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?
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.
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).
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?