90% of Americans are middle class

[I slightly misread the table initially, and wrongly suggested 91%]

One constantly sees articles about America’s shrinking middle class.  Don’t believe them.  The term “middle class” is obviously subjective, and in my view the only interesting fact is the share of Americans who consider themselves middle class, which is 90%.  So how do other news articles come up with much smaller numbers?  They divide up the middle class into three groups, lower middle class, middle middle class and upper middle class.  And then for some strange reason they only consider the middle middle class to be “middle class”.  Weird.  Obviously if you keep slicing the pie into narrower and narrower categories, you’ll get smaller shares in each slice.

Screen Shot 2015-12-15 at 9.39.19 AM

When I was young, the common definition of middle class was people who had a decent house or apartment. (I.e. not a shack with an outhouse.)  You needed the basic home appliances (stove, fridge, washing machine, telephone, TV, etc.) and a car.  Maybe in Manhattan you didn’t need a car.  But that was the basic middle class lifestyle, and it still seems a reasonable metric.  Obviously if you used India’s definition of “middle class” then almost everyone in America except the homeless would be considered (at least) middle class, indeed even many of the “homeless” (who actually often do have homes, BTW.) And if you used “the middle third” as your definition, then 33.33333% of Americans would be middle class.

Being middle class is a state of mind.  From age 18 to 25 I had a really low income, low enough to qualified for food stamps if I had applied.  And yet I would have answered “middle class” if a pollster had asked me, and that’s because I think in terms of life cycle. The NYT reports that roughly 73% of Americans spend at least part of their lives in the top 20% of the income distribution.  That’s why even though America’s official poverty rate is 15%; only 7% of Americans are a hard core that views themselves as lower class.  Many are like the younger version of me.

The upper class is only 2%.  And that’s because lots of families have incomes that seem very high in percentile terms, but in a social sense are considered middle class.  Think of a Boston cop married to a nurse, with a family income of $230,000. That’s a pretty high in percentile terms, but culturally they are obviously “middle class.”  I’d guess that most doctors self-identify as upper middle class.

So don’t worry about the naysayers, America is a 90% middle class country and it’s going to stay that way.

PS.  Tyler Cowen has a more pessimistic post on the middle class.

PPS.  I have a new post at Econlog, discussing scurvy and the Phillips Curve.


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34 Responses to “90% of Americans are middle class”

  1. Gravatar of BorrowedUsername BorrowedUsername
    15. December 2015 at 08:54

    Is 230k a year in Boston really only “middle class” or “upper middle class”?

    I did a quick real estate search and found this place in boston:
    148 Fairmount St,
    Dorchester Center, MA 02124

    Listed at 515k (expensive for “middle” class, but we’re being generous) Estimated Mortage < 2k per month.
    So this family pays $25k per yer in housing (assume it's all after taxes)
    We'll stingily assume after tax income at about $125k. So yes, a huge chunk goes out the door for this beautiful house.
    down to $100k. So let's say a family of four spends about 2k per month on food (sounds high, can definitely eat well for much less, but we're being "fair") so that's another ~25k per year.

    So now you have 75k per year to pay for entertainment, travel, car, home upkeep, misc. Let's say you want to spend $50k per year on these things. You're still saving 25k per year and could easily save 50k per year if you wanted to cut back on things.

    If you can through voluntary lifestyle changes double your savings and still live a comfortable life, I don't think it's reasonable to call that middle class. I get that people do, but given how dramatically different the lifestyle discussions are for a family of 4 making $120k per year (still way above median) I think it's crazy.

    So I think there are people at the bottom who are probably not really middle class who self identify, I think the "rich" end of the spectrum is slowly creeping towards a self-identified "would never have to work again" and I think that's actually slightly dangerous for policy. That's why we raised marginal rates above 400k but not 250k. In 2013 apparently Democrats thought only those making above 250k were "rich" and Republicans thought only those making above 400k were "rich".

    P.S. The national discussion is still better than in California where only those with annual incomes above $500k or 1 million are "rich" according to their marginal tax rates. I'm also not even close to being conservative or libertarian, but it peeves me when both my liberal and conservative friends think 250k per year isn't rich. It is if you want it to be, but you can over-consume and make it look like it's not.

  2. Gravatar of Becky Hargrove Becky Hargrove
    15. December 2015 at 08:57

    The problem in the U.S. is that one can have these amenities (except a car and of course live in an isolated area), hasn’t quite reached “retirement” age, is completely fed up with government “handouts”, but needs to determine how best to allocate “disposable” income of less than $200 in a month…

    You’re such an optimist! But then in the U.S. that’s the way it’s “supposed” to be.

  3. Gravatar of Jason Jason
    15. December 2015 at 11:09

    Becky, try reading your own comment. It really doesn’t make any sense.

  4. Gravatar of Doug M Doug M
    15. December 2015 at 11:26

    I agree that 91% of America is “middle class.”

    The definition I have decided upon is — If you work for a living you are middle class.

  5. Gravatar of Zack Zack
    15. December 2015 at 11:32

    Sumner, nice posts, both here and at Econlog.

    Becky Hargrove, I reread your comment a couple times and I still have no idea what you’re trying to say.

  6. Gravatar of Steve Steve
    15. December 2015 at 11:41

    I would argue that this is a self-protection or self-delusion bias.

    Most low income self-identify as middle class because lower class connotes failure or inferiority.

    Likewise, the affluent self-identify as upper-middle because they don’t associate themselves with the invective often hurled at the rich: greedy, selfish, aloof, etc.

    It’s a variation of the reason something like 70% self-identify as better looking than average, or better drivers than average. People self-identify with the group that has the most positive connotation.

  7. Gravatar of Dan W. Dan W.
    15. December 2015 at 12:11

    Agree that “middle class” is largely a self-identity or state of mind. If people in the same neighborhood send their kids to the same school, shop at similar stores and drive similar cars are they not of the same class? What if the one family has 5 times as much income and millions more in “wealth”? What if the one family vacations in Barbados or Vail every Christmas (a very non-middle class activity)? At what point does one leave the middle class? I believe finding this answer by looking at income and wealth is tricky. If one wants to draw conclusions on American society one needs to observe Americans living in society and identify the similarities and differences.

  8. Gravatar of Njnnja Njnnja
    15. December 2015 at 12:23

    “Middle class” is based on a particular window of people in somewhat similar circumstances. So the cop and nurse making $230/year are comparing their income with other mid-career, married people living in a large metropolitan area. Just filtering out those few items changes them from being in the top 2% of income nationally to something like the top 25% for that subsample that it is more appropriate to measure them against. A 25 year old single guy making $230,000 is probably not middle class for the same reason.

  9. Gravatar of Scott Sumner Scott Sumner
    15. December 2015 at 12:24

    Borroweredusername, I agree with much of what you say, but I’d still insist that the family I described would be considered “middle class” in a socioeconomic sense, not wealthy. I agree that in some respects they (and quite frankly my wife and I) earn far more than we need, and if you looked at things from global perspective we are certainly rich. But I’m focusing on how Americans think about the concept. They think Beverly Hills and the Hamptons for rich, and Dorchester for middle class.

    The comments of new commenters are delayed, which may be why you were held up before the comment was approved. Sorry for the delay.

    Becky, Jason’s right, you need to be clearer on that comment.

    Doug, Not bad, but more true in the 1960s. Now there are some pretty high paid “working” people (Trump, etc.)

    Thanks Zack.

    Steve, I think it’s partly that, but I think some is genuine. Those like the cop and nurse I described may live a modest lifestyle, given the cost of housing in Boston. Low income working class Hispanics in El Paso, Texas may live in the same sort of ranch house as lots of other families in the area, and hence think of themselves as being “average” in that sense. Or middle class by Mexican standards. I recently visited an affluent family in a suburb in San Mateo county just outside SF. They lived in a boring 50s ranch house with 3 small bedrooms and an outdated kitchen. Tiny yard. But both have very good high tech jobs. So what are they? Is it income or lifestyle?

  10. Gravatar of Scott Sumner Scott Sumner
    15. December 2015 at 12:26

    Dan and Njnnja, I basically agree with both comments.

  11. Gravatar of Luis Pedro Coelho Luis Pedro Coelho
    15. December 2015 at 13:04

    Doug M: “if you work for a living, you are middle class” is a good first approximation, but I’d say you should have an upper bound, mine is at “if you have a driver, you are no longer middle class”.

    (I am using here the American meaning of class, not the European one, which is less related to income [or, at least, it’s average income over the last 5 generations]).

  12. Gravatar of collin collin
    15. December 2015 at 13:18

    Being middle class is a state of mind. From age 18 to 25 I had a really low income, low enough to qualified for food stamps if I had applied.

    I bet one of the contributing factors here as the age of first marriage has almost at the age of 30. So the ideal middle class is house, car but also married with at least one child and plans for another. I did not truly feel middle class until I was married and buying a house at age 27. Now for most people that is turning into 30 – 32 years old. Also it should be noted that college graduate women are starting to have more kids than non-college graduates. Looks like the developed world is following the Singpore Solution which is the best to control poverty is make child to expensive for people to have!

  13. Gravatar of Don Geddis Don Geddis
    15. December 2015 at 14:33

    @Sumner: “I recently visited an affluent family in a suburb in San Mateo county just outside SF. They lived in a boring 50s ranch house with 3 small bedrooms and an outdated kitchen. Tiny yard. But both have very good high tech jobs.

    Was that in Hillsborough, by any chance? Plenty of multi-million dollar tiny ranch houses in Hillsborough…

  14. Gravatar of Benny Lava Benny Lava
    15. December 2015 at 15:09

    Instead of merely snarking, I want to challenge your thinking regarding this sentence:

    “When I was young, the common definition of middle class was people who had a decent house or apartment.”

    Which is it? Because lately young adults are increasingly unable to afford purchasing a house and are stuck renting. Rising rents is making a downpayment harder to save for, making home ownership ever more difficult.

    http://www.vox.com/2015/12/12/9900970/homeownership-rate

    Isn’t it fair to say that, for a large cohort of Americans, your particular definition of middle class is regressing? I recall you once expressing the sentiment that America’s stagnating middle class was because of export growth from China, and you found it a great tradeoff since it allowed millions of people to move out of abject poverty. That is a defensible position, but does not square with other statements you’ve made about how the middle class is fine and trade never has losers.

  15. Gravatar of ssumner ssumner
    15. December 2015 at 17:03

    Don, Millbrae I think.

    Benny, You said:

    “I recall you once expressing the sentiment that America’s stagnating middle class was because of export growth from China,”

    I don’t recall ever saying anything like that, and I certainly don’t believe that.

    You said:

    “That is a defensible position, but does not square with other statements you’ve made about how the middle class is fine and trade never has losers.”

    I don’t ever recall saying anything like that, and I certainly don’t believe that.

  16. Gravatar of Ray Lopez Ray Lopez
    15. December 2015 at 18:58

    Sumner: “Being middle class is a state of mind” – what hogwash. Instead of ‘state of mind’ why don’t you use numbers? It’s a fact that though most DC suburb residents claim to be middle-class, something like 8 out of the 10 richest counties in America are found in and around the Washington, DC area, and the average family makes well over 100k $/yr.

    Off-topic: I notice Ken Duda has disappeared. I hope he’s OK, maybe busy, and has not lost his faith in Sumner. After all, economics Sumner-style is a faith-based ‘science’ of ‘expectations’.

  17. Gravatar of Ray Lopez Ray Lopez
    15. December 2015 at 19:27

    Sumner: “PPS. I have a new post at Econlog, discussing scurvy and the Phillips Curve” – LOL, Sumner believes a speculative blog post that the Scott expedition to Antarctica was doomed due to scurvy. In fact, Scott’s party died of starvation, not scurvy. True, they were weakened by scurvy but that was not the killer. There’s lots of hazards in exploring (including eating dog liver and getting Vitamin A poisoning, see Mawson, who BTW survived), but the trace amounts of Vitamin C found in even stale limes is enough to prevent death from scurvy. The French even found that trace Vitamin C in wine was enough to prevent severe scurvy. As evidence of this, the link cited by Sumner supports this theory that scurvy in 1911 was crippling yet not fatal: “… Jackson-Harmsworth Expedition to Franz-Josef Land in 1894. Members of this expedition spent three years on a ship frozen into the pack ice” yet in three years, with the same diet of canned food as Scott’s men, only two died of scurvy. Scurvy weakens but unless you have no Vitamin C at all, it rarely kills. And let’s leave aside why a imperialistic mission to ‘claim’ Antarctica should be glorified at all. I say LOL at the foolish nationalists that tried to conquer Antarctica.

  18. Gravatar of Benny Lava Benny Lava
    15. December 2015 at 19:27

    Well I don’t want to mischaracterize you. You’ve said that the middle class is fine (in this post), that trade doesn’t have losers here https://www.themoneyillusion.com/?p=11717
    That we should worry more about China’s poor than America’s here https://www.themoneyillusion.com/?p=25819

    Do you disagree with this statement I will reiterate: Because lately young adults are increasingly unable to afford purchasing a house and are stuck renting. Rising rents is making a downpayment harder to save for, making home ownership ever more difficult.

  19. Gravatar of derivs derivs
    16. December 2015 at 03:21

    Middle class.. Anyone that falls within 1 std dev of the mean.

    Creating a moving target is unnecessary and leads to 90% of people thinking they are middle class. It becomes like asking someone if it is hot or cold outside, cold for someone from Chicago and Dallas are 2 very different things. Just tell me the damn temperature.

    …and yes, the size of the middle class remains essentially fixed this way (except for change in population size) and only the mean shifts, but mathematically that”s accurate.

    Now back to XCOM…

  20. Gravatar of derivs derivs
    16. December 2015 at 03:22

    oh and before anyone gets nit-picky, it doesn’t have to be 1 std… just picked it for illustrative purposes to represent centering on the mean.

  21. Gravatar of TallDave TallDave
    16. December 2015 at 07:38

    Originally “middle-class” meant European town-dwellers deriving income from work/trade, in contradistinction to the peasantry (subsistence farmers) and the nobility (coercive taxers). This class hierarchy was so important that it was usually considered more honorable for a noble fallen on hard times to take up highway robbery (which really wasn’t all that different than taxation anyway) than to sully themselves with work.

    Of course the rise of free markets in Western Europe destroyed all that because the capitalists were just creating too much value (this is one of the main themes of Downton Abbey) — the peasantry all wanted to become middle class and so the elites in the West gradually lost control of the coercive system. The elites tended to more successfully suppress this phenomenon as one moved further east, but the Western capitalists were so successful that this action amounted to self-impoverishment, and so the paradigms of Western Europe still dominate the world centuries later.

  22. Gravatar of TallDave TallDave
    16. December 2015 at 07:49

    The above is interesting because it suggests that:

    1) since the Civil War, 100% of Americans are middle class — income distributions are not a class system

    2) amusingly, anyone truly in the “upper classes” would have found the concern that people’s descendants were not well-positioned to find highly paid work to be nearly incomprehensible

  23. Gravatar of Justin Justin
    16. December 2015 at 11:27

    I’m persuaded by arguments that class is only moderately correlated with wealth/income. It has as much to do with the sorts of books, and art one has in one’s house, as income. Paul Fussell’s “Class” makes this case. 90% seems reasonable for America.

    Certainly one should do whatever it takes to avoid being too middle class.

  24. Gravatar of ssumner ssumner
    16. December 2015 at 13:45

    Ray, And where would the 10 richest counties be if 90% of Americans were middle class—in Ohio?

    You said:

    “In fact, Scott’s party died of starvation, not scurvy. True, they were weakened by scurvy but that was not the killer.”

    True, and while the bullet led to the loss of blood that killed the murder victim, it’s absurd to claim he was killed by a gunshot, it was the loss of blood.

    Benny, No I never said trade doesn’t have losers, I’m not a moron. I said there’s no net loss of jobs, as many jobs are lost as gained.

    And yes I believe we should care more about China’s poor than America’s poor, you’d have to be a completely insensitive brute to think otherwise. But that has no bearing on what you claim I said in your previous comment.

    derivs, Income is not a good way of measuring wellbeing.

  25. Gravatar of Benny Lava Benny Lava
    16. December 2015 at 14:23

    A day in the life of a troll…

    How many more posts will Scott make declaring the middle class fine because he was a poor student back in the 70s?

  26. Gravatar of Jhow Jhow
    16. December 2015 at 16:24

    It’s reminds me a video by T. Sowell:

    http://m.youtube.com/watch?v=WpZkhHvIfH8

  27. Gravatar of Derivs Derivs
    16. December 2015 at 16:33

    “Income is not a good way of measuring wellbeing.”

    Agree, but I never worked well with subjective metrics.

  28. Gravatar of Major.Freedom Major.Freedom
    16. December 2015 at 19:12

    A much better metric of middle class population sizes is data driven, not opinion driven.

    According to the same source (Pew), if we use the better metric of annual income distributions (interesting how Sumner is so confident in annual income data being used for a country wide socialist program of money printing, but says subjective beliefs matter more for the relative distribution of income earners), the middle class is indeed shrinking:

    https://cdn.rt.com/files/2015.12/original/5669d347c361887c288b459e.gif

    Those people who claim that people’s personal opinions that are colloquial and habit driven should be trusted more than numerical data, DON’T BELIEVE THEM. They are obviously motivated by politics and nationalism, and in Sumner’s case, motivated ultimately by a self-interested bias in defending the very inflationary system that is the root cause for the shrinking middle class. He’s only trying to convince himself the cause is not the Fed, by denying the reality of the effect.

    Trust the data and the optimists of the free market, not the pessimistic naysayers of the free market.

    More here:

    https://www.rt.com/usa/325531-middle-class-income-shrinking/

  29. Gravatar of Major.Freedom Major.Freedom
    16. December 2015 at 19:21

    “Income is not a good way of measuring wellbeing.”

    …except for the well-being of monetary policy. Then what everyone knows about economics is to be disregarded, because heck, the Fed had to do something.

    Income is a good way to measure the relative size of economic classes. However, it is a problem because using that as a measure leads to a conclusion you don’t like. Better just listen to what names people give to survey reporters, rather than what their incomes actually are relative to their peers.

  30. Gravatar of ssumner ssumner
    17. December 2015 at 16:45

    Benny, About 17 more. Of course my point is that I was technically “poor”, not actually poor in a socioeconomic sense.

  31. Gravatar of Floccina Floccina
    17. December 2015 at 18:48

    It’s not one dimensional.
    My son, a plumber making $12/hour due to wisdom, used his college money from his Grandpa+lived with us and worked and saved 1 1/2 years after high school to buy a condo for cash. => Middle class
    Latrell Sprewell “Sprewell’s career came to an unexpected end in 2005 when he refused a $27-million three-year contract offer from the Timberwolves, which he implied would not be enough to feed his children” => Low class
    Lindsay Lohan => low class
    Steve Jobs worked => Middle class
    Kennedys => rich
    Bush family => rich
    Rockefeller family => rich

  32. Gravatar of Cooper Cooper
    18. December 2015 at 12:22

    BorrowedUsername,

    You picked a house in a terrible neighborhood. You must not be familiar with the nickname of Mattapan as “Murderpan”

  33. Gravatar of Scott Sumner Predicts a $12 National Minimum Wage in 2017 | Scott Sumner Predicts a $12 National Minimum Wage in 2017 |
    13. October 2016 at 06:28

    […] Times has a diagram showing that less than 50% of Americans are now viewed as “middle income”. Elsewhere I’ve pointed out that almost 90% of Americans self-identify as middle class, so these stories are […]

  34. Gravatar of Scott Sumner Predicts a $12 National Minimum Wage in 2017 | Last Men and OverMen Scott Sumner Predicts a $12 National Minimum Wage in 2017 | Last Men and OverMen
    4. April 2017 at 05:10

    […] Times has a diagram showing that less than 50% of Americans are now viewed as “middle income”. Elsewhere I’ve pointed out that almost 90% of Americans self-identify as middle class, so these stories are […]

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