the American dream isn’t supposed to be for upper-class citizens only. It’s supposed to be a hallmark of middle-class-ness. So if we can be middle class, then we must be doing alright — or are at least on track to doing alright. If we can get a house or a car (or however we define middle class) then we must be on the right path.
Which could be why it’s so perplexing to us when a middle-class income doesn’t stretch as far as we think it should. It’s cognitive dissonance: middle class is supposed to be security when in fact, it often still means struggle. That causes frustration, disenchantment and perhaps even anger and resentment. Not great for society at large.
So is the middle class real?
Not the historical version. Not anymore.
Sure, you can frugal hack your way into financial comfort on a middle-class income; but that’s not the archetype. The archetype is having a comfortable, easy lifestyle with all of the trappings of at least moderate success. It’s financial breathing room while keeping up with the Joneses.
As for the more recent stereotype — one of struggle and frustration — I guess it’s hard to argue that it doesn’t exist since it’s seemingly everywhere. So yes, it’s real, but arguably it’s a symbol of its own erasure.
That is, the middle class’s struggles are starting to look an awful lot like lower-income people’s problems (admittedly with a lot more gadgets and health care). So the the middle class’s embodiment of a descent into money trouble… Well, that arguably signifies the class’s erosion.
The problem with the problems
You can say that these money troubles are self-inflicted, that if middle class folks were more frugal this wouldn’t be an issue. But first of all, ever-increasing basic expenses mean that’s not necessarily the case. Secondly, neither middle class archetype involves frugality. And those ideas are what we’re examining.
The fact is that, when middle class folks try to lead the lives they’re “supposed” to have, they’re finding that there’s not enough money to cover bills and still get ahead. Heck, sometimes there’s not even enough to just cover the bills.
So the middle class life as we have traditionally understood it… Well, it’s rapidly disappearing.
So yes, “middle class” does exist in actual income levels. But those income levels no longer mean what they used to: comfort, stability and an easier life.
What do you think constitutes middle class? Do you think it’s changed over time?
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It is interesting discussion Abigail. I have always considered growing up in an upper-middle class and even consider myself still in that category even though I probably would be classified as upper class by a lot of definitions.
I think there is a stigma associated with being upper class (or the 1%) and most people in it likely categorize themselves as upper middle as well (I personally think it is the decamillionaires and billionaires that are upper).
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Interesting that you think there’s a stigma attached to being upper class when that’s what arguably most middle class people vie for. On the other hand, given the growing divide between middle and upper class, I suppose that there is growing unrest that could make people reluctant to be called upper class.
As I said in the piece, the Pew Research Center calls you upper class if your household brings in more than $122,000ish. So as a radiologist with a fiancée (who presumably works) then by at least one organization’s objective standards you’re upper class. But I can see how it’d be hard to conceptualize being in the same class as — like you said, decamillionaires and billionaires. Maybe we need a separate class entirely for them?
I definitely agree with you about the stigma of finally reaching the “upper class”, especially if you weren’t born at that level of wealth. It’s uncomfortable, particularly in an age where the media vilifies wealthy people (millionaires & billionaires all lumped in together). We work so hard for decades to reach the top, and when we’re there, we have to go into stealth mode so our neighbors won’t judge us for being “out of touch”.
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It’s interesting you feel like there’s a stigma attached to being millionaires. I feel like that’s what most people aspire to and envy. Then again, envy can cause some less-than-pleasant reactions, I suppose. Still, I feel like a lot of the middle class (and even some low-income folks) are protective of millionaires (at least when it comes to raising taxes) since they think maybe they’ll be there one day. But I suppose millionaires are conveyed to an extent as being out of touch, even those who worked hard for it.
The range is so huge. I would consider us middle class, and on the higher end of middle class because we are both putting money into retirement and saving cash, though much of the cash right now will go towards our youngest’s college expenses. Yes, we have above the average incomes noted above, I feel we have to be very careful with money to have the savings rate we do, and that the savings rate we have is absolutely a necessity if we hope to retire with at least the same quality of life we have now. Alternatively, I think I have family member that have ore disposable income than us, and come across in their mannerisms as being on the financial edge all the time, and family members that I would guess from their occupations, make far less but seem to live what I would consider a high middle class lifestyle with always new cars and very frequent travel. I know nothing about any of their details-maybe the ones I think make more, don’t or are paying off some huge expense I know nothing about. Maybe the ones with new cars and frequent travel had money from sources I’m unaware of. All I truly believe though is access to good health care and being able to use it without it costing your grocery money seems to be the new standard of a comfortable middle class for me, as those that experienced health problems with poor insurance have little to no way to recover.
Interesting idea, that middle class includes access to good health care. I think that enough middle class people use the health care exchange (which, let’s face it, ain’t great unless you’re paying through the nose) that it’s a problematic metric. But on the other hand, I can see where it’d seem like a benchmark because good insurance means you’re probably with a good company in a position that pays well (if it has such good benefits). So in that way, I guess it does make sense. I’m torn, I guess.
I agree that it’s hard to know other people’s finances, which makes it difficult to judge what’s truly middle class. Are the hallmarks income or things owned or general lifestyle? Some people live like they’re middle class when they’re on the low spectrum of income. And some middle class people live like they’re lower income, either out of anxiety or prudence to save. (Or both.)
All I know for sure is that “middle class” is awfully ephemeral.
I tend to think of middle class according to the same definition you do, of a comfortable but not extravagant lifestyle. I was just reading a book from the 80s and reflecting on how lifestyles have changed. At least where I live, I see people having higher standards of home size and condition, cars, and consumer spending than I remember growing with up in a “middle class” family. However, I agree that home prices, health care, and tuition costs have outpaced earnings in many ways. It’s crazy to think that $100,000 has been the unspoken standard of sort of arriving for 30 years! This is a timely question for PF bloggers, too, as many claim to be middle class, but by whose definition? It can be discouraging or confusing to posit “anyone can retire early” when you’re making more than twice than average income.
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Excellent point. I hadn’t thought about how this impacted the PF blogging community too. Skewed ideas of what makes middle class can definitely lead to skewed narratives and, therefore, unrealistic expectations.
Yeah, things have definitely changed for the middle class, though. If nothing else, there are a lot more gadgets considered basic facts of life now (smartphones and gaming consoles, for example) that weren’t expenses in the ’80s. Cable was cheaper and we didn’t have a zillion streaming services necessary to watch the stuff we wanted to watch. All sorts of things that add up to a more expensive life — even before you get into housing and health care costs.
Seriously, look at how much basic phone service and “long distance” cost in the 1980s–even without adjusting for inflation. You will be very surprised. Today’s smartphones, streaming etc cost much less than cable, etc, in the 1980s.
Dave Ramsey had a discussion about this recently on his podcast. He said something similar to what you said above; that the middle class today lives in much bigger homes, has more cars, has more stuff, goes on more vacations, & eats out more than the middle class of 30-40 years ago.
Of course, families have fewer options as houses are being built bigger and bigger, so if they don’t want an older house, they might not have the option of going with a smaller place with a smaller mortgage. As for vacations, that’s probably true. Services like Expedia et al make it much easier to find deals that lets you rationalize going more — or that simply stretches your vacation dollars far enough to allow for multiple vacations a year. And certainly there are more options than ever to eat out. And it’s become more normalized over the years of course. And with the increasing number of dual-income families, two car households are far more common (and arguably necessary) than they were. Not to mention that back in the day, my mom’s parents could leave them with family, so there was no need for pricey daycare. And the cost of daycare has probably outpaced inflation significantly too.
There are a lot more costs associated with being middle class — some optional, some less so — than there ever have been. So if you’re going for what’s perceived as normal… Yeah, you’ll find it pretty darn expensive and potentially impossible on an average salary.
It is a really squishy concept. I do think that my mental definition of middle class is similar to yours – financially “comfortable” – but not extravagant. It feels almost like you say “well, we’re not rich or upper middle class – and we’re not poor/struggling – so I guess we’re middle class”?
Growing up, I would have put our family in this category – my parents owned our house, but we never had new cars – my parents bought used cars – always over 10 years old (my father was a mechanic, so this worked out). We never struggled to put food on the table – but we didn’t eat out all the time. We had cable tv – but we also had only one tv in the house until I was 15 years old – when we finally got a second tv for the kids to all share.
We had a computer – but it was one computer for the whole family to use. Our bicycles were all bought used, from the classified ads in the newspaper. We didn’t have phones in our bedrooms – there was one phone in the kitchen, with a really long cord and one extension in my parents’ bedroom.
Fast forward 30 years later – the definition of “comfortable” is drastically different. These days every kid wants/has their own phone, tablet, computer. Having more than one tv in the house is the norm – and everyone wants not only cable tv, but HBO, Netflix, Amazon streaming.
New technologies and new options mean that peoples’ expectations of what should have and deserve, are constantly expanding – and cost more.
My parents didn’t have monthly cell phone bills, streaming entertainment costs or an annual Prime membership cost.
My grandparents didn’t have monthly bills for cable tv or internet.
My great grandparents didn’t have monthly ELECTRICITY bills LOL.
Some of the struggle is because things like housing costs are increasing – but some of the struggle of the middle class, is because a lot of the things that used to be “upper middle class” are trickling down and becoming part of the middle class’s expectations.
Great point — a lot of things that only rich people used to have are now considered standard for the middle class. Internet, of course, is a great example of $30-50 for most people that is just something they consider a necessity. The cell phone too. (Remember car phones being a thing? One that only rich folks had.) And yeah I suppose tablets are considered somewhat standard, certainly gaming consoles and, yes, multiple TVs. And a family of four’s cell phone bill — let alone the cost of the phones themselves — is going to be $80-100 minimum. That’s a pretty big expense that we didn’t have when I was growing up.
Point being that it’s much more expensive to be standard middle class these days than it used to be — and not just because of housing costs. And since wages haven’t risen the same way expenses have, it’s easy to see why some people accept middle class as being mired in — or barely saving off — debt.
So then, the question I have is – should people recognize that the lifestyle they are trying to live, is *actually* not middle-class – but really more of an upper-class lifestyle – and that is the problem?
Who sets the expectations of what “standard middle class” means? A family who is mired in debt right now, were to scale back – go down to one tv with basic cable instead of HBO/Netflix, no cell phones for the kids – cut back on all the things that weren’t part of middle class life 20 years ago – I wonder if they would suddenly find themselves in a better financial position?
Nobody *wants* to do that, obviously – but realistically a lot of the “must-haves” in our lives right now, were the stuff of the super rich, not that long ago!
Just because you *want* it and everyone else has it, doesn’t mean that you can afford it?
Good point, it could be that we’re all trying to live like we’re rich because the meaning of middle class has shifted. Again, I’d blame conspicuous consumption (in addition to housing and health care, obviously). Keeping up with the Joneses has probably always been the norm for middle class families, but that competition could drive you to living a more upper class — or at least upper middle class — lifestyle on a squarely middle class income.
Certainly, if people scaled back they’d find some extra room in the budget. Whether it’d be enough to offset rising housing/health care costs… That I’m not sure of. But it would have to make their lives easier.
That said, I’ve shifted my position a bit on kids having smartphones. I used to think it was absurd. But even if it weren’t now a standard way that kids keep in touch — and it most certainly is — there’s the issue of school shootings and other unsafe environments where kids need to be able to contact their parents (and vice versa) at any point. So I’m leaning more toward giving kids some form of cell phone — preferably one with texting capabilities. Maybe just not the latest iPhone, eh?
Spiffkins! Bingo!! Hit the nail on the head. I should’ve waited until I read this comment to post my comment above!
Great post. I think part of the differences of middle class from when I was young (I’m 37) is that costs for certain items like homes and cars have gone up drastically and along with utility bills. My parents didn’t make much money and we had a smaller house, older cars, plus medical bills as my mom had breast cancer twice and my younger sister had leukemia. It’s definitely difficult when you have a family also and many people don’t always plan for what comes when the baby is born (understandable if it’s a non planned pregnancy) and daycare costs quite a bit in the Northeast especially Massachusetts where I’m from. Many people are going for what’s best or the newest trend that they have to have right away and credit card debt goes up before you know it and it’s a struggle to pay it off as well as school loans. College now costs an astronomical amount, many more than what parents make in a year. My parents have even told me that if they were first married now, they never would have been able to afford three kids. My husband and I have one child, we tried to have another but that ended in a miscarriage and we decided financially (and other reasons) it was best for us to just have one child. We make ok money, neither over 50k but we make do and we bought a house in June and we know there’s more to life than a bunch of materialistic things.
I’m so sorry to hear about your miscarriage. I know firsthand how awful those are. But I could definitely see deciding to stick to one kid in this financial climate. I think you can live a satisfactory life on a middle class income, but I do think that what “middle class” is has become blurry. Or perhaps was never really defined at all. So it’s tough to say who is leading a middle class life and who is trying to lead an upper class life on a middle class income. Because we don’t really know if middle class involves all of the stuff that people now consider par for the course in life: smartphones, multiple computers and TVs (even if they’re cheaper now than they were in the past), cable, cars (which are now necessarily pricey), etc. Or if that’s trying to live beyond what a reasonable person would consider middle class means. After all, if most of the middle class is going into debt — thereby meaning they can’t afford all of this stuff — maybe it’s just not middle class to have it all.
I am astonished that you think “middle class” means stability and comfort. Er–have you ever read any postwar American fiction? In the 1950s, the middle class was about doing without and aspiration.
You’re referring to the upper middle class, the professional class of prosperous lawyers and doctors, not the regular-Joe middle class.
As for this: “And conspicuous consumption has caused a lot of otherwise-available funds to turn into gadgets and luxury items.” No. No no no no. Consumer goods are MUCH cheaper now than they’ve ever been. Please don’t give in to the “we didn’t have cell phones in 1982” mindset, as in real terms, cellphones are MUCH cheaper than phone service in 1982, as are all consumer goods. Housing and health care are the real killers of middle class prosperity, NOT consumer goods. Which you did touch on a little, but mostly your argument was pretty scattershot.
Or again, people were saying “We only had one TV!” Yes–because your one TV cost $1000 in 1985 dollars. I paid something like $1800 for a 35″ TV in 1988.
Today, a large flatscreen costs a fraction of that, not even adjusted for inflation.
Sigh. Come on, people.
Nope, can’t say I’ve read any postwar fiction. I know during the war deprivation was the name of the game, but everything I’ve ever seen implied that the ’50s let people loosen their purse strings a bit after being so deprived in the war. If that’s not the case, then I’m sorry for misunderstanding. But that’s the popular image that I’ve always seen. Not to mention that I’m not necessarily thinking of the ’50s as the model for the middle class. It wasn’t a specific zeitgeist that I was thinking of but instead more the general idea of middle class that has emerged over the last few decades.
Yes, housing and health care are the major culprits, but I do think consumer goods — while cheaper than they used to be — have proliferated to the point of being at least part of the financial problem. In the ’80s, gaming consoles were less common and, I believe, cheaper even accounting for inflation. Games were about the same (accounting for inflation) but there were fewer released, so it cost less to keep up on the latest ones.
Computers weren’t as common, though they were obviously more expensive back then, and of course now a lot of households also have a tablet in addition to the smartphone and computer. And I find it hard to believe that phone service was $80+ a month for most people, which seems to be about what most cell phone companies charge for data plans now. So the average family spends $100+ a month if they have two kids to supply (and that’s not counting buy four $800-1,000 smartphones). I know in the ’80s as I was growing up, $0.10 per minute was what most companies were offering up in Alaska, so I assume it was the same in the lower 48. Assuming a base rate for phone service of $20-30 a month, you’d have to spend at least 8-10 hours talking long distance to have a phone bill equal to most single user data plans. More if we’re talking family plans.
Yes, TVs were significantly more expensive. (Though not if you’re keeping up with the latest and greatest these days — those are still $1,000-3,000.) But cable wasn’t. It’s gone up 188% since just the ’90s, according to an article in The Atlantic. Now, cable TV prices could have taken a price dip between the ’80s and ’90s, but most prices in general have gone up steadily since the ’80s (consumer electronics being the exception to the rule here). So I’m going to assume that prices have risen steadily since the ’80s. But I’ll allow that I could be wrong in doing that.
And streaming is certainly cheaper than cable, but a lot of folks have both cable and streaming these days rather than just sticking to streaming. Or they choose enough streaming channels that it’s still $40-50 a month, or more than cable was in the ’90s (and probably ’80s).
And of course cars have risen exponentially in price over the last few decades. I remember my mom bargained for her Nissan Sentra back in the ’90s and got it for under $10,000. I think it was closer $8,000. Now, under $20,000 is considered a good deal.
So I think consumer goods are an issue, though obviously not as big of one as health care, housing and tuition (and probably daycare, but I haven’t researched inflation-adjusted pricing for that).
Huh? You think cable wasn’t $40 a month in the 90s? It was more than that in the 80s, not even adjusted for inflation. And yes–look at old ads for the cost of phone service. AT&T was the only provider and they charged a ton. Back in 1987, I remember, my phone bill was about $20 a month not including long distance. With inflation, that’s $45 a month now and again, not counting long distance which could easily add another 30-40 to the bill.
As for games consoles, “In the early ’80s, we had the release of the ColecoVision and the Atari 5200 in 1982. The ColecoVision retailed for $200 ($475.06 in today’s dollars), while the Atari 5200 retailed for $269 ($638.95 in today’s dollars). ”
Yes–we do have things that only rich people had then, but they’re CHEAP now.
Look at the prices of major appliances some time too–they’re practically the same now as in the 1970s, not even adjusted for inflation.
Sorry, but my point stands. Consumer goods are much cheaper now than they were. And cutting out $20 a month for a kid’s cell phone bill isn’t going to vault someone from working class to middle class. This is just lazy thinking.
As for postwar fiction, try reading it. The idea that the 50s were a land of security and material goods doesn’t hold up.
Thanks for clarifying some of those points with actual prices. It helps.
I’d also like to point out that consoles debut quite high and often have price cuts. You may recall that the PS3 came out for $600. It came in at $400 or $500 for the PS4 if I recall. I believe the Xbox debuted for around $400 as well. So I guess console prices have stayed about steady when accounting for inflation. But the point is that consoles are now a standard fixture in most houses, whereas a minority of folks had them — same with computers — back then. And far more games “need” to be bought these days at nearly $70 a pop. So even if consoles were cheaper today, they’re no longer considered upper class things. They’re standard for the middle class, which means an additional expense that didn’t used to be there.
And no, cutting $20 a month for a kid’s cell phone bill won’t make a huge difference (though with 2-3 kids it starts to add up — but I’m not advocating leaving your kids without cell phones). I’m simply saying that the proliferation of even cheaper consumer goods does take its toll, especially now that they’re so prevalent.
According to the article I cited, by the way, the average cost of cable in 1995 was just over $22 — which would be roughly $50 in today’s dollars. Whereas the average cable bill now is right around $100. That’s a difference of $600 a year. Coupled with those kids cell phones that they’re paying for — assume the average family has two kids — that’s $1,000 a year.
And yes, $1k isn’t enough to vault you into upper class, no, but I wasn’t saying it would. I was saying that the sheer number of expenses for the average family has risen as more and more things — even if they’re cheaper now — have become standards of middle class-ness rather than hallmarks of being upper class or at least “well off.” And once again, that’s not even touching the cost of things like cars, which result in an average payment of $479 a month. That’s a pretty big drain on a middle class income.
All of that being said, I agree that housing and health care are the major issues at play. I just don’t think we can discount the proliferation of goods and services now available and considered routine expenses.
Rose, you are exactly right. I couldn’t agree with you more.
I replied to Rose with some of my own points, in case you want to read/react to those. There are some cases where I could be wrong, of course, because I was a kid in the ’80s. But I do think (and think I backed up my argument) that consumer electronics ARE part of the problem. Just not as big as housing and health care.
Well, all I can say is, having raised my three kids in the 80’s I remember things being more expensive than now. Electronics were and so was the phone bill. For us, and our large extended family with everyone living in a different state, 8-10 hours of long distance charges was nothing. Usually it was double that. Clearly we like to talk. I can laugh about it now because we all seemed to feel that was an absolutely necessary and valid expense at the time… haha… but what a difference now with a cell phone and no long distance fees. My kids are grown and out of the house now and my income is less, but I feel there are so many more ways to find deals, bargains, etc. that allow me to have ”the things” without breaking the budget and live very comfortably. My parents could not have done this back in their day. This has been a really fascinating discussion on what is considered to be middle class, upper middle , etc. I hadn’t given it much thought before. It seems that everyone has their own ideas of what middle class is, or should be so that is interesting to me. For instance, I’ve always assumed an income of one million to be the benchmark for being considered rich. I guess it’s all relative. Fun discussion, though. There’s a lot to think about.
Thanks for your input on phone bills and electronics. I can see how having extended family in a different state would definitely hike up the phone bill. And you’re right that there are a lot more ways to find deals now. On the other hand, that leads to having more things if you’re not careful (or if you just want them and can fit them in the budget, the way you have).
Glad you enjoyed the discussion. It’s definitely given me some stuff to think about!
There was nothing scattershot about your post, Abby. It’s a combo of housing and medical care costs combined with the proliferation of electronic “must have” gadgets that is eating up middle-class paychecks.
That, and traditional middle-class jobs are disappearing rapidly. We are becoming a service economy instead of a manufacturing economy. Between jobs being outsourced overseas and technological advances, it becomes more and more difficult to find good paying jobs. And let’s not forget wage stagnation.
Oof, yes wage stagnation is a biggie. If it can’t or can barely keep up with inflation, it’s just not going to do much for how the dollar stretch. Good point about traditional jobs disappearing too. Mom and I were talking about this subject on the phone the other day, and she said that there used to be something like five factories in her small town where you could walk right in and get a job. Not so anymore. I’m not sure even one survived, actually.
And thanks for saying the post wasn’t scattershot. That one admittedly stung a little.
As you know, I’m a fan of putting middle class in the context of quintiles, as a way to combat the murkiness around what we mean when we refer to the middle class.
https://www.donebyforty.com/2019/06/middle-class-…
I like your take that, from a conceptual standpoint, the sort of things a middle class was supposed to bring (stability, comfort, and a better life than your parents had) might not be as attainable. These are harder things to quantify but I like where you’re going with this post, Abby.
I personally feel like we have those things. But, also, I don’t think we’re middle class: I think we’re wealthy AF and nowhere near the middle of anything when it comes to our income or net worth.
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Yep, I have to keep reminding myself that I’m upper middle class now. I’m not what I would consider rich, but I’m definitely not too far from it. It’s a weird concept for sure — especially having been on disability, bringing in $8,400 a year.
I do think that what we now define as comfort is not necessarily attainable. Partially because of wage stagnation and increasing prices on housing, health care, etc. Partly because we now define comfort as having an awful lot of gadgets and services that the middle class used to not have. Whatever the reason, the reality is that being middle class now (more often than not) means some struggle — no matter what we see in our mind’s eye when we think of “middle class.”
I do love how you break things down into quintiles. I think it’s a much more accurate representation than saying that $40,000ish to $122,000ish are in the same class of earners.
i consider myself to have grown up squarely middle class. it was a one income from a state blue collar job. the income didn’t matter as much in a low cost of living rural area. the class part we were lacking was a certain sophistication about how things worked. we really were hicks and you can’t quantify that quality but i think it matters.
i was likely considered somewhat “poor” on paper for most of my 20’s and was a proud member of the debt cycle club. i went from feeling middle class and just ok to feeling rich when i landed this factory job and could pay 450 cash for a sweet bicycle. it sounds a little absurd but it’s true.
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Hey as long as you felt middle class, I guess that’s all that matters. Though maybe not if you got into the debt cycle club. (Perhaps with the bicycle? A cycle with a cycle?)
I think our middle-class lies in the vast gulf between the Haves and the Have Nots. It’s difficult to pin them down because they’re defined by what they lack, not by what they share.
Haves: The 1% have enough wealth that they they are income-independent and completely immune to survival concerns. “Poverty” to them means being down to their last $5 million. The Upperclass do not always have enough tangible wealth to be income-independent, but they do have a wealth of connections and education/knowledge that protects them from survival concerns. They can usually handle setbacks without long-term impacts, and “Poverty” to them would mean having to downsize their house/condo.
Have Nots: On the other side, our Working Class are the inspiration porn of poverty. Holding down a job (or two or three) to stay afloat, they are balanced on a tightrope over survival concerns. Usually they just barely manage to make ends meet but it’s a hard struggle with little room for error and there’s not much security. Then we come to the actual Poverty class. Income is irregular or non-existent; they often experience inadequacies in housing, food, & medical care; and have no security. Doing everything right rarely makes things better, but a single misstep can make things crushingly worse.
So the Middle class is (as the name suggests) an amorphous blob in the middle of these. They lack the wealth of the 1%, but rarely experience the survival deficits of the Poverty class. They have some of the Upperclass network resources, but not enough to actually join it. They have some of the caution of the Working class, but with enough resiliency to withstand mildly to moderately bad luck.
Excellent way to frame it, I think. As you said, it’s more about what they don’t have — for example, no income independence, but also no poverty conditions — that define them. And when you’re defined by what you lack… Well, it’s pretty tough to pin down what you ARE.
Thanks for your two cents!
First, some data as background: https://www.aei.org/carpe-diem/chart-of-the-day-o…
Next, my interpretation of that, through the lens of my family.
Of course middle class exists.
Move to Canada.
I say that somewhat flippantly, but policy choices matter. Is there ever stranger status-chasing and consumerism? Absolutely. But you can skip that. It’s harder to skip the big costs of health care, education and childcare. And “retirement”, which is arguably a newer “need”.
A significant amount of the “cost of housing” increase we see is an attempt to salvage a shred of opportunity for your kids within a class system that is increasingly ossifying, when so many school districts were decimated by chronic underfunding stemming from generations of racism and segregation. This is also what is underlying the geography of dramatically unequal opportunity.
I hear you that in the past people “needed” far less tech. But did we really spend less? I mean, my Dad bought our first home computer for $2000 in (about) 1991. That’d be ~$3,800 today, which buys you a lot of PC power (my SO recently bought a new PC for $3,000 and it’s pretty extravagant!). My parents bought me a keyboard, because we weren’t about to invest in a piano, but I guarantee that $100 was a bigger factor for them than the $100 I spent on a tablet for my kiddo. We had a fire when I was 12, so I learned about “replacement value” in insurance, and the effective rate of technological value for stereo systems was mind blowing in those years. Maybe I just grew up in a very tech-oriented house? I know my father’s house was the first one on his block to have color tv. And even in stories of the 40s and 50s, I’ll bet you people went to the movies and theatre a lot more than today- Netflix might seem like an extraneous luxury, until you realize it’s filling the same niche that sending kids to the movies all day in the 40s did. Yeah, that cost 10 cents for a ticket, but that’s the equivalent of $1.62 today, a lot more than Netflix.
And at the end of the day, the tech isn’t going to budge much of our budget. We can’t buy two tablets every week. That’s what daycare costs us (and we pay a LOT less than plenty of people). And we certainly aren’t buying 1.5 tablets every *day*, which is what U of Chicago tuition is running (my grandfather went there).
To pay for college, my grandmother went back to work as a nurse. Can anyone imagine a nurse’s salary paying for two college tuitions, including one high cost private university (Northwestern) and two on-campus living costs??
Although, paying for cancer treatment did essentially bankrupt my grandfather, so maybe the cost of ill health isn’t so much “higher than ever” as “still intolerably high”.
My parents had very little in the way of “retirement savings” and with my Mom’s pension they didn’t really need it.
It’s the childcare, education, healthcare and retirement that render the perch of the middle class so precarious. And these type of things are not *this* hard to afford in every advanced nation.
Amen
(though on average the cost of ill health is larger, but at least we’re better at treating many things)
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True, I think we definitely pay more than we used to — at the very least in deductibles and premiums — but at least medicine IS helping people live longer for those amounts. That’s… something.
All well said, but yeah it sounds like you grew up in a very tech-oriented house. Then again, not every house has a tablet in addition to a computer and smartphones so it may all even out. On the other hand, tech is more disposable now, what with constant upgrades. It used to be that you kept the same computer until it died, but now a lot of people switch computers every three to four years. And with smartphones/tablets, updates (especially with Apple it seems) mean your device could be defunct within a few years.
As for going to the movies, yeah it was a weekly thing, but at $1.62 per person — even for a family of four — that’s significantly less than the $8-10 it costs now for kids/adults. Meanwhile, there are more movies than ever to choose from. Even if we’re down to one movie a month (or even every two months), we’re spending more when we go. And yes Netflix alleviates some of the need, but not all of it.
At any rate, the now-lack of pension in most jobs has definitely hit the American worker hard. Daycare is an extraordinary cost. And of course housing. While copays may or may not be higher than they used to be, deductibles are higher and premiums cost more or are covered less by a lot of employers. So I’d say healthcare is definitely higher than ever.
Interesting point about the housing stemming from racism and segregation. I hadn’t thought about that. Definitely food for thought and a fascinating insight.
For the movie thing, I feel like people used to go a lot more before TV was in all the homes? Again, maybe my Dad was just really weird (he used to manage a movie theatre as a teen and set up a film night at his college).
Sidenote: “copays” didn’t exist as recently as the 90s, at least in the context of healthcare-from-my-Mom’s-union.
In many cases, major things we think we need to spend money on to have a “middle class life” are not luxuries, but neither were they ever universal. College was not as common an expense, retirement savings are a need only if you have both a long life and social security/pensions are going to fall short, daycare is a much more common need in two-earner families. One interpretation is that college and dual-earner careers and nice houses in the suburbs are “just” status competition in the same way nice cars are. Another interpretation is that society has changed, and policy hasn’t kept up to allow middle class households to have a sense of ease that was not uncommon a generation or two ago.
I have particularly Strong Feelings about the cost of housing and how it intersects with education systems and race and how we *artificially* limit opportunities, but I probably have ranted enough. Suffice it to say definitions of middle class focused on achieving a measure of comfort and security resonate with me, definitions that focus on status per se do not.
Makes sense overall. I think when things become so ubiquitous, it’s hard to remember that they didn’t used to be universal — and still aren’t. Hell, I forget that a fair chunk of poor people still don’t have fridges, let alone microwaves, based on some polls done in past years. That’s just about inconceivable to me, I’m so ensconced in a middle-class mindset.
And yes, daycare didn’t used to be as common an expense because so many women stayed home. As it’s become increasingly common to have both parents working, that huge expense has become a necessity. Especially in this era when leaving your kids at home alone at too early an age could get a call in to Child & Family Services.
Late to this discussion, but I need to point out the “shrinking of the middle class” was a HOT topic in the 2016 election. It has become a political arguing point. As evidenced in the article, your post, and just about every comment here. It’s what’s behind the push for socialist ideology today. In spite of record setting markets (I watch market news every day), lowest unemployment across the board in 50 years, and lowest interest rates in roughly the same. There are, in fact, plenty of good paying jobs in this country. There are more good paying trade jobs than there are applicants. Some things cost more today than they did in the 1970s and 1980s when adjusted for inflation, and some things cost much less. Our phone bill in the early 90s averaged $250 per month as an example.
My parents each grew up in middle class homes; my mom is 86. My husband and I grew up in middle class homes; I’ll be 58 in a matter of weeks. What’s changed is an expectation of what being middle class means. For my 43 yr. old nephew and his family, as well as my 41 yr. old niece and her family, the middle class lives they lead are equivalent to what would have been (at a minimum) upper middle class when I was a child… wealthy when my mom was a child. Their homes are much larger. The HGTV effect is that bathrooms and kitchens are comparable to wealthy homes of the past. My niece just had a pool, jacuzzi and fire pit put in to their back yard. My nephew lives in a subdivision that includes walking trails, bike trails and a river walk. They get new cars almost as soon as the “old” ones are paid off. Their kids are in expensive sports programs. Have all the latest stuff. And that’s considered “normal” for middle class folks today. Debt is considered “normal” to that age group and younger. Not so in my mom’s day.
Yep, part of the problem could definitely be that lifestyle has inflated to the point that “middle class” is now the same as “upper middle class” was in the past. (I guess it adjusts for inflation too?) I don’t know that pools, jacuzzis and fire pits are considered squarely middle class (maybe pools if you’re in Arizona, where even older houses tend to come with them); but houses have definitely gotten nicer — and more expensive along with it.
I think debt is considered normal because there’s an assumption of how lives are supposed to look and spending matches that, even when it doesn’t match salaries. But as others have pointed out, housing and health care are big players in this too. As I believe I say in the post, it’s no longer uncommon to see $800 to $1,000 rents. That’s simply too much for a lot of people, but as long as owning a house is more and as long as people are flocking to the city, the market will bear overpriced apartments.
We have relatives in the Phoenix area, including an aunt that lived in Scottsdale for decades. There were FAR fewer back yard swimming pools 40-50 years ago. We were just in AZ in May. Newer apartment complexes throughout the metro area are almost exclusively what used to be called “luxury apartments”, which (of course) drives up the price of all available rentals. Phoenix metroplex has exploded in growth in less than a decade as businesses and families flee California for the better overall economics in Arizona, Texas, Nevada, Tennessee and other states. My point is most articles on Yahoo–and any mainstream media–has an urban populous in mind, predominantly in NY, NJ and CA where income inequality is greatest and where the middle class is moving out. It isn’t anywhere near an accurate picture of the U.S. as a whole. And it seems to ignore all current financial news as well as the expectations we now have as a society. We want more. A lot MORE. But is that a reflection of the economy or benign, conditioned dissatisfaction?
Yep, almost everything new is a “luxury” apartment. Especially the ones downtown, but in general as well. Who would want to build the next mediocre, mid-range rent building? No, it has to be the latest and greatest — and the new rents on the buildings reflect that. The same thing happened in Seattle. You had to go to the older, more rundown buildings to get a decent rent.
I’ll take your word on the swimming pool situation. Most of the houses on the market when I was looking had them but, of course, they could have been additions after the house was initially purchased. I actually desperately looked for a place without a pool because I know how much upkeep would’ve cost (financially or physically, if we tried to do it ourselves) and that we wouldn’t use it enough to make up for it.
“Conditioned dissatisfaction” is a good way to put it, I think. We’re taught to want the latest and greatest, so as soon as the newest phone or tablet comes out, ours just doesn’t seem cool enough. Or the latest gadget just is too tantalizing to skip out on, and we’re dissatisfied when we do. (Less so with frugal people, but we’re susceptible to it too, of course.)
Class will always be where you sit in the hierarchy between rich and poor – in terms of wealth, influence or power.
the emergence of a large middle class coincides with a breakdown in traditional hierarchies and the result is that we don’t genuinely know who has higher status than us in society.
Is the plumber lower class – but he charges $100 an hour and sends his kids to private school or the school teacher who is university educated but takes home a third of that and still have the student loans to pay off?
Being middle hasn’t much to do with whether you have money or not or how much you earn. You can buy yourself into thinking you are middle class but if it’s not backed up by income or cash then you’ll be just keeping up with the Joneses and will just get in debt.
Interesting points. I suppose blue collar workers tend to be considered lower class automatically, even though some of them make very good livings indeed, whereas a university degree does often confer a sense of middle-class-ness onto people.
I think the key is not to worry who has more status than we do. It’s the only way to save our sanity!
The financial services industries has classifications which are fairly standardized and used to determines services & marketing to clients. The numbers vary but the following give a sense of magnitude.
Mass Market – liquid financial assets below $250,000
Affluent or mass affluent – liquid financial assets between $250,000 and $1,000,000
High Net Worth – liquid financial assets between $1,000,000 and $5,000,000
Very High Net Worth – liquid financial assets between $5,000,000 and $30,000,000
Ultra High Net Worth – liquid financial assets above $30,000,000
HNW corresponds to the top 10% by net worth, VHNW to the top 1% and UHNW to the top 0.1%.
Interestingly, $250,000 in liquid net worth would put an individual in approx. the 75 percentile so mass market is the bottom 75% of the total market.
Liquid assets are definitely another way to gauge middle class. But I’m not sure lumping in everyone with under $250k in liquid assets is the best way to determine middle class. I’d say people with $100,000 in liquid assets are doing pretty well (assuming “retirement” isn’t considered liquid, and I can’t imagine it is) and probably aren’t middle class.