The best things about these designations is that there are five of them: lower class, lower middle class, middle class, upper middle class, and upper class. Quintile opportunity!
The good folks at the Census Bureau have broken down household income into five quintiles. (And they've further broken it down by race, but I'm not brave or stupid enough to touch that one.) Instead of relying on existing definitions of the middle class, which are usually vague, what if we simply equated Pew Center's five class designations with the five income quintiles? The bottom 20% of households by income are lower class, highest 20% are upper class, and so on.
If your household earned between $0 and $20,900 in 2013, congratulations, you were in the lowest quintile. But you're not alone: a full 20% of all U.S. households were right there with you. Here is how American household income breaks down, for 2013:
- 1st Quintile ("Lower Class"): $0 -$20,900
- 2nd Quintile (or what I'd call "Lower Middle Class"): $20,901 - $40,187
- 3rd Quintile (the true middle "Middle Class"): $40,188 - $65,501
- 4th Quintile ("Upper Middle Class"): $65,502 - $105,910
- 5th Quintile (the "Upper Class"): $105,911 or more
These quintiles provide a clear definition and designation for each group. Every American household fits into one of the fifths. Each fifth has an income cut-off. And while incomes and fortunes change, the true 'middle class' is always 20% of the households. If you want to include the upper middle and lower middle classes, they are always 60%. Using quintiles to correlate with classes removes a good deal of ambiguity, and reduces class designations to what they really are: a relative comparison of finances, not an absolute. To be in the middle, you need something on either side.
The biggest problem with the prevailing ideas about the middle class is that they're loosely defined, if they're defined at all. Can your inclusion to the middle class be validated simply by a list of the things middle class families can afford? Paying the mortgage and utilities, and maybe an emergency room visit? Maybe Robert Reich is correct, and that anyone making within 50% of the median income is middle class. Or maybe the Pew Center has it right: let everyone self-designate, as we do with race or gender.
I'm a fan of the clear-cut income quintiles. I like that they create a static percentage of households in the middle class. Since there are always 60% of households in the middle class(es), it changes the kinds of questions we, or policy makers, have to ask. Instead of asking whether the ill-defined middle class is growing or shrinking (with quintiles, they are a static percentage), we might ask whether the middle class is earning more or less income than they were a decade ago, or saving more or less of that income. What kinds of people and households are making up the middle class? Are they getting younger, older, or more diverse? With clearly defined boundaries, we can get in to the weeds.
For example, the income earned by the middle class quintile has decreased over the past decade. In 2003, if your household made between $43,063 and $68,968 (in 2013, CPI-U-RS-adjusted dollars), then you were in the middle fifth. In 2013, that range shifted down to $40,188 - $65,501: roughly a three thousand dollar drop. So it's true: the middle class is making less today.
Yet, taking the long view, the middle class quintile was making more in 2013 than in 1968. Back then, the middle fifth was only earning between $35,674 and $50,632 in inflation-adjusted dollars. Each of the other quintiles tells a similar story. So, at least as far as income is concerned, we are probably doing a little better than our parents and grandparents.
But as long as we choose to define the middle class with vague anecdotes (My father was middle class and he paid for college painting fences over the summer!) then the conversation will remain a battle of opinions, and inclusion to the middle class is open to anyone who cares to invite themselves. Want to join the ranks of the average? Just raise your head and proudly say, "Yes, I am middle class." Your membership card will arrive in six to eight weeks.
Of course, income is only a part of the story. Like the old saw goes, it's not what you earn that matters, but what you keep. How does net worth distribute among our household quintiles? We'll tackle that next week.
For now, let's take a poll of the readers here. Which of the income quintiles does your household fit into?
Update: here is a breakdown of income quintiles by state, but it is slightly older (2011 data).
*Photo is from DPChristian at Flickr Creative Commons.