That may be a gross oversimplification, but that was kind of the point. I would like a concrete definition of class and this seems like the best way to break it out in my mind. What is your concrete definition of class? Why do you say that a single guy making $70,000 is upper middle? What characteristics does he portray that make him upper middle class?
As I said before, just looking at salary is not enough. A 25 year old who got a free ride through college and is making $70k is doing a lot better than a 25 year old who got married after HS, took out student loans to get through, and is now raising a couple kids on the same salary. The quintiles that the CBO and various other gov't agencies use are handy for statistical analysis but they do not tell much of a story. Perhaps if you look at things in a vacuum, it might be sufficient.
Personally, I tend to use more descriptive groupings rather than absolute figures.
At the top is the rich - fairly self explanatory. "Salary" does not even come into play here, except with top tier professional athletes and entertainers. If you need to work to maintain your lifestyle, you're not rich.
Below that is the affluent: high income earners, large inheritances/wealthy families, successful business owners, etc. Still need to work, but have freedom to vacation often, make large purchases (cars, boats, second homes, etc) without impacting other needs, and in many cases with cash. Luxury items (higher end cars, expensive shoes, fancy dinners, etc) are common. Extensive savings. A loss of work can be dealt with easily.
The majority of people are middle class. You can slice this a million ways, but the middle class are mostly wage earners with defined/restricted benefits (i.e. 3 weeks vacation) who must work to make ends meet. Any interruption in work means increasing debt load or other drastic measures. Major purchases are financed and must be balanced against other needs. Luxury purchases and savings are limited.
Below that is working poor - people who work but with few benefits, little to no financial security, and a reliance on rolling debt to make ends meet. No savings, luxury purchases are rare.
At the bottom are the poor. Again, fairly self explanatory.
If I had to estimate Seattle's population based on that, I'd estimate <1%, 10%, 50%, 30%, 10% (I know, it adds up to over 100%). Other places with lower incomes, it might be <1%, 5%, 40%, 50%, 5%.
So, going back to the OP, the $80k lawyer is probably middle class. If you want to call it upper middle class that's fine but s/he is still probably reliant on that job or one just like it for their lifestyle. They could be much better off, if they got a free ride through college or if they have wealthy parents. They could be worse off, if they're financially supporting sick parents or are raising a large family.
Unfortunately there is no hard way to define middle class. It's always somewhat abstract just because not every situation is the same.
West Side Billy
you wrote:
The majority of people are middle class. You can slice this a million ways, but the middle class are mostly wage earners with defined/restricted benefits (i.e. 3 weeks vacation) who must work to make ends meet
Yep that's us
. Any interruption in work means increasing debt load Nope
or other drastic measures. Depends on what you mean we have 12 months income set aside for just such an eventuality since I expect it's a liklihood.
Major purchases are financed and must be balanced against other needs. Um, all purchases are balanced against other needs and needs are very clearly differentiated from WANTS! Besides the house, nothing is financed, if we can't pay cash we can't afford it. If we want it and can't pay cash, we save for it then buy it.
Luxury purchases and savings are limited. Again to me it depends on what you mean by 'limited.' Our savings are 'limited' to 50% of our gross (well 49.7 last year if you want to be precise)
Is that your definition of middle class?
a) $100,000 annual passive income (based on $2 million in assets) and all of the free time in your life?
or
b) $120,000 per year in a job that requires 40+ hours per week of labor and the continuation of that income depends on the decisions of your boss and the health of the company?
If you work for your money, you are working class. Most people tend to lead a lifestyle at their income level. But if a change in your income (loss of job or a promotion) is going to change your lifestyle (up or down) then you are a working stiff. There are different classes of working stiffs. But they are all some version of middle class.
You cannot be defined as "upper class" or "wealthy" if your lifestyle is depending on the paycheck from an employer, even if it is $300,000 per year.
Someone who is an owner (doctor practice, partner of law firm) of the asset might be defined differently. That is an income, but they are also one of the decision makes on how that asset is distributed. But then again, 10% of all bankruptcies are lawyers and doctors going out of business. They are working stiffs also.
If your money works for you, as in investment assets throwing off passive income, then you are wealthy upper class.
Even NBA or MLB players are working stiffs the first few years.
This entire thread has missed the point in my opinion. Middle class has never been as much about income or how it's earned per say as financial stability. The term grew out of the change from agriculture jobs where a bad harvest or two could ruin you to the more stable blue and white collar jobs. But we've shifted back the other direction.
Consider the 1960s: if a worker on a Boeing manufacturing line were laid off in 1964, he would have no problem moving to Detroit and getting a similar job with a similar pay. Catastrophic risk to his income was rather low. Now, if a worker on an auto manufacturing line is laid off, what is he going to do? He can't find a similar quality job with his current training. Losing your job is now catastrophic for a significant chunk of the population.
Jim Jubak had a great article about this very situation earlier this year. This of course is ignoring such things as illness or injury which have always been potentially catastrophic.
West Side Billy
you wrote:
The majority of people are middle class. You can slice this a million ways, but the middle class are mostly wage earners with defined/restricted benefits (i.e. 3 weeks vacation) who must work to make ends meet
Yep that's us
. Any interruption in work means increasing debt load Nope
or other drastic measures. Depends on what you mean we have 12 months income set aside for just such an eventuality since I expect it's a liklihood.
Major purchases are financed and must be balanced against other needs. Um, all purchases are balanced against other needs and needs are very clearly differentiated from WANTS! Besides the house, nothing is financed, if we can't pay cash we can't afford it. If we want it and can't pay cash, we save for it then buy it.
Luxury purchases and savings are limited. Again to me it depends on what you mean by 'limited.' Our savings are 'limited' to 50% of our gross (well 49.7 last year if you want to be precise)
Is that your definition of middle class?
No.
You have several factors which I attribute more to affluent families than middle class. One, you can handle a job loss (12 months savings? Definitely not middle class). Two, you have extensive savings. Three, you are not forced to finance.
If you are middle class, then most people are flat out poor.
You have several factors which I attribute more to affluent families than middle class. One, you can handle a job loss (12 months savings? Definitely not middle class). Two, you have extensive savings. Three, you are not forced to finance.
If you are middle class, then most people are flat out poor.
He has those factors because your definition of middle class is flawed. If person A makes $30k a year but has figured out a nice lifestyle for themselves that costs $10k a year, they could easily save up 12 mos worth of expenses during their first year on the job. That makes them thrifty, not affluent.
I doubt grumpy old guy's situation mirrors what I just said, but the point is you can't rank class based on how thrifty someone is.
You have several factors which I attribute more to affluent families than middle class. One, you can handle a job loss (12 months savings? Definitely not middle class). Two, you have extensive savings. Three, you are not forced to finance.
If you are middle class, then most people are flat out poor.
He has those factors because your definition of middle class is flawed. If person A makes $30k a year but has figured out a nice lifestyle for themselves that costs $10k a year, they could easily save up 12 mos worth of expenses during their first year on the job. That makes them thrifty, not affluent.
I doubt grumpy old guy's situation mirrors what I just said, but the point is you can't rank class based on how thrifty someone is.
Your example wouldn't be affluent using my definition. Middle class, yeah, despite the low salary. There's no way that salary can make any major purchases without significantly impacting savings, nor make frequent luxury purchases, take long vacations, etc.
Today (family of 4), I think it would probably means a home with one bedroom for every 1.5 residents (that's 2-3 bedrooms for a family of 4), a two running cars, access to extracurricular activities (sports/band/clubs), ability to eat out at affordable restaurants once a week, and a slightly nicer vacation than enjoyed 40 years ago.
grumpy old guy might fit in this group, but could easily be above it based on my interpretation of what he posted.
I'm not trying to say my definition is perfect, because it's merely one way of slicing it.
There's no way that salary can make any major purchases without significantly impacting savings, nor make frequent luxury purchases, take long vacations, etc.
The problem is you're getting into a recursively defined definition. The rational next question is, what is a luxury or major purchase, and what is a significant impact to savings.
Some people consider a brand new BMW to be expected, others would consider a 2000 Toyota Corolla with only 80,000 miles on it to be a luxury. This is why middle class is so hard to define.
It is difficult, which is why I am purposely vague. There are areas of overlap based on lifestyle choices, which you're getting at. We're also looking at it from an American perspective. A laborer in a 3rd world nation would probably view even the poorest workers here as "rich".
I would argue that anyone who views a new BMW as expected has a fairly skewed view of the world, but you and I both know those people are out there (and probably complaining about not having enough to get by). Most people, however, could easily distinguish between filling a transportation need (with the trusty ol' Corolla) vs satisfying wants with the much nicer BMW.
I look at your definition (posted on #11 and quoted above), and while I don't disagree with it, it allows a huge range of lifestyle and "class". You could probably find a family that fits that description in Skyway, and another on the lakefront in Medina, and both would be "middle class" even though I suspect the latter is far better off.
I look at your definition (posted on #11 and quoted above), and while I don't disagree with it, it allows a huge range of lifestyle and "class". You could probably find a family that fits that description in Skyway, and another on the lakefront in Medina, and both would be "middle class" even though I suspect the latter is far better off.
Uh oh, called on my own game.
Actually, I think that's nitpicking in this case. If I had thought to add it, I would stipulate that a house should be within about 30-35 minute drive of your workplace. Also, I would have stipulated that middle class would usually mean a house in a "safe" neighborhood.
So, Medina is out. But probably Skyway as well. It's reasonable thought to alter the definition based on where you life to a degree though. The wage for middle class in NYC is definitely not the same as in Houston.
Working class has nothing to do directly with lower/middle/upper class. Working class is defined in opposition to Capitalist class. If you own things (businesses, investments, etc) which passively make you money then you are not working class.
This is a little bit blurry, but a huge chunk of this country is clearly working class and basically has no investments. There are some people who I would still also consider to be working class who have considerable 401(k) investments but are still doing 'work and save' it is just going into index funds and I think its stretching it to consider them capitalist class. Most lower rung management in companies also may have stock incentives but they still get most of their income from their salary.
When jeff bezos sells 100,000 shares of amazon every now and then, that is in a completely different league to the 5000 shares that i got for working there for 5 years.
If all your income comes from investments, investment properties and businesses that you own a fraction of, then you are not working class. You may do a lot of work, but your income is due to your capital that you own. You do work on your own capital, as opposed to doing work on someone else's capital.
Comments
"Yes."
Hooray for Bili. I love this movie too and watch it every Christmastime. Strip poker and mescaline are optional.
As I said before, just looking at salary is not enough. A 25 year old who got a free ride through college and is making $70k is doing a lot better than a 25 year old who got married after HS, took out student loans to get through, and is now raising a couple kids on the same salary. The quintiles that the CBO and various other gov't agencies use are handy for statistical analysis but they do not tell much of a story. Perhaps if you look at things in a vacuum, it might be sufficient.
Personally, I tend to use more descriptive groupings rather than absolute figures.
If I had to estimate Seattle's population based on that, I'd estimate <1%, 10%, 50%, 30%, 10% (I know, it adds up to over 100%). Other places with lower incomes, it might be <1%, 5%, 40%, 50%, 5%.
So, going back to the OP, the $80k lawyer is probably middle class. If you want to call it upper middle class that's fine but s/he is still probably reliant on that job or one just like it for their lifestyle. They could be much better off, if they got a free ride through college or if they have wealthy parents. They could be worse off, if they're financially supporting sick parents or are raising a large family.
Unfortunately there is no hard way to define middle class. It's always somewhat abstract just because not every situation is the same.
you wrote:
The majority of people are middle class. You can slice this a million ways, but the middle class are mostly wage earners with defined/restricted benefits (i.e. 3 weeks vacation) who must work to make ends meet
Yep that's us
. Any interruption in work means increasing debt load
Nope
or other drastic measures.
Depends on what you mean we have 12 months income set aside for just such an eventuality since I expect it's a liklihood.
Major purchases are financed and must be balanced against other needs.
Um, all purchases are balanced against other needs and needs are very clearly differentiated from WANTS! Besides the house, nothing is financed, if we can't pay cash we can't afford it. If we want it and can't pay cash, we save for it then buy it.
Luxury purchases and savings are limited.
Again to me it depends on what you mean by 'limited.' Our savings are 'limited' to 50% of our gross (well 49.7 last year if you want to be precise)
Is that your definition of middle class?
a) $100,000 annual passive income (based on $2 million in assets) and all of the free time in your life?
or
b) $120,000 per year in a job that requires 40+ hours per week of labor and the continuation of that income depends on the decisions of your boss and the health of the company?
If you work for your money, you are working class. Most people tend to lead a lifestyle at their income level. But if a change in your income (loss of job or a promotion) is going to change your lifestyle (up or down) then you are a working stiff. There are different classes of working stiffs. But they are all some version of middle class.
You cannot be defined as "upper class" or "wealthy" if your lifestyle is depending on the paycheck from an employer, even if it is $300,000 per year.
Someone who is an owner (doctor practice, partner of law firm) of the asset might be defined differently. That is an income, but they are also one of the decision makes on how that asset is distributed. But then again, 10% of all bankruptcies are lawyers and doctors going out of business. They are working stiffs also.
If your money works for you, as in investment assets throwing off passive income, then you are wealthy upper class.
Even NBA or MLB players are working stiffs the first few years.
Consider the 1960s: if a worker on a Boeing manufacturing line were laid off in 1964, he would have no problem moving to Detroit and getting a similar job with a similar pay. Catastrophic risk to his income was rather low. Now, if a worker on an auto manufacturing line is laid off, what is he going to do? He can't find a similar quality job with his current training. Losing your job is now catastrophic for a significant chunk of the population.
Jim Jubak had a great article about this very situation earlier this year. This of course is ignoring such things as illness or injury which have always been potentially catastrophic.
No.
You have several factors which I attribute more to affluent families than middle class. One, you can handle a job loss (12 months savings? Definitely not middle class). Two, you have extensive savings. Three, you are not forced to finance.
If you are middle class, then most people are flat out poor.
He has those factors because your definition of middle class is flawed. If person A makes $30k a year but has figured out a nice lifestyle for themselves that costs $10k a year, they could easily save up 12 mos worth of expenses during their first year on the job. That makes them thrifty, not affluent.
I doubt grumpy old guy's situation mirrors what I just said, but the point is you can't rank class based on how thrifty someone is.
Your example wouldn't be affluent using my definition. Middle class, yeah, despite the low salary. There's no way that salary can make any major purchases without significantly impacting savings, nor make frequent luxury purchases, take long vacations, etc.
grumpy old guy might fit in this group, but could easily be above it based on my interpretation of what he posted.
I'm not trying to say my definition is perfect, because it's merely one way of slicing it.
The problem is you're getting into a recursively defined definition. The rational next question is, what is a luxury or major purchase, and what is a significant impact to savings.
Some people consider a brand new BMW to be expected, others would consider a 2000 Toyota Corolla with only 80,000 miles on it to be a luxury. This is why middle class is so hard to define.
I would argue that anyone who views a new BMW as expected has a fairly skewed view of the world, but you and I both know those people are out there (and probably complaining about not having enough to get by). Most people, however, could easily distinguish between filling a transportation need (with the trusty ol' Corolla) vs satisfying wants with the much nicer BMW.
I look at your definition (posted on #11 and quoted above), and while I don't disagree with it, it allows a huge range of lifestyle and "class". You could probably find a family that fits that description in Skyway, and another on the lakefront in Medina, and both would be "middle class" even though I suspect the latter is far better off.
Uh oh, called on my own game.
Actually, I think that's nitpicking in this case. If I had thought to add it, I would stipulate that a house should be within about 30-35 minute drive of your workplace. Also, I would have stipulated that middle class would usually mean a house in a "safe" neighborhood.
So, Medina is out. But probably Skyway as well. It's reasonable thought to alter the definition based on where you life to a degree though. The wage for middle class in NYC is definitely not the same as in Houston.
This is a little bit blurry, but a huge chunk of this country is clearly working class and basically has no investments. There are some people who I would still also consider to be working class who have considerable 401(k) investments but are still doing 'work and save' it is just going into index funds and I think its stretching it to consider them capitalist class. Most lower rung management in companies also may have stock incentives but they still get most of their income from their salary.
When jeff bezos sells 100,000 shares of amazon every now and then, that is in a completely different league to the 5000 shares that i got for working there for 5 years.
If all your income comes from investments, investment properties and businesses that you own a fraction of, then you are not working class. You may do a lot of work, but your income is due to your capital that you own. You do work on your own capital, as opposed to doing work on someone else's capital.