Sunday, May 01, 2005

What is the Middle Class, anyway?

America prides itself on being a "classless" society. But, by that, I think that people mostly just mean that things are not as rigid as they were in 19th century London. Certainly, we have economic classes in the United States and the middle class, in a bell curve kind of way, is meant to be the largest. So, what is it?

It can't just be an income number since costs of living vary so greatly in the U.S. Do you need to own property to be Middle Class? Or does renting in a Middle Class neighborhood count? Is there an age component to this? If you're just out of college and are doing about as well as most people just out of college, are you Middle Class? If your salary doesn't increase as you get older, are you then lower class?

Why do I care? Well, our political leaders seem to want two things. First, they want middle class support. Second, they want to define expectations. The expectation is that if you work and earn a salary, you should be at least in the Middle Class and you should enjoy the benfits of that lifestyle.

Bush's Social Security plan rests on the work of Robert Pozen and the plan suggests that anbody making over $20,000 a year is sufficiently Middle Class to have their Social Security benefits cut. Does that seem right to you? It sounds way off, to me.

Atrios has suggested that Middle Class means that you own your own home in a decent neighborhood with decent schools and, if there's not great public transportation where you live, that you own as many cars as there are wage earners in the family. That seems about right. Discussions on Atrios have revealed that people have a hard time doing that with combined salaries (for a couple) govering around $100,000 a year. I believe those accounts. The housing bubble is especially hurting property owners and it's making it hard for renters to become property owners, even if they make a nice chunk of change.

Then there's potential Republican Presidential candidate, Virginia Senator George Allen, who said this on Meet the Press this morning:

"In the event that a personal savings account approach is taken, allowing them to invest in a home in addition to right now it's stocks, bonds and other financial instruments, if people can invest in their own home, they'll know it. They'll understand it. They'll take care of it. And they'll enjoy it and they don't have to worry about mergers and acquisitions and scandals and market share. And by the time they retire, they're going to have a pretty good nest egg there and they don't need as big a house, usually, because they don't want to be cutting grass and trimming hedges, and that is good for the economy as well."

Allen suggests that it's just fine for a retiree to have to sell the family home in order to live. See, it's just an investment, not anything to get attached to! Do you all think that's okay? Is that what a member of the Middle Class should expect out of life?

In our political discussions we talk a lot about the economy in he abstract but very little about what Americans want or expect in exchange for the work that we do. I think we need to change the conversation because, right now, I think the folks in Washington find a lot about the average American life acceptable at a time when the average American should be demanding better.

3 Comments:

At 10:11 AM , Blogger adriana said...

Wow, this is very illuminating. According to that Atrios description, I guess that makes us way below middle class.

I'm really kind of shocked and confusticated by that statement about getting old and wanting to get rid of your house because you don't want to trim hedges and shit. They're basing an economy on this? Unfrikinbelievable.

 
At 11:34 AM , Blogger Ideasculptor said...

Imagine what that says about the middle class in California or NYC. At least in Santa Barbara, a middle class home starts at $850,000K and then only if you don't have kids. I don't know about you folks, but coming up with a 20% downpayment on $850K is pretty much a losing proposition, not least because the value of said house increases faster than the normal person can save. And the $10K in property taxes every year will pretty much offset the tax savings from writing off the interest, even if you could afford $680K mortgage payments. I guess the middle class in SB starts at around $300K per year.

They recently built some 'low income' condos in Santa Barbara, but by the time they were actually completed, each condo had been bought and sold so many times that it now costs over a million dollars to score one. 7 figure 'low income' housing!

I'm going to have to commute for over an hour in order to join the middle class, whether I work in SB or LA.

Can you tell this ticks me off?

 
At 10:10 AM , Blogger adriana said...

I'm right there with you on that. I don't even consider ownership an option.

 

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