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What does it mean to be "middle class" in America today?

Consumer Reports News: February 13, 2009 01:23 PM

As the federal government wrangles over trillions of dollars in tax cuts, stimulus spending, and corporate bailouts in response to the nation's economic crisis, the White House is also trying to talk to average citizens about their financial lives.

A "Middle Class Taskforce," headed by Vice President Joe Biden, was announced at the end of January to "put the middle class front and center."

The task force asked for ideas and comments on that mission, and in the first response its executive director tried to answer the most fundamental question: What is middle class in America?

Jared Bernstein, chief economist and economic policy adviser to the vice president, wrote this on the Middle Class Task Force Blog:

I think it’s important for us to use a broad definition of "middle class" that encompasses the various levels of middle class. The Census Bureau tells us that the median household income—the income of the household smack in the middle of the income scale—is about $50,000, so that’s certainly got to be considered a middle-class income. But a more comprehensive definition must go a lot further. My boss, the Vice President, often describes the "middle class" as any family that can’t afford to miss more than two or three paychecks without financial difficulty. Given job market turmoil, that’s an awfully timely way to think about the question. It used to be that the middle class was able to achieve the American dream of owning a decent home in a safe neighborhood with a good public school, having access to affordable health care, saving for college and retirement, and enjoying the occasional meal out, movie, and vacation. The problem is that many middle class families are no longer able to achieve this dream. The task force will focus on making the American dream accessible again to the middle class.

The answer to what exactly middle class means different things to different people. In a Pew Research Center survey from April, 2008, about half said they think of themselves as middle class, but that group covered a wide range of Americans.

Some 53% of adults in America say they are middle class. On key measures of well-being -- income, wealth, health, optimism about the future -- they tend to fall between those who identify with classes above and below them. But within this self-defined middle class, there are notable economic and demographic differences. For example, four-in-ten Americans with incomes below $20,000 say they are middle class, as do a third of those with incomes above $150,000. And about the same percentages of blacks (50%), Hispanics (54%) and whites (53%) self-identify as middle class, even though members of minority groups who say they are middle class have far less income and wealth than do whites who say they are middle class.

That same Pew survey tried to determine statistically which Americans were "middle income," and, according to census data, that number was significantly lower than 50 percent.

In 2006 there were nearly 218 million adults ages 18 and older residing in U.S. households (Table 3). About 77.1 million adults (35%) had adjusted household incomes in the middle income category in 2006. Over 71 million adults (33%) resided in households with adjusted incomes below middle income. Over 69 million adults (32%) had adjusted household incomes in the upper income category. So, roughly speaking, the census income analysis reveals that in 2006 adults split about evenly one-third, one-third and one-third across the lower income, middle income and upper income categories.

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