What is the Middle Class?

Do you consider yourself part of the “middle class?” Many Americans do.  With the political season heating up, the term “middle class” is being used more and more frequently. President Obama referred to the “middle class” 14 times in a recent speech!

Economic data suggests the middle class is actually shrinking. The White House chief economist Alan Krueger said in January that the middle class fell from 50% of households in January to 42% in 2010. More families are moving to the extreme ends of income distribution. But what does this mean? What is the middle class?

The Census Bureau divides household income in groups of 20%. Some economists define the middle class as those in the middle 20% of the distribution, which would be earning $38,000 to $61,000. Other economists say it includes the middle 60%, which would be earning between $20,000 and $100,000.

Another way to gauge class is by income tax bracket. The middle class is typically seen as falling in the 15% and 25% brackets, which would be families whose taxable income is between $17,400 and $142, 700.

Dennis Gilbert, a sociology professor at Hamilton College, says, “Politicians love to use the term, because it’s vague and connotes an image of regular American people.” As the election draws nearer, we will only hear this term more.

Here are a few varying interpretations of the current middle class:

• President Obama: families making less than $250,000.

• Mitt Romney: families making less than $200,000 (includes families who fall below the poverty line).

• Council of Economic Advisors: people earning between $25,000 and $75,000.

• Economists: people making between $20,000 and $100,000.

• Americans in an ABC News poll: middle class means owning a home, being able to save for the future, and affording things like vacation travel, the occasional new car, and other luxuries.

For more information, read this article from the Winston-Salem Journal: "'Middle Class' Becomes an Indistinct Label in Politics."

How do you define the middle class? Do any of these definitions line up with your own interpretation? Let us know!