Defining the Middle ClassPosted: September 14, 2012 Filed under: Economics, Politics Leave a comment
Arguments over what politicians mean when they say they want to help the “middle class” are almost as old as the existence of a middle class. And with both Mitt Romney and Barack Obama beating the middle class drum silly this political season, it was only a matter of time before a conversation about who is and isn’t in the middle class resurfaced.
And so it did with Mitt Romney’s exchange with George Stephanopolous on ABC Friday morning:
MITT ROMNEY: Let me tell you, George, the fundamentals of my tax policy are these. Number one, reduce tax burdens on middle-income people. So no one can say my plan is going to raise taxes on middle-income people, because principle number one is keep the burden down on middle-income taxpayers.
GEORGE STEPHANOPOULOS: Is $100,000 middle income?
MITT ROMNEY: No, middle income is $200,000 to $250,000 and less.
As the Wall Street Journal‘s What Percent Are You calculator reveals, $200K puts you in the 94th percentile of tax-filing households, and $250K puts you in the 96th percentile. So to the extent that Romney believes that being middle class in 21st century America means being in the top 4-6 percent, he’s going to deserve the ridicule he has manage once again to self-inflict. Of course, Romney did say $200-250K “or less,” so presumably he doesn’t put the middle class household wage floor at $200K. Even he’s not that dim.
To be fair, some will point out that Barack Obama’s pledge to avoid raising taxes on the middle class, coupled with policy proposals that preserve tax cuts for those earning less than $250K, means that Obama also defines the middle class all the way up into the mid 200Ks. I’m not aware that Obama has been clumsy enough to make that upper bound explicit as a definitional matter in the way that Romney just did. And of course, any definition of middle class tied to raw income levels or earning percentiles is flawed by its failure to factor in vast geographic differences in cost of living, not to mention variations in household size and other relevant factors. As we all know, a given level of income goes a whole lot further for a childless couple in Nashville than for a family of four in San Francisco.
So where should we locate the middle class in household income terms? A recent Wall Street Journal Marketwatch piece blandly asserted that the middle class is comprised of “the 50% of American households earning between $39,000 to $118,000.” Using the Journal‘s calculator, that range runs from the 46th to the 84th percentile of tax filing households … and seems rather arbitrary.
We know from recent Pew survey data how many self-regard as middle class: Just under half of adults call themselves middle class, only a few percent less than said the same thing four years ago, with reasonably similar percentages saying this across gender and race divides.
If being middle class is essentially a state of mind, then one way to define a middle class income is to ask people where they would peg the number. The Pew survey gave that a shot, asking respondents to say how much annual income a family of four would need to lead a middle-class lifestyle. The overall median response to this question was $70K – a number not far off from the actual median income for a four-person household based on Census Bureau numbers ($68.2K) and well below the definition of middle class amidst the rarified air on Planet Mitt.
An alternative approach is to think about the key elements of consumption one’s income makes possible, or easy, or not so easy. I kind of like the version of this approach put forward by some guy named Eric commenting on a blog post about the Romney remark at The Atlantic:
You should define class by the ability to pay for two new cars, a $1200 mortgage (arbitrary for this comment), private schools (especially if you live in a city), a $3,000 health insurance deductible, and organic/sustainably produced foods. Then assume that most people pay for cable and cell service. Anyone who doesn’t worry about these things is above middle class. Anyone who must make trade-offs among them is in the middle. Anyone who cannot pay for any of these is poor.
We can quarrel about the organic food part, but otherwise it makes quite a bit of sense to me.
A version of this post appears on the Nashville Scene‘s Pith in the Wind blog.