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Income Classes, Defined
I created the table below when I realized that people’s intuition about who was in the American middle class corresponded (roughly) to low $30k to around $100k in annual income and that the logarithm of those numbers happened to be about 4.5 and 5, respectively. To me, this range seems about right for married couples. I then extended the principle to create ranges for the other classes. So, lower class for married couples is between $10^4 ($10,000) and $10^4.5 ($31,623), and upper class is between $10^5 ($100,000) and $10^5.5 ($316,228).
| Class | single | married | 1 kid | 2 kids | 3 kids | 4 kids | 5 kids |
| bottom lower | $7,071 | $10,000 | $12,247 | $14,142 | $15,811 | $17,321 | $18,708 |
| lower | $10,379 | $14,678 | $17,977 | $20,758 | $23,208 | $25,423 | $27,460 |
| top lower | $15,234 | $21,544 | $26,386 | $30,468 | $34,065 | $37,316 | $40,306 |
| bottom middle | $22,361 | $31,623 | $38,730 | $44,721 | $50,000 | $54,772 | $59,161 |
| middle | $32,821 | $46,416 | $56,848 | $65,642 | $73,390 | $80,395 | $86,836 |
| top middle | $48,175 | $68,129 | $83,441 | $96,349 | $107,722 | $118,003 | $127,458 |
| bottom upper | $70,711 | $100,000 | $122,474 | $141,421 | $158,114 | $173,205 | $187,083 |
| upper | $103,789 | $146,780 | $179,768 | $207,578 | $232,079 | $254,230 | $274,600 |
| top upper | $152,342 | $215,443 | $263,863 | $304,683 | $340,646 | $373,159 | $403,058 |
| bottom wealthy | $223,607 | $316,228 | $387,298 | $447,214 | $500,000 | $547,723 | $591,608 |
To find the corresponding ranges for households of other sizes, I scaled it by the square root of the number of people (multiply singles bracket by sqrt[household size]) because I’ve heard that’s a good approximation of the additional costs when you add a person.
I believe these numbers include all but the 1% highest incomes and the bottom 6%, but I wonder how many people actually make/live on less than $10,000 in America after transfer payments and retirement savings are included.
How well does this match up with your intuitions about where the classes are? Find your family size and income and let me know if it feels it defined you correctly. The numbers shown are the LOWER BOUND for the bracket. For instance, the “bottom middle” class goes from $32,623 – $46,416 for married with no children.
If we scale this class definition to the rest of the world, world poverty ($1.25 per day) is about four full “classes” below the middle class, and Tim Cook, CEO of Apple is eight full classes above the middle class.
Published in Culture, Economics
When one liberally uses the term middle class, or class in general, it conjures something quite different, especially in literal-minded people like me. And I think you’ll find other commenters have interpreted it that way too, as I illustrated previously. Hence “…people’s intuition about who was in the American middle class…” is not determined by income, as the post proclaims.
One reason I rebel against the narrow concept is that the Left has been exploiting the issue of income inequality while neglecting other aspects of quality of life, however defined. Even in the narrower sphere of financial well-being, income may not be the dominant factor; retirees have lower incomes but higher net worth than younger people. Social Security is a transfer of wealth based on the idea of income as applied to a group whose well-being is largely determined by assets. By accepting the premise that income is dominant, one is conceding important ground.
The problem with this whole discussion is that the unadjusted income classes tell us nothing interesting about the people earning the money and how they live because of how much they earn.
It’s like using the same income level for poverty in New York City and a small town in Mississippi. “We both earn $44,000 per year so I guess our two families of 4 are both living in poverty.” Makes no sense to me.
I totally just posted this on a whim so it’s not like I was carefully crafting a sophisticated argument with exact language. I didn’t expect it to be mainfeeded or taken quite so seriously…
You are just the author. The rest of us are deconstructing your work.
I agree class language is problematic when we are speaking strictly of income. But I also don’t think it’s wrong to notice that people do have certain intuitions about how much others’ yearly income is when they hear the labels “middle class”, “lower class”, or “upper class”.
So Mike makes an income table, and asks people if that table matches their intuition.
A lot of folks complain because the table doesn’t include a cost-of-living adjustment, and discussion about why, exactly, people choose to live where the cost of living is higher, and whether those who choose to do so are getting a real benefit out of it, ensues.
If I could taboo the word “class” entirely from discussions of income, I would happily do so to avoid the confusion. Unfortunately, “class” has become a proxy for describing where one falls on the income ladder – in addition to everything else “class” means – and that makes avoiding the word entirely difficult.
We could use the word “fnork” instead, though.
The word “class” isn’t the problem. I actually like it. I’ve asked my college students over the years what class they believe themselves to be and the answer is always “middle class.” Not once has a single student given a different answer.
That’s why I found this post to be worth spending a lot of my time thinking about and arguing about.
The problem is in looking at dollar income as if it carries more meaning than it does. My daughter lives in San Francisco. She earns $120,000 per year. She is poor. My son lives in Raleigh. He earns $70,000. He is comfortable.
That’s true, although I don’t think the calculus changes significantly if you look at my wife’s and my income. She’s self-employed in a very seasonal and Zipf-distributed industry, so she may make ~$40,000 in a very good year. I make a bit over $150K a year. In LA, that makes us distinctly middle class, hence the 40-year-old ranch house in “the valley” for, at the time, a third of a million dollars. But I may try to move us years before retiring, because I work from home, and it would be great to have my Silicon Valley income with Pigeon Forge, TN living costs.
It might be interesting to note that the ranges I picked for “middle class” include exactly 50% of the US population. It is 20% below the median and 30% above the median, but people who are more wealthy like to think of themselves as middle class. As you note Axe, people like to think of themselves as middle class, to the point that answering that question “upper class” is a strong indicator of narcissism.
In the “pining for the fnorks” or the “can you see the fnorks” sense?
On the other hand, unless the college you teach at just happens to serve only families in the middle band of income – that is, those with incomes that can be described as neither especially low nor high – that suggests very strongly to me that your students are looking upon “middle class” as a cultural designation, in line with drlorentz’s objection that the distinction between class and income ought to be made clearer.
Actually, I was quoting verbatim from Mike’s first sentence, in which he was asserting, not asking. I think it is fair to disagree with an assertion:
“…I realized that people’s intuition about who was in the American middle class corresponded (roughly) to low $30k to around $100k in annual income”
But that’s the point, isn’t it? The whole conversation (should I say hectoring from the Left) has been about income inequality and the implicit assumption that that’s all that matters. To put it another way:
Besides geography, people also make other quality-of-life tradeoffs against income. We see this in the gender gap issue, which is so dear to the Left.
That said, the table is a good rough cut at class structure.
We have friends who are self-employed and make a lot, lot less money than we do. I don’t know what their income is, but they’d probably be middle to lower middle and we’d be very near the top. We live in a very expensive part of the country, but they have been here a lot longer and bought their very nice house from a family member for a low price. They are from small families and inherited money, we are from large families and don’t expect to inherit. Because of our high income and their low income, you’d think we’d be a lot richer, but we aren’t. Their house is paid off, ours isn’t, though we’re close. Since they bought it much longer ago and from a family member, here in CA they pay hardly any property taxes, whereas ours are very high. They have smart children and (I say humbly) so do we, but since their income is low, their children went to better schools for almost nothing, while ours didn’t even apply to the schools theirs got to attend for free, and we had to pay full tuition for our last two kids (got a tuition break at ND when Dad taught there for the older 3, but still paid a fair amount per kid.) They own a vacation home and other real estate besides their house. We don’t. In spite of our high income, since we just finished putting the kids through college, we now need to start saving money to redo the kitchen, which really, really needs an update. They did their kitchen several years ago, and have done more extensive work on their house than we can afford to do. There’s a very high income tax here in CA, and we pay through the nose for that, whereas they don’t because their income isn’t very high.
I’m telling you, circumstances make a big difference, and there is rather a lot of income redistribution in various forms. I’m really not complaining, just making the point that income is only one part of the picture when it comes to wealth.
Some more context for this is it’s something Sal posted on Facebook. He asked how people defined middle class since politicians always talk about doing things for the middle class but never define it. Everyone responded with an income range.
Sounds like you and Mike are in agreement, then!
This will prove to be an interesting evolution; as people work remotely then the premium for certain geographic areas will vanish. Keep in mind that this could cut both ways. If people in cheaper areas compete with those living in expensive ones, salaries would tend to equilibrate at a lower level than Silicon Valley.
I wonder it there will be an exodus from those expensive areas, thereby depressing housing and other costs. It will be encouraged by the looming fiscal problems and hostile business climates in states like California, Illinois, and New York. It will be fun to watch. In my area, Toyota is slowly relocating everyone to Texas.
Of course. I was just quibbling.
You are an apt quibbler, then :-)
That’s my gripe in one sentence.
This is my experience. I work for a software company from home. I could live anywhere in the country, but my pay wouldn’t change because we have no central office. Our pay isn’t based on where we live but what the owners and we agree to. It’s very close to being an independent contractor in many ways.
My thoughts exactly. The numbers need to be factored for locale cost of living. In the NYC area you should drop at least two categories downward to find the right one.
My sympathies.
Still, not too many sympathies. We conservatives likewise rail over “gender” being used to describe sexual identity rather than grammar. But railing, no matter how justified, is still unlikely to change popular usage, or lead to the rectification of names we most desire.
About cost of living effecting the classes… my niece once complained about being only able to afford a small, three bedroom, house in Mountain View, California (that’s near Stanford, very posh area) and it cost really a lot, I can’t remember what…. but she lived in Mount View and had a nice house. Selling that house and moving to a lower cost of living area would bring her a fortune, by the other area’s standards. So the house itself made her income because: location, location, location.
Also, it is probably hard to FEEL wealthy when everyone around you is dressed so well and drives such expensive cars, but if you fit in there you are wealthy.
Also, I once asked about a small town another relative lived in, and her description was that it was full of poverty… I visited, and saw large pieces of land with double wide mobile homes on them, and horses. What looked like poverty to her, looked pretty prosperous to me. The land was probably worth more than most average city houses would be worth. And horses are expensive to keep. Those people are not poor, I would think anyone living in public housing in Compton, California, for instance, would think they looked wealthy.
I guess the point is… I think the chart does not need adjustment. If you don’t make as much as your neighbors, but you live in Mountain View… you are wealthy.
Here’s the difference: people may say income defines class but they act differently. Here’s a little Gedankenexperiment for you: a recent law school graduate (female) gets her kitchen faucet fixed by a plumber. They both have about the same income; he’s a couple of years older. Is the plumber marriage material? If you have any doubts about the answer, consider why this had to be posted. Sure there can be exceptions but they are exactly that: exceptions.
And I never use gender to mean sex.
Mike H:
Any chance of a similar chart after the application of transfer payments? That would be helpful from a political standpoint in first showing that there are essentially no poor people in the US. And if the before and after amounts can be linked in some way, it would be far more helpful as the middle class sees the ‘poor’ doing as well or better than themselves as a result.
We’ve had headlines from various jurisdictions in the last few years comparing benefits to salaries. There was one from PA that said for the mythical family of four, you were better off on welfare until the salary was well over $60k per year. I doubt many in the middle class would be cool with that.
My other takeaway is that the numbers are much lower than I would have expected, meaning I was doing better than I thought. ;-)
This is an important point.
Another aspect of it is the marginal cost of working that obtains because of the structure of our welfare programs. I don’t remember the numbers, but the idea is something like this:
Say a non-working woman with children receives $35,000 per year in total transfer payments. If she goes to work and receives a minimum wage paycheck of $7.25 (2000) = $14,500. She pays FICA, state and local, and has other costs of working (babysitter, lunches, bus) which, let’s say, brings her net down to $12,000. She also loses $6,000 in transfer payments. (I’m making that number up.) Her net after all that is $6,000 / 2000 hours = $3/hour.
Most people won’t go to work for that.