Who or what is the middle class?

[ivanm]

• Tweet

This is a bone of contention around here and I have been looking into the specifics of it, trying to get a handle on the issue.  The following excerpt is from an article in 2007 but it does hold some insight in to what the middle class is and who is included.  Judging from the following paragraph, the idea that the middle class is falling behind may be more of a misconception than anything.

Read the whole article for a nice view of the middle class issue. Even though the article is not recent I think the truths still hold today.
 
___________________________________________________________________________________

One trend that is all but universally accepted is the widening wealth disparity between those at the very top and bottom. Even as incomes in the middle have gone up, the gap between richest and poorest has gotten wider, both in America and around the world. That means that those at every level see more wealth flowing to people in income groups above them. And that could help explain why, even as everyone’s standard of living is going up, many of those in the middle feel like they’re falling behind.

Though middle class status may be largely a state of mind for many Americans, some have clearly lost ground due to specific, harsh economic circumstances that have sent them falling abruptly down the ladder. The decline of unionized labor in the past several decades has given employers more flexibility to increase productivity and adapt to rapid technological change and increased competition. But it has also devastated those workers who have been displaced from high-wage jobs and don’t have the skills they need to find a new one with comparable pay and benefits

http://www.msnbc.msn.com/id/21272238/ns/us_news-gut_check//

[ivanm]

What is middle class income.  This study puts it at 25,000 to 100,000 but I doubt that 25k goes very far at today's prices. The excerpt is from a wikipedia article.
 
http://en.wikipedia.org/wiki/American_middle_class
______________________________________________________________________________________
 
Everyone wants to believe they are middle class...But this eagerness...has led the definition to be stretched like a bungee cord — used to defend/attack/describe everything...The Drum Major Institute...places the range for middle class at individuals making between $25,000 and $100,000 a year. Ah yes, there's a group of people bound to run into each other while house-hunting.
—Dante Chinni[4]
____________________________________________________________________________________

I think the key thing for the higher income people to do is to shelter as much of their income as they can from taxes.  At one time my wife and I were making about 85k a year and yes we paid moreincome tax than we do now but we also sheltered a lot of our income by using 401ks, IRAs, and by buying tax exempt bonds.   Now we are enjoying the fruits of our prudence and are slowly drawing down our tax deferred accounts, as required by law.

I think another thing to do is to defer some of the major purchases until later in life.  Do you really need a second big screen HD home entertainment center, just because the neighbors rolled one in the other day?  Edna and I had other plans and were socking a lot of extra cash into a retirement home, which was a small farmstead, so we suppressed our desires to have the latest and greatest in the way of status symbols and other middle class trappings.  We had to give up the farm because of my allergies but the investment stayed intact and we were able to sell at a nice profit.

It appears that when upper middle class complain of being squeezed they are too caught up in keeping up with the Jones family next door.  I like nice things too and we have some very nice vehicles plus a big house with loads of furniture and collectibles, but my farm background helped me to understand the difference between an investment and an expensive hobby.  I thin another thing that bites people is that they go hog wild on a large home they can ill afford hoping that it will appreciate and make them big bucks someday.  It might, and again it might not , but either way, when you sell or give up
that home you have to replace it with something, and that something else has also appreciated in value.  So maybe you are trading dollars when you trade houses?

[ivanm]

Something tells me that those in the upper middle class range are paying a large part of the roughly 1 trillion in personal income taxes that are collected each year.  How many people is this, I don't know but articles say that middle class married taxpayers are getting hit the hardest.

So why would a high wage earner want to vote for expensive government social projects that will increase their tax burdens even more?   

[Pepsi]

So why would a high wage earner want to vote for expensive government social projects that will increase their tax burdens even more?   

Let's take child care as an example.    These relatively high income married working couples probably are going to have kids.    And, being the busy professionals they are, are going to need pre-school services.    Really these days kids need to start learning in an organized environment earlier in life, it's quite beneficial to get started at 3 and 4.   

We're I'm at the costs of pre-school are extraordinary.   3 half days a week cost ~$600.   Full time (to cover working hours) costs $30,000-$40,000 a year.   

Would these (relatively) high net worth families be willing to pay a bit more in taxes to have a cheap, if not free, "public" pre-school education services?     I think they would.   

[ivanm]

Here is another piece of a wikipedia article that may interest those who wonder how many of a given income level there are.  This data is in terms of households and not people.
The chart copied in scrambled so let me try to straighten it out in tabular form.

___________________________________________________________________________________

Household income distribution
Bottom 10% Bottom 20% Bottom 25% Middle 33% Middle 20% Top 25% Top 20% Top 5% Top 1.5% Top 1%
$0 to $10,500 $0 to $18,500 $0 to $22,500 $30,000 to $62,500 $35,000 to $55,000 $77,500 and up $92,000 and up $167,000 and up $250,000 and up $350,000 and up
Source: US Census Bureau, 2006; income statistics for the year 2005

____________________________________________________________________________________


                                                            Household Income Distribution
Bottom 10%               $0 to $10,500
 
Bottom 20%               $0 to $18,500
 
Bottom 25%               $0 to $22,500
 
Middle  33%               $30,000 to $62,500
 
Middle  20%               $35,000 to $55,000

Top     25%               $77,500 and up    
  
Top     20%               $92,000 and up

Top      5%                $167,000 and up

Top      1.5%             $250,000 and up

Top      1%                $350,000 and up                    

[ivanm]

There are roughly 130 million households so the top 1% bracket would include
1,300,000 people out of over 300 million. Is it reasonable to soak these people for the needs of millions upon millions of lower income people?

I think a more reasonable spread of the tax burden is to place it on those in the middle 33% and above.

[nraforlife]

Let's take child care as an example.    These relatively high income married working couples probably are going to have kids.    And, being the busy professionals they are, are going to need pre-school services.    Really these days kids need to start learning in an organized environment earlier in life, it's quite beneficial to get started at 3 and 4.   

We're I'm at the costs of pre-school are extraordinary.   3 half days a week cost ~$600.   Full time (to cover working hours) costs $30,000-$40,000 a year.   

Would these (relatively) high net worth families be willing to pay a bit more in taxes to have a cheap, if not free, "public" pre-school education services?     I think they would.   

WHY would anybody shell out $30K for preskool??? Out here in the Real America a very good fullday preschool can be had for about a quarter of that amount. Decent family daycare for much less than that.

[nraforlife]

MIDDLE CLASS-Professional, Supervisory or Self Employed with an income greater than $60K per year but less than $175K

[ivanm]

Let's take child care as an example.    These relatively high income married working couples probably are going to have kids.    And, being the busy professionals they are, are going to need pre-school services.    Really these days kids need to start learning in an organized environment earlier in life, it's quite beneficial to get started at 3 and 4.   

We're I'm at the costs of pre-school are extraordinary.   3 half days a week cost ~$600.   Full time (to cover working hours) costs $30,000-$40,000 a year.   

Would these (relatively) high net worth families be willing to pay a bit more in taxes to have a cheap, if not free, "public" pre-school education services?     I think they would.   

Something tells me you would be paying for a high priced baby sitting service.  I did not have the access to a kindergarten or even a pre-school baby sitter and I competed quite well with kids from the city who did have access to such niceties.  My pre-schooling was out on the farm with my father or at home with my mother.
 
The only thing that kept me from doing more grown up duties on the farm, such as operating a big tractor or throwing hay bales, was my small size. Knowledge comes easy, but it is what you do with it that counts, and if you don't have the opportunity or environment to apply what you have learned then there is a good chance you won't amount to much.  I see this everyday with town kids.  

For example, my son-in-law has a second grader who makes excellent grades but he cannot pour piss out of a boot for getting it on his shoes.  He has next to nothing in the way of coordination or manual skills because he has next to little chance to learn some.  His father is a couch potato, a football freak and all he knows is throwing balls.  

[johnhp]

There are roughly 130 million households so the top 1% bracket would include
1,300,000 people out of over 300 million. Is it reasonable to soak these people for the needs of millions upon millions of lower income people?

I think a more reasonable spread of the tax burden is to place it on those in the middle 33% and above.

Place more of the tax burden on the people with the least disposable income?  You are a lunatic.

[ivanm]

Let's take child care as an example.    These relatively high income married working couples probably are going to have kids.    And, being the busy professionals they are, are going to need pre-school services.    Really these days kids need to start learning in an organized environment earlier in life, it's quite beneficial to get started at 3 and 4.   

We're I'm at the costs of pre-school are extraordinary.   3 half days a week cost ~$600.   Full time (to cover working hours) costs $30,000-$40,000 a year.   

Would these (relatively) high net worth families be willing to pay a bit more in taxes to have a cheap, if not free, "public" pre-school education services?     I think they would.   

I think those sorts of services should be funded at state or local level, or by the individual parents.  Since when is that a task for the feds to cover?  Look at it this way, if you high income families would stop voting for social programs then you would have more left to pay for your own needs.  Sorry, but to me schooling does not include baby sitting.

[Pepsi]

WHY would anybody shell out $30K for preskool??? Out here in the Real America a very good fullday preschool can be had for about a quarter of that amount. Decent family daycare for much less than that.

That's nice but here in Boston where income is generally higher costs are generally higher as well.   

[Pepsi]

MIDDLE CLASS-Professional, Supervisory or Self Employed with an income greater than $60K per year but less than $175K

You can't use numbers like this without taking into account location.    You can get a mansion in some parts of the country for the same price as a tiny studio in other parts.   Real estate costs are the most significant expense part of most people's budget, along with food which is similiarly widely disparate between regions.

[Pepsi]

Something tells me you would be paying for a high priced baby sitting service.  I did not have the access to a kindergarten or even a pre-school baby sitter and I competed quite well with kids from the city who did have access to such niceties.  My pre-schooling was out on the farm with my father or at home with my mother.
 
The only thing that kept me from doing more grown up duties on the farm, such as operating a big tractor or throwing hay bales, was my small size. Knowledge comes easy, but it is what you do with it that counts, and if you don't have the opportunity or environment to apply what you have learned then there is a good chance you won't amount to much.  I see this everyday with town kids.  

I didn't go to pre-school either.   So who took care of you?  Was it those in the "Upper middle class" range you are speaking of when you asked who would pay more in taxes for more or better government services?   That's the preposition you posted, isn't it?

How does one become upper middle class if one is not out working full time these days?

If one is working full time, where do you suppose they put the kids while they are at work?  At your family farm?

 

[Pepsi]

I think those sorts of services should be funded at state or local level, or by the individual parents.  Since when is that a task for the feds to cover?  Look at it this way, if you high income families would stop voting for social programs then you would have more left to pay for your own needs.  Sorry, but to me schooling does not include baby sitting.

You are the one who asked the question to paraphrase "why would they want to pay more in taxes for more services" to which I answered for you - the point being in some cases it is more cost effective for the tax payer.   You made no reference of a distinction between Fed or State level government programs, the point seems irrelevant to your premise to me.   Higher Fed taxes or Higher State taxes for better fed or state services - I agree it is better at the state level.