What is "middle class"?

[DisneyBamaFan]

So 100K could be poor in California, while 30K isn't poor in rural Michigan? That's the problem with trying to come up with a definition - too much varies from place to place.

I recently ran our budget for next month onward, when we move into the new house. We could cover all the essentials - utilities including cable & internet, health insurance, gas, auto insurance, taxes, food and toiletries, a simple but not sparse lower middle class lifestyle - on about 15K/year. We can continue our current lifestyle of vacationing twice a year and not being especially frugal on an income below the official poverty line for our family size. I know we're an extreme example because we have no debt, just as the family barely making ends meet on a 6 figure income in a high cost of living area is the extreme example, but that's the problem with using vague terms like "middle class". Unless it is put in a more specific context, you can't derive any significant meaning from it.

Great point. My mother can pay all of her bills and still have money to save (not much) on about $25k/year in income. And she has her grandson living with her. She is not poor, and certainly doesn't consider herself to be poor...

 

[mjkacmom]

So 100K could be poor in California, while 30K isn't poor in rural Michigan? That's the problem with trying to come up with a definition - too much varies from place to place.

I recently ran our budget for next month onward, when we move into the new house. We could cover all the essentials - utilities including cable & internet, health insurance, gas, auto insurance, taxes, food and toiletries, a simple but not sparse lower middle class lifestyle - on about 15K/year. We can continue our current lifestyle of vacationing twice a year and not being especially frugal on an income below the official poverty line for our family size. I know we're an extreme example because we have no debt, just as the family barely making ends meet on a 6 figure income in a high cost of living area is the extreme example, but that's the problem with using vague terms like "middle class". Unless it is put in a more specific context, you can't derive any significant meaning from it.

Ugh - I'm on the opposite extreme of you, unfortunately - with 15K, I wouldn't have much left over after just paying our propterty taxes!

 

[ToyStory Fan]

I think it is ridiculous to use the term "middle class" in the context of a Federal median household income figure. Where I live yes the median household income is higher than the federal levels, but everything else around us is price adjusted according to that same scale...housing, property taxes etc. So the real answer is to define middle class within a particular geography not on a national basis. I can assure you that most people where I live are regular "working - joe and jane" - who unfortunately based on where we live will be the most penalized by the definition of middle class and the household income level currently asscoiated with "wealthy" as it relates to an increase in taxes.

There's a reason the gov't hasn't done anything to address the antiquated and ridiculously low income threshold for hitting the Alternative Minimum Tax...it would kill alot of the money they see coming through the gov't coffers and put it back in the hands of those that earned it. There's gotta be something wrong witht he process when a majority of "middle class" families in a certain region are tripping over A.M.T. hurdles and not getting the benefit of mortgage deductions that someone considered middle class elsewhere in the country is entitled to.

 

[wall*e2008]

So 100K could be poor in California, while 30K isn't poor in rural Michigan? That's the problem with trying to come up with a definition - too much varies from place to place.

I recently ran our budget for next month onward, when we move into the new house. We could cover all the essentials - utilities including cable & internet, health insurance, gas, auto insurance, taxes, food and toiletries, a simple but not sparse lower middle class lifestyle - on about 15K/year. We can continue our current lifestyle of vacationing twice a year and not being especially frugal on an income below the official poverty line for our family size. I know we're an extreme example because we have no debt, just as the family barely making ends meet on a 6 figure income in a high cost of living area is the extreme example, but that's the problem with using vague terms like "middle class". Unless it is put in a more specific context, you can't derive any significant meaning from it.

WOW. We pay $12,500/year just for health insurance. The rest we could do for $15K/year.

 

[SAHDad]

So 100K could be poor in California, while 30K isn't poor in rural Michigan? That's the problem with trying to come up with a definition - too much varies from place to place.

Exactly. Which is the problem with your suggestion above:

To me it makes more sense to define middle class by income distribution - the statistical middle - than by subjective measures of lifestyle because lifestyle is so impacted by debt or lack thereof.

For example, our house, when we bought it, was $X. If I look on realtor.com right now, I can see that there are 44 houses in that range (more or less). There are only 16 houses (and some of those are condos or duplexes) where my in-laws live. And there is another difference - the houses locally are bigger and/or newer than the ones where the in-laws live.

That's actually one of the big problems with a national minimum wage - it presumes that the cost of living is identical everywhere. Minimum wage will buy you more (though admittedly not much) in Lincoln, NE than it will in New York NY.

FWIW, my rule of thumb is this:

I was poor when I worried all the time about food, rent, utilities, transportation, etc. I was poor when every purchase was a trade-off - if I bought generic 'nilla wafers as a treat, it meant making mac-n-cheese without milk. I was poor when a single day of missed work meant a major recalculation of the budget, and a missed paycheck could have put me on the street.

I entered into middle class when I didn't have to count pennies all the time, and I had the relative freedom to get what I wanted at the grocery store. I could afford to indulge once in a while, and even take vacations from time to time. Monetary worries are more concerned with major purchases (house, car, college, retirement) than with the mundane (Doritos, milk, a daily newspaper).

We have not yet entered what I would call "rich". Our heads are above water (though I need to reign in our spending again), but I think, when we don't have to put off a major purchase (like a car) until the financing is better, or worry about the cost of a trip to Disney. In the meantime, we have a nice house, we have 2 cars, and I have the luxury of being able to be at home for our children. (When we had kids, we worked it out - if we had to do child care, my job would have only paid about $1 an hour, after counting gas, food, work attire, etc. Wasn't worth it.)

 

[ntsammy5]

WOW. We pay $12,500/year just for health insurance.

Wow. I know it's expensive. My wife has one of the best insurance plans around through work and pays nothing for it. I use it too at no cost, PLUS I'm eligible for Tricare (military insurance). I consider myself lucky.

 

[Mr Man]

Here is my shorthand.

If you pay no income tax, you are upper class (or a Democrat politician-bazing!).

If you pay income taxes, you are middle class (or a Republican politician-bwah bwah)

If you pay no income tax and get a refund, you are lower class (or an illegal alien).


/s

 

[wall*e2008]

Wow. I know it's expensive. My wife has one of the best insurance plans around through work and pays nothing for it. I use it too at no cost, PLUS I'm eligible for Tricare (military insurance). I consider myself lucky.

There was an article recently in the local paper and it said that the national average for health care is $12/year/family. We are average I guess.

This is one of the reasons that UHC scares the crap out of me. Do the math and see what it costs. Then they need to pay for others so the cost to us will be much higher. Presently we have over 100 million US households.

 

[arminnie]

If you can barely afford to pay your basic living expenses such as food, clothing and shelter; to me that is poor. I'm not talking about not being able to pay for a huge house, eating out all the time, and designer clothes. I'm talking about basic needs.

But what is your definition of basic needs? Someone who lives in subsidized housing and gets food stamps may be having their basic needs met - but is still really poor.

If you ever meet someone from "old money" who has never worked and considers people who do work to be beneath him/her, you will realize that there still exists a very clear class system in America. As far as they are concerned, there is the Upper Class, and then there is everyong else. These people control almost everything in America, and the world...

I live part-time in New Orleans - very old city. There is DEFINITELY an upper class - but it has NOTHING to do with money. I know many upper class people from well known families who don't have two dimes to rub together. And there are many very wealthy people who cannot buy their way into the upper class no matter how hard they try.

And by the way - not all of these "upper class" folks are white either.

 

[tink_n_pooh]

Here is my shorthand.

If you pay no income tax, you are upper class (or a Democrat politician-bazing!).

If you pay income taxes, you are middle class (or a Republican politician-bwah bwah)

If you pay no income tax and get a refund, you are lower class (or an illegal alien).


/s

Exactly what I was thinking

 

[Colleen27]

Ugh - I'm on the opposite extreme of you, unfortunately - with 15K, I wouldn't have much left over after just paying our propterty taxes!

We're fortunate to have a low cost of living, low real estate prices, and low tax rates to boot. Of course the flip side is high unemployment - I'm in the semi-rural outskirts of the Detroit metro area, and the rate in our county is about 13%.

 

[Colleen27]

WOW. We pay $12,500/year just for health insurance. The rest we could do for $15K/year.

We don't have much of a plan. We got tired of paying 10K+ for a policy that never paid out and switched to a low-cost, catastrophic-only plan. This way we're covered in the event of the unthinkable - a serious injury, major illness, hospitalization, etc - and we get the "preferred" pricing for having our health plan even for uncovered serviced, but we're not throwing an arm and a leg into premiums. We put what we saved in premiums into a specific savings account until we had enough to cover our very high deductable, and that money is building interest for us now rather than for our insurer.

 

[Mysteria]

For where we live we are far beneath the median so I guess that makes us poor. Now if we could move to a place with a lower cost of living we'd be middle class. Move to Ttuktyuktuk we may even be upper middle class.

 

[disney1990]

Also, if you own your own home, you are not poor...

I don't agree with this statement. There are places in this country where you can purchase a house for $40,000.

 

[DisneyBamaFan]

I don't agree with this statement. There are places in this country where you can purchase a house for $40,000.

Sorry, I don't see how anyone can claim to be poor when they have sufficient income to put together a down payment on a home - even a $40k home. As has been mentioned on this board, there are those living comfortably (if not luxuriously) on $15k-$25k per year...

 

[SAHDad]

I don't agree with this statement. There are places in this country where you can purchase a house for $40,000.

Detroit has 1439 houses priced between $5,000 and $10,000. I would concur that home ownership, in and of itself, is not necessarily indicative of being even middle class.

 

[LaraK]

Where I live, there are quite a few people who own waterfront property who are poor (and waterfront property is like gold around here). The property has been in the family for generations. The Tax Man would take the house, but we have capitated property tax increases in my county (thank God!). Unfortunately, those folks have to sell when the official "owner" of the house dies because the death tax on the assessed value is so high.

What my husband and I make here would make us rich in many other parts of the country. Here it makes us middle class.

 

[DisneyBamaFan]

Where I live, there are quite a few people who own waterfront property who are poor (and waterfront property is like gold around here). The property has been in the family for generations. The Tax Man would take the house, but we have capitated property tax increases in my county (thank God!). Unfortunately, those folks have to sell when the official "owner" of the house dies because the death tax on the assessed value is so high.

What my husband and I make here would make us rich in many other parts of the country. Here it makes us middle class.

How can you call them poor when they could sell that property for a fortune?

 

[LaraK]

How can you call them poor when they could sell that property for a fortune?

If they sold the property, they could buy another property for their profits. However, they don't want to sell the property that they've had for generations. Some make their living off the water (crabbing, fishing) and they certainly can't afford another property on the water. Some live in little more than shacks. The person who buys the property tears the house down and builds on the land.

 

[DisneyBamaFan]

If they sold the property, they could buy another property for their profits. However, they don't want to sell the property that they've had for generations. Some make their living off the water (crabbing, fishing) and they certainly can't afford another property on the water. Some live in little more than shacks. The person who buys the property tears the house down and builds on the land.

Sorry, that is like saying, "I have $1MM in the bank, but I will not touch it, so I am poor."...