patrick.net

terriDeaner says

BINGO.

Yea going by your chart middle class wages would be $35k-73k in 2006 which probably hasn't changed much since then. This makes lots more sense and I'd agree with it.

SFace says

The context was what is middle class for a family of four?

The overwhelming majority of house holds make less than $75K a year. ~73% according to the wiki.

http://en.wikipedia.org/wiki/Household_income_in_the_United_States

Median for households is like $45K. So the $35-73K estimate is still pretty much dead on.

Only 15% make $100K or more....

SFace says

The context was what is middle class for a family of four?

OP does not specify this.

SFace says

A household includes a 24 year old non-dependent and/or 65+ year old retiree. Because many households consist of a single person, average household income is usually less than average family income,

Again, many types of household can be (were) middle-class, not just 2 parent 2 kid types.

SFace says

San Bruno is a median type city in the SFBA,

How about thinking outside the Bay Area box? It is already been established that it is NOT representative of the rest of the country.

SFace says

San Bruno is a median type city in the SFBA

You're reasoning and math is solid except for one thing: middle class is a general term that encompasses the entire country and you're trying to mash it down into a city sized thing and it doesn't work that way.

No one talks about what is middle class in say the Rust Belt vs. what is middle class in San Bruno, they just say the Rust Belt is depressed and people there tend to be poor as fuck because the wages are so low.

terriDeaner says

100K+ is definitely more upper class than middle class.

Upper class includes people making $1B+ per year.

$100K can be an upper class income, e.g. the capital return on $2M -- but it depends on the discretionary household income.

Once taxes, housing, insurance, retirement savings, food, clothing, car expenses, etc come out, $100,000/yr doesn't go so far in some areas. . .

$100K in any area is certainly towards the upper-middle class. But far from upper class if you are the typical wage slave.

Bellingham Bob says

Upper class includes people making $1B+ per year....$100K in any area is certainly towards the upper-middle class. But far from upper class if you are the typical wage slave.

Congrats for rediscovering the wealth disparity issue. Just because the top .1% or whatever have sucked up a vastly disproportionately amount of the wealth doesn't mean that $100K isn't upper class.

Bellingham Bob says

$100K can be an upper class income, e.g. the capital return on $2M -- but it depends on the discretionary household income.

Once taxes, housing, insurance, retirement savings, food, clothing, car expenses, etc come out, $100,000/yr doesn't go so far in some areas. . .

Good point. What we need here is a good definition of 'effective income', particularly in the context of 'affordability' metrics.

lb51 says

Where I live, $111,000 is the max income to qualify for affordable housing for a family of four. That number qualifies for a 900 sq. ft. 2 bedroom apartment that rents for $2000.00 to $2300.00 per month.

lb, how does this work? Do you mean there are rental subsidies for families making this much? Or reserved housing at these rents?

I think something that is missing here is that "middle class" (to me at least) refers to a lifestyle and not where one might fall in terms of percentile of income in a given group. For example, I believe that the median income for Bangldesh is about $5,000. Bangladesh has a population of about 150 million people. Assume that 30 million or so people in Bangladesh have incomes that place them in the middle distribution, say $4,000 to $6,000. Would we then say that Bangladesh has a "massive middle class" consisting of 30 million people! Of course not. These people are poor not middle class, and I bet only persons with incomes in the top 5% of so in Bangladesh could actually live what we refer to as a middle class life. Making $1,500 a year in Somalia might put you at the 50th percentile of incomes in Somalia, but that does not make you a middle class person. It makes you poor.

I think refence must be made a a middle class lifestyle (a 4-2 home with 2,000 square feet, two moderate cars, a reasonable allowance for clothes and vacations, etc). Based on all that, somehwhere arounf $70-120K seems about right to me nationally, while $100-150K is probably closer for the Bay Area.

tjjenkins says

For example, I believe that the median income for Bangldesh is about $5,000.

You can't compare what constitutes middle class by wages across nations. There are all sorts of factors outside of wages that will effect what amounts to middle class like style of government, taxes, currency status, etc.

SFace says

for family of 4: 74,801 in CA
about 68,000 nationally (eyeball test)

So still pretty much in line with wages and national household numbers. Thanks for digging this up though.

tts says

amount of the wealth doesn't mean that $100K isn't upper class.

$100,000 gross
Less 15% off the top for payroll taxes
Less $16,500 IRA and $5000 IRA
Less $20,000 for income taxes
Less $20,000 for rent
Less $10,000 for car(s)

leaves $13,500 a year discretionary income.

"Upper class" my ass.

tjjenkins says

I think refence must be made a a middle class lifestyle (a 4-2 home with 2,000 square feet, two moderate cars, a reasonable allowance for clothes and vacations, etc). Based on all that, somehwhere arounf $70-120K seems about right to me nationally, while $100-150K is probably closer for the Bay Area.

So this is where the idea of an 'effective income' comes in. To afford all of the thing you list, you need some disposable income above what is ABSOLUTELY needed (still sort of hard to define...) in terms of housing, food, taxes, health care, child care/tuition, fuel + energy costs, etc.. Once you subtract the cost of the absolutes from the income (plus available credit as well, perhaps), you will get a much better idea of who can afford the 'middle class' lifestyle you describe.

Such an 'effective income' should help subtract out the geographic patterns that otherwise heavily influence income levels and living expenses.

tts says

You can't compare what constitutes middle class by wages across nations. There are all sorts of factors outside of wages that will effect what amounts to middle class like style of government, taxes, currency status, etc.

But probably not at international scales, as tts suggests.

SFace says

http://www.cec.sped.org/Content/NavigationMenu/SpecialEdCareers/ESTIMATED_STATE_MEDIAN_INCOME.pdf

for family of 4: 74,801 in CA
about 68,000 nationally (eyeball test)

Yes, thanks for the link.

Bellingham Bob says

"Upper class" my ass.

This clearly highlights the disconnection between what income levels exist in the US, and what they represent in terms of lifestyle. That so many families and/or households make LESS THAN 100k tells us that most Americans are no longer living the 'middle-class' lifestyle of the previous two generations.

Bellingham Bob says

leaves $13,500 a year discretionary income.

"Upper class" my ass.

OK now run those numbers for someone who makes $55K a year or less and tell me again that $100K isn't upper class.

Pro tip: that $55K wage earner likely won't have a IRA or savings of any sort to fall back on and their car is probably a cheap econo box or fairly used and their discretionary income will still be much less as well. They'll also live in a mediocre to down right crappy area, especially in SF or anywhere in SoCal for that matter. The differences are huge, HUUGE, for you to downplay this is incredible.

Bellingham Bob: I do not think a 100K income could even remotely qualify one as upper class. What kind of home does an upper class person live in? What kind of cars do they drive? Where did they and there children go to school/university?

I think "upper class" refers to a person that lives on a large estate (or luxury condo in a place like SF or NY), has multiple luxury automobiles (perhaps even a driver), belongs to exclusive country clubs, probably went to Harvard/Yale etc., and an exclusive prep school, and has substantial financial security..

I think $500K is the bare min. for an upper class life, and $1M is a better floor.

tts says

That is a problem with bubblish or still boomed out home prices and not wage classification. $100K is in the top 5-10% of wage earners nationwide so no way in heck could it be considered middle class.

Yeah, but those 100K a year jobs tend to be clustered around big cities... More 100K earners per square mile in a big city than elsewhere.

tjjenkins says

I think $500K is the bare min. for an upper class life, and $1M is a better floor.

There is upper class and then there is wealthy or rich and past that is super rich. I do believe you're talking about the rich here.

Los Angeles Renter says

Yeah, but those 100K a year jobs tend to be clustered around big cities... More 100K earners per square mile in a big city than elsewhere.

The thing is most people live near or in big cities. Really the vast overwhelming majority of them too.

"As of 2011, about 250 million Americans live in or around urban areas. That means more than three-quarters of the U.S. population shares just about three percent of the U.S. land area."

http://en.wikipedia.org/wiki/Demographics_of_the_United_States#Cities

This is even more true in some countries outside the US like Japan where the population density is insane compared to the US.

edit: oh and its been true for decades that most people in the US live in or very near cities. The big shift from agri to city oriented populations really picked up steam around the late 1800's and was consolidated post WWII if I remember my history books correctly. So there isn't some sort of new demographics shift at play here either.

Los Angeles Renter says

Yeah, but those 100K a year jobs tend to be clustered around big cities... More 100K earners per square mile in a big city than elsewhere.

Again, more confounding issues with geographically linked demography.

tts says

tjjenkins says

I think $500K is the bare min. for an upper class life, and $1M is a better floor.

There is upper class and then there is wealthy or rich and past that is super rich. I do believe you're talking about the rich here.

Yep. 100K/yr in any ole' small town in flyover land would make you one of the wealthiest families in town, 500K/yr would make you one of the wealthiest folks in the tri-county area, and 1M/yr would put you into the regional (and potentially national) urine-hoarding, casino-owning financial elite.

tts says

The thing is most people live near or in big cities. Really the vast overwhelming majority of them too.

yes and no. . .

the sum of the 275 cities with population over 100,000 only comes out to ~80M . . .

http://en.wikipedia.org/wiki/List_of_United_States_cities_by_population#Incorporated_places_over_100.2C000_population

The idea and the definition of middle class was highjacked by corporative thinking in America.

Historicaly (since late middle age) it had nothing to do with income. It was about economic and social independence.

It was about being neither a bond nor a lord (landlord mostly). It meant that most of your income comes of your own labor/trade rather that someone elses; and most of your labor contributes to your income rather that to someone elses income. You could be a very poor farmer (but owner of your land) or a very rich lawer. Other examples of middle class members are millers, smiths, doctors, artists, actors etc.

In this sense the idea that a corporate manager or a public school teacher may think he belongs to middle class is a non-sense. Even more ridiculous is to consider a home debtor as a middle class member, no matter what his income is.

Bellingham Bob says

yes and no. . .

I guess it depends on what you think of as "close to" and wether that matters or not really effects the numbers. Given the wiki's info. though (ie. 3/4 of US pop. in ~3% of land) I think its pretty relevant in showing the effects of wage localization to be over blown.

I don't think you can just look at a graph of US income distribution to figure out what income range constitutes the 'middle' class. You really need some other metric, some measure of the lifestyle afforded by a certain income in a certain area.

michaelsch says

The idea and the definition of middle class was highjacked by corporative thinking in America.

This is an interesting point but I don't believe anyone uses this definition you're giving anymore for "middle class", certainly since WWII and maybe even post Civil War. Some language and social drift over that time period is reasonable and common usage should be observed when discussing this stuff anyways so as not to confuse everyone.

Matt.BayArea says

You really need some other metric, some measure of the lifestyle afforded by a certain income in a certain area

No you don't. Middle class is a term applie across an entire country and not a county, city, or state term. It loses all meaning once you start breaking down by localization since everyone's definition of middle class then becomes different.

edit: you can argue that certain places might afford you a better standard of living due to the local economy but that is totally different from class. Standard of living is after all somewhat wishy washy.

tts says

No you don't. Middle class is a term applie across an entire country and not a county, city, or state term. It loses all meaning once you start breaking down by localization since everyone's definition of middle class then becomes different.

edit: you can argue that certain places might afford you a better standard of living due to the local economy but that is totally different from class. Standard of living is after all somewhat wishy washy.

So again, we come back to the issue that 'middle-class' can be defined by both income level (money in), AND by lifestyle/standard-of-living (how money goes out).

I agree that the money in is best defined on a national level - we are talking about the AMERICAN middle-class, or lack thereof, after all.

But even though measuring how the money goes out is indeed slippery, I think it is important. It is hard to quantify... take for example discretionary spending. It seems like a fuzzy metric; does it really reflect more what one CHOOSES to spend on housing rather than what one CANNOT AVOID spending on housing? Ultimately some things that some folks consider essential, baseline spending constitute luxuries for others.

(Oh yeah, I see you commented on discretionary income above...)

I think many ideas are being conflated.

It is true that a family that makes $200K a year probably is closer to a family that makes $20K a year than one of the top 1000 households in the country, it doesn't make the $200K family middle class (no matter how many times politician's consider them entitled to "middle class tax cuts").

I think the quintile method is good. As of 2004 (if anything, likely lower than this now for the non-top quintiles - note this is household income, not individual income - individual income is lower than this)

Lower class: household income $0/year to $18,500/year - fully 20% of households.

Lower-middle class: household income of $18,500/year to $34,738/year - another full 20% of the population.

Middle class: household income of $34,738/year to $55,331/year - another full 20% of the population.

Upper-middle class: household income of $55,331/year to $88,030/year - another full 20% of the population.

Upper class: household income of more than $88,030/year - this represents the top 20% of the population.

I think it is legitimate to consider middle class as either just the middle 20%, or as a general term counting the lower-middle and upper-middle and getting a full 60% of the population (skipping the lowest 20% and the highest 20%).

But I don't think it is legitimate to consider folks in the top 20% as part of the middle class. It stretches the definition of middle too much.

You can further divide the upper class into the rich, the filthy rich, the super rich, the masters of the universe or whatever divisions you want (top 5% are those >$157,176; top 1.5% are those >$250,000; etc.). And there is a point that those making $95,000 aren't that similar to those making $10,000,000; but that doesn't mean either are "middle class". That labeling is disingenuous and designed to confuse.

Compare to the OP of "Using only income as the marker, which is of course imperfect for many reasons, I would say that $40,000-$70,000 is lower middle, $70,000 to $120,000 is middle, and $120,000-$250,000 is probably upper middle". Now I'm using household income and he's using family of 4 but that shouldn't effect things too much as likely in OP's family of 4 there were only at most 2 parents working. But that division has 43.08% living in poverty/the lower class (I.e., below the middle class - below event the "lower-middle"). That division has 25.64% of people in the "lower-middle" bucket. Less than 15% of the people in the middle-middle bucket. Less than 15% of people in the upper-middle bucket. And only 1.5% of people above the middle class. So 43.08% of people are below the middle but only 1.5% are above? Some middle!

In practice I think a bunch of people define middle class to mean anyone who makes what I make is middle class (or maybe anyone who makes between half of what I make and twice what I make is middle class).

A different interesting definition of middle class might be the middle class (and lower class) are those people for whom they get more than $1 of benefit for each $1 of taxes they pay. The upper class are those who get less than $1 of benefit for each $1 of taxes they pay.

Bellingham Bob says

$100,000 gross
Less 15% off the top for payroll taxes
Less $16,500 IRA and $5000 IRA
Less $20,000 for income taxes
Less $20,000 for rent
Less $10,000 for car(s)
leaves $13,500 a year discretionary income.
"Upper class" my ass.

You forgot the rug rats..

A major magazine had an article saying, if I recall correctly, the upper midddle class has home in nice area, country club membership, private schools, european vacations and luxury cars. And I am assuming savings after all that spending.

John Bailo says

I think the change has been from an American Middle Class with everyone else in the world much poorer, to a global Middle Class.

So, previously, just by being an American citizen, you had access to a certain wealth and status.

But now, that has spread worldwide. Suddenly, there is a manager in India who (rightfully) feels he should command not equal...but greater status than line workers in Kentucky.

That's what's hard for people to deal with.

http://jabailo.tumblr.com

That's the party line, but somehow the American professional classes rarely shared in this global competition with overseas professionals. When they did, it was only at the margins, work that was usually performed by entry level workers. In short, certain groups were protected from international competition, because they had lobbyists, while those without a 4 year degree were told their struggle was merely 'globalization' evening things out. And to make matters worse, that modern day Indian manager with rising status often doesn't even make what that Kentucky line worker used to make 30 years ago when adjusted for inflation and benefits. The point of the exercise is to increase the wealth and power of the professional classes and the hereditarily wealthy, not global competition and market efficiency. That's the vocabulary they use to justify it to the masses as they are still a tiny segment of society, whichever continent they hail from.

Actually even that manager in India is getting screwed, same thing for the manager in China or Mexico for that matter.

Globalization was supposed to spread the wealth around a bit more evenly but all it has done is create a tiny few very very rich people in the countries that have participated in it.

It has also made it very easy for Capital to abuse workers' rights. And now when a country tries to enforce some rules or if the workers' wages in a given country start to get too high Capital merely leaves the country and the jobs are outsourced to the next cheapest place. This is why jobs are now leaving China and India and going to SE Asia and Mongolia*, and even believe it or not places like N. Korea**. After that they'll probably start outsourcing to Africa...

The labor conditions in these countries are just awful as are the wages. Sure technically they make more and have access to reliable food supplies which is better than what they did working as subsistence farmer peasants in a field, but the standard of living for the avg. worker is often worse or about the same as our avg. poor homeless person.

That is why you are starting to hear stories from time to time of Chinese workers committing suicide or rioting and hanging their managers now. There have been massive demonstrations in India about the corruption in the government too but you don't hear much about those at all in the news. They're starting to realize they're getting screwed and they are getting pissed.

*http://www.businessweek.com/magazine/content/10_21/b4179011091633.htm
**http://blog.aflcio.org/2011/09/20/corporations-backing-new-trade-deals-outsourced-18600-jobs/

tts that can be true with strikes but it can be a bit iffy. In China people rather work for foreign companies rather than their own. They have this reverse xenophobia there that is a bit hard to explain.

I toured a number of factories there and it varies quite a bit. On the streets of Shanghai you can sometimes see people welding without a mask! There is no OSHA or DOL but people do gravitate towards areas that provide better conditions.

Sophistication continues to grow. I know of a man that has worked in Shanghai for thirty years now. He said that in 1980 the average person wanted a bike, a watch and a radio. A child can get that now. Now it is probably a job, an education and a decent apartment and in another thirty years could be an annuity, a house and tenure!

It is hard to judge other countries by our standards especially when some have only been independent for decades.

The interesting aspect about the strikes is that as long as it is a foreign company then the government won't clamp down, they see it as fine as asking for more.

To note to trade with North Korea is very hard to do. Supposedly there are ways to take commodities that they make (gold, silver etc) and sell on the open market. We haven't had anything come into the USA from North Korea for quite some time. 2008 had some exports to them but not that much since. Sanctions often do have exemption. Cuban art work/music is actually legal to bring back.

Apparently "Middle Class" is anyone up to a few hundred million dollars...
http://www.cbsnews.com/8301-503544_162-20109658-503544.html

Well, if you count only income there are still two different models:

You get to the diamond model when you classify based on income percentile. In a diamond model it's about like this:

Bottom 10% - below the poverty line. (not a part of the economy)

11%-20% - very poor.

20%-35% - lower class.

36%-45% - lower middle class.

46%-75% - middle class. (it's wider percentile because at this level taxes level the field.)

76%-90% - upper middle class (same as previous)

90%-99% - bottom upper class.

99%-99.9% - real upper class (mostly still a part of the economy, i.e. productive)

99.9%-100% - Ultra rich (not a part of the national economy again).

But this is still in the diamond model - very much outdated in USA.

In reality we leave more in a pyramid model. You get to it, if you count total income distribution. In the way top 400 families are equal to about bottom 40% of the population.

Using the pyramid model you get the following population distribution:

Again 10% - below the poverty line.

10%-65% - lower class

65%-90% - lower middle class

90%-97% - middle class

97%-99.9% - upper middle class

99.9%-100% - upper class.

I did not check actual income distribution, but as far as I remember top 100000 families make much more than bottom 50 million families.

Actual ranges may be different and they are constantly moving, but the idea is clear.

michaelsch says

But this is still in the diamond model - very much outdated in USA.

You've just found a new way to showcase wealth disparity. As a measure of economic class the "diamond model" isn't very good since things get so lop sided at the top by so very few people.

Certainly without defining what is poor, middle class and rich it makes arguments harder to make.

Should it be based on how much money someone has, how much they make, what assets they have, none or a combination?

There are many farmers that can be said to be millionaires if you sold off all of their combines, all of their land and all of their crops. But the liquidity of these items is not efficient so the logic doesn't hold water.

If we use a metric of that "Anyone that is rich is someone who does not have to work" well would elderly people be considered rich if they retired on money they saved/invested for much of their life?

Having something of wealth does not automatically mean it can be sold immediately without some ramifications. If you own a house and sell it you still have to live somewhere and that comes at a cost.

Technically one could argue that anyone can become richer if they just move to a cheaper area (midwest comes to mind). But that is not always desirable. If you go overseas you can see how this differs even more. Europe is expensive (at least the capitals..London, Paris..even Moscow these days is high). Asia is cheap. For me a beer cost $1, bottle of brandy $4, a platter of food $1. China, South Korea, Thailand, Philippians etc. But some would probably prefer some of the social safety nets that operate in Europe.

Standards of living differ everywhere. If you have a car in the suburbs that can be required due to a lack of transport. In a city it usually is not needed..

Middle class is however you define it.

mdovell says

Should it be based on how much money someone has, how much they make, what assets they have, none or a combination?

The thing is that the cost of many goods is very similar most everywhere you go for the rich, middle class, or poor person. The major thing that changes that is easily comparable is their income. Things like wealth are huge factors too but the numbers are so skewed there as to make a comparison bizzarrely lopsided.

Standard of living changes a bit depending on your location but a person making $50K a year in CA couldn't move to say Idaho and make that same $50K and end up being effectively rich or even upper middle class. Of course in the cheaper areas wages also tend to be lower, so that person making $50K in CA might only make $40 or 35K a year instead. So unless they happened to sell a big asset or home in CA and then moved to ID and bought a cheaper home they wouldn't really benefit much financially from such a move.