Who or what is the middle class?

[gateley]

Source: msnbc.com


Economic data can't fully explain why so many feel financially squeezed

By John Schoen
Senior Producer
MSNBC
Updated: 10:38 a.m. ET Oct 17, 2007

When politicians, economists, academics and journalists try to assess the current economic status of the "American middle class," the debate often begins with a question that some concede is all but impossible to answer: Who, exactly, is middle class in America today?

One way to find out is to ask Jerry Orzechowicz, a salesman in the hospitality industry, who lives in Merrillville, Ind., population 30,000, tucked in the northwest corner of the state, about 35 miles outside Chicago.

"I'm about as middle class as you can get," he said

Orzechowicz and his wife, who also works, earn a combined annual income of between $70,000 and $90,000 and have two kids, one of whom is still in college. They own their own home, four cars and four TVs — including a high-definition widescreen model with surround sound.

Orzechowicz says just about anyone living on $50,000 a year can enjoy a middle-class existence in his neighborhood, which is why he says he’s puzzled when he hears that it’s getting harder to maintain that lifestyle in America.

snip

Read more: http://www.msnbc.msn.com/id/21272238/

---

There's an interesting poll: How much do you need to be in the middle?

[againes654]

1. I would like to try to live on that.

At this point I am below the poverty level. :cry:

[zabet]

2. According to those figures...

I am middle class. :shrug:
The cost of groceries and gas have had the
biggest impact on our budget other than
medical expenses.

[gateley]

5. In addition to groceries and gas, my utility bills are pretty daunting as a result

of increases along the way.

[zabet]

20. Oops...

mine too - I have blamed it on our old house. Built in 1931.
Improvements have done little to curtail utility bills increasing
over time. We have done the windows and insulated but, I will
have to say, our electric bills have gone up in the past year.

[Warpy]

3. Some people describe it as anyone making the median wage

which is hanging at about $37,500. However, in terms of lifestyle, the middle class was the class between the working class and the wealthy. That meant that, while they still had to work for a living, they had enough income to live very well, send their kids to private schools, and invest enough for a comfortable retirement. The middle class was historically populated by licensed professionals like doctors and lawyers and by successful small business owners.

Another way is to define it by net worth. If the author looks at the net worth enjoyed by that "middle class" $50,000/year family, I think he'll be in for a very rude shock. They can leverage enough debt to enjoy the lifestyle, but they cannot really afford it. Looking at their net worth, assets minus debt, will probably confirm it.

Most people who think they are middle class because they can still leverage debt are going to be in for a very rude shock. With their net worth, mostly in their housing, declining they will soon find their ability to leverage affordable debt sharply curtailed and their ability to leverage unaffordable debt limited by the increase in monthly payment schedules.

[sandnsea]

8. So Hillary's "middle class" bus tour

is really aimed at the upper 20-30%. I wish working Americans understood that.

[pennylane100]

4. As a quoted spokesperson for the middle class

Orzechowzic (sp) and his family should be subject to the same kind of scrutiny the Frost family endured. Because his family income is higher than 50K, why is he saying that is the amount needed for a middle class family to survive. Did I miss something?

[CrispyQ]

11. Those were my thoughts, too.

Cut $20k-$40k off his annual salary & see if he feels the same way. Also, the article doesn't mention how much debt the family is carrying. Four cars????? And the "they own their own home" comment -- I doubt they really own it, but rather owe on it & who knows what kind of mortgage.

It's really sad how so many people cannot feel empathy for others until they themselves experience pain.

[AX10]

38. Or his job could be outsourced and he can work...

at McDonald's for 5.15 an hour.

[sandnsea]

6. That's the upper 20%

“You can have a house and pay the bills and put food on the table and save a little and take a little vacation once a year," he said. "To me, that’s maybe lower end of the middle class, but it’s better than 98 percent of the people in the world.”

Despite income of $100,000, ‘We are squeezed tight’

2006 the 80th percentile started at $91,705.

Too many people do not understand how well they have it in this country, and never stop to think that if they're "struggling", how are the 50% of households with less than $45,000 surviving.

[daninthemoon]

7. The American middle class is a curious footnote in history. For

a short time, After WWII and continuing roughly through the early 21st century, there was a class of people who were paid fair wages for a days labor. They had health insurance and retirement plans. The wealth of the country extended beyond the top 2% of the population. It was entirely unique, and we shall not see such a phenomenon again. Our dear emperor will see to that.

[gateley]

13. Do you think there's no possibility of heading back toward that time? Has

too much happened? It really breaks my heart.

[daninthemoon]

24. Oh, don't mind me. If we get the right president and the right

(meaning left) congress, who knows. Things are certainly looking bleak at the moment. These next decades are going to be difficult, and fateful for the US and humanity overall.

[gateley]

27. Well I think you're right. There will be a long way to go to regain the

economic situation as it was when I was growing up.

[superconnected]

9. I like the end of the Article:

"Now globalization poses a similar threat to the financial security of American workers whose jobs are “outsourced” to lower-wage, developing countries. Much of the credit for the current strength in the global economy goes to the elimination of trade barriers and the increased interdependence of producing and consuming countries. But if the economic benefits of that global growth flow only to a smaller and smaller group at the top, the backlash from those left behind could threaten the continued expansion of global trade, according to Zandi."

“Globalization is a fabulous thing. It raises everyone’s standard of living — it’s a net benefit to the global economy,” he said. “But there are losers. And if we don’t take care of the losers — if we don’t allow their standard of living to remain within some striking distance of the winners — then they could very well short-circuit the entire process.”

I also like how the author noted a few times the growing gap between rich and poor and how the rich have way taken over in income level growth leaving the middle class growth rate well behind.

[CrispyQ]

16. We used to be a nation where there was no limit to how high you could climb,

but there was a limit to how far you could fall. We no longer value community.

I suspect I will never make as much as I am making now & I'm already making less than I did five years ago. And getting older doesn't help, either! ;)

[The2ndWheel]

18. And then some wonder why this way of life isn't sustainable

No limit upwards, but a limit downwards.

Unfortunately, physical reality doesn't work that way. You either have limits up and down, or no limits either way. We don't get to have everything.

Well, no, we could. There won't be much of a planet left...alright, so we still couldn't have everything.

[raccoon]

52. It certainly doesn't help. I realize that I'll probably never make a decent wage again. nt

[chelsea0011]

10. $50,00 a year for a family of four can live comfortably?

Let's break it down. Pay your taxes and that $50,000 goes down to less than $40,000 a year but let's say 40 to make it easy. That's make it easier and say you take home $800 per week. Rent or own a home? Mortgage or rent....$1200 per month. Want to feed yourself? $400, aand that's conservative. So....out of the $3200 per month you take home you are down to $1600 left. Want insurance? Oh, I don't know. $400 a month for the cheap policy with no dental. You want heat, electric and water/sewer? Pay up. $1000 left. You want clothing, entertainment, college, savings for retirement, a haircut, furniture, cable tv, pay for plumber, that washer just broke down, who needs glasses?, we'll jus attach your tooth to the door and slam it. Middle class on $50,000? No way. That's nearly the working poor right now.

[KayLaw]

12. What you said!

But I read your post twice and didn't see transportation which is another killer.

[chelsea0011]

37. Thank you. Car payments. Now we are really broke.

[SharonAnn]

44. Car insurance, gas, maintenance, etc.

[gateley]

14. Well done! nt

[daninthemoon]

22. I wonder if this is some (not all) of the apparent disconnect with

prezdent numbnuts and the schip veto. He doesn't have the first clue what it costs to live in America, let alone how to live in a budget.

[onehandle]

15. The second family in the story is more realistic.

Despite income of $100,000, ‘We are squeezed tight’

But many Americans who consider themselves middle class told msnbc.com they do feel financially squeezed. One of them is Kathy McClain, a wife and mother of three teenagers in Westbrook, Maine.

McClain and her husband have a combined income of $100,000 a year, which leaves about $80,000 after paying income and property taxes. They have no credit card debt, don’t take expensive vacations, and she drives a 9-year-old car. Tuition for their oldest child, now at the state university, costs another $16,000. The family makes too much for her to qualify for work-study.

“I can tell you quite honestly that we are squeezed tight,” she said in a recent e-mail. “We live paycheck to paycheck. Yet, by all standards, we are doing well.”

[The2ndWheel]

17. Whatever it is, a lower class is required

Or else it wouldn't be the "middle" one.

So say goodbye to the war on poverty. Unless we get rid of the lower class, and make the middle class the new lower class. Then you're left with an upper and lower class, and that isn't fair either. So then the upper and lower classes have to become one class. Good luck with that.

I say lets just get rid of the institution of economics. Get rid of mass production. Get rid of corporate or state controlled economies. Good luck with that.

[gateley]

28. I think the middle class is becoming a memory. When it becomes upper and

lower only, I wonder what will happen then.

[superconnected]

30. That's when you start getting to the time of revolt.

Think The spanish and french inquisitions.

If the people are so repressed that they can't work out of it, they tend to get rid of their opressors - expecially in nations where they can "read".

[gateley]

36. Yep. I was actually wondering who would be the first to mutter "let them eat cake".

[quiet.american]

19. Not for nothing, but Merrillville, Ind., is a helluva lot different than Manhattan, NY.

I guess ole Orzechowicz must think Merrillville, Ind. is the center of the world if he can't figure out how maintaining "that lifestyle in America" is more difficult for some than others.

[Alcibiades]

26. People in the Midwest just don't get it

On the other hand, I think some of the folks in this thread just don't get it either. It's perfectly possible to live a middle-class lifestyle in the midwest.

Probably the number one item on the list of middle class desiderata is a home of your own. The article does bring this up, seemingly in passing, but it's the most important reason why someone in Merrillville Indiana wouldn't understand why many Americans making $50,000 and under feel really poor:

"...the cost of maintaining a middle-class lifestyle depends heavily on where you live. A family in Wichita, Kansas, where the median price for an existing home is about $110,000, has a much better shot at a comfortable middle-class life than a family in San Francisco where — housing slump or no housing slump — the median home price is $846,800."

If you check on the MLS for Merrillville, you will find dozens of homes under $150k, and lots of 1,000-1,500 square foot ranch houses for around $100k, which works out to about $500 a month. I'd love to pay only $6,000 a year to house my family. Comparable houses in my area (Durham, NC) run about $150k. Up where my wife is from, in New Jersey, it's around $300k.

What I don't get is why there's no exodus from the coasts to the midwest. I'd move there in a minute if I could.

[bpeale]

29. we moved from No. VA 17 yrs ago to New Mexico

we bought our house for $59900 & that was pretty median priced. now our house (1600s/f) is valued at $146000. do i think i could get that for my house? no way. i would be lucky to get what i paid for it. our combined income is $69000. we have adult children living at home while attending college & we are supporting them. our mortgage payments are $250/mo. & we are barely making ends meet. how do others do it? squeezed tight doesn't begin to cover it.

[JerseygirlCT]

33. Beach

I get itchy too far from the ocean, myself.

And though I heartily dislike our winters here, I'm a northeasterner through and through. I feel a stranger anywhere else.

Reasons like that, probably.

[Alcibiades]

43. There are lakes, the great lakes, and plenty of rivers

Of course, you'd probably make less money commuting to a job in say, Grand Rapids than you can living in NJ and commuting to what folks in my wife's family call "the city."

[JerseygirlCT]

45. Nope. Lakes don't do it. So NOT the same

to this beach person. (And by beach, I mean "ocean", not even a really, really big lake, lol!)

Living in CT, I've managed to downplay the whole commute problem pretty well. At the worst, traveling at rush hour, my commute was 45 minutes with traffic. I now work slightly off-hours and it takes 20 minutes. SO far superior to my years commuting in the city from NJ! THAT was hell, and something I'd never, ever want to do again.

But it's just me. I need to get to my ocean. Frankly, CT is lacking in that dept., too. Rocks and a calm sound don't really fit the bill, either!

[TankLV]

48. Then you haven't experienced the Great Lakes then...

only difference is the salt and snow...

[superconnected]

34. The exodus will come when there are jobs in the midwest.

Right now I'd be very taxed to leave my area of high tech jobs to move to a place without a tech corridore.

[Alcibiades]

42. The region as a whole does have the highest unemployment rate at 5.4%

On the other hand, there are some bright spots. Illinois is probably cheaper than out where you live, but you'd have to retrain to work in a candy factory.

My wife was looking at a transfer to southern Illinois recently that didn't come through. She's a govt employee, so the money would be the same, but the cost of living much much lower. There are some cheap towns out there. I lived in Springfield, MO for a few years and loved it. One of my friends from the Bay area was from MO and hated it, loved living near Frisco. Personally, I say if you can get a job in the midwest, do it. You can fly anywhere in the world you want to visit with the money you'll save.

[Romulox]

50. *You* can afford your lifestyle on the coast, and *we* don't get it?

Uh-huh. :eyes:

[SomeGuyInEagan]

54. You're right - we voted and Orzechowicz speaks for all of us ...

... on this issue. That's why he's quoted in this article.

I was asked, but I said, "Nope. Go see Orzechowicz in Indiana. He speaks for all of us in Midwest on this topic."

[Romulox]

51. Manhattan is a ritzy part of NY. NOTHING "middle class" about it...nt

[bdamomma]

21. the Middle Class were the people who have worked hard in this

country, but apparently we seem to be a dying breed right now, I am proud to say that I was from a Middle Class family. This disgusting regime we have now acknowledge the haves and have mores, no room for Middle or Low Class on their delusional scale.

[coalition_unwilling]

23. So many good responses to this post already, but I thought I

would mention that the decline in the American middle class is highly correlated with the decline in the American labor movement. In 1946, if memory serves, some 40% of Americans worked in union jobs. By 2006, a scant 60 years later, the proportion of Americans covered by collective bargaining had fallen to 12-15% of the work force.

One can argue that this just a statistical coincidence, i.e., no causal relationship. But I would argue that the decline in the labor movement has contributed to the decline in the American middle class.

[CrispyQ]

25. When I was 19 I got a union job that paid for my college education.

At the same time, my mother would harshly criticize unions. I finally told her to keep her comments to herself unless she wanted to help pay my tuition. That shut her up! :)

BTW, when I say it paid for my education, I mean that it was a good paying job where I could afford my living expenses and tuition. There were no educational benefits like some companies offer today.

[SomeGuyInEagan]

49. Some companies are pulling back on education reimbursement

I work in higher education. Some companies still offer very generous education reimbursements, no doubt.

But we are also seeing a trend where companies are placing more restrictions of tuition reimbursement, reducing tuition reimbursement and in some cases, discontinuing tuition reimbursement entirely.

However, I think your point of being able to afford college can not be overlooked.

IMO, the real problem lies in the cost of higher education to the student. It is great if you can get your employer to help foot the bill. But most people are not in that situation. And, generally speaking, higher education at all levels is much more expensive in constant dollars now that when I went to college in the mid-80s, which was more expensive that it was in constant dollars for those who attended in the mid-70s.

Double-digit tuition increases have occurred at many public schools in recent years, in some cases two or more years in a row. Certainly there is waste in higher ed (as there is in any organization), but a larger factor is the reduced state and federal support to institutions over the past three decades which in turn subsidized student tuition (even if you receive no grants or aid, your tuition is still subsidized in a real sense by this practice).

That is because the thinking is (or was) that as a society benefit when more people have access to higher education - more innovation, more business growth, more taxable income to run the beast, greater opportunity for upward mobility and/or broader career options which creates happier and healthier citizens, a more educated citizenry to contribute to solving societal problems, etc., etc., etc.

Our leaders abandoned policies to support using higher education to achieve those goals a while ago, IMO.

I think those are good goals, however we get there. I think making education accessible and affordable (however it is done) for as many people as possible is part of how we get there.

[Alcibiades]

41. The peak real earnings for high school grads

in the workforce, mainly men at the time, was 1979. It's been downhill for American families ever since.

[JerseygirlCT]

31. I don't think you can use dollars

What he lives well on in Indiana wouldn't get him nearly so far here in the northeast. Or California.

The funny thing about us in the US is that we tend to think just about all of us are "middle-class". Few would cop to "upper class". It's much more egalitarian to say you're in the middle!

So a good question, but I'm not sure of the answer. A median income range for the area perhaps?

[Edith Ann]

32. Middle Class

My husband owns his own business. We bring in about 130.000 a year. Out of that we take business expenses. Mostly gas, phone,and ink for the printer. There are other expenses I don't know what they are right off because I don't do taxes. I do know that gas has doubled. We pay for my husband around 500.00 a month in gas expense, that is 6000.00 a year. For non-group health insurance we pay 615.00 a month for me and 923.00 a month for my husband. So we pay for bad health insurance around 20,000 a year. We have high deductibles and not much of a cash pool for me 500.000. I think my husband has 1-2-million. I have to belong to a state high risk pool because I was turned down for insurance because I have female organs. Mind you there is nothing wrong with them. I had an easy menopause. We pay after taxes are figured 4000.00 a quarter or 16,000 a year in federal taxes. We pay 4000+ in state taxes. We pay more for health insurance than we do for a house payment. My point is we could retire now if we could have saved even some of this money. What has happened is that the Bush policies have gone too far up the ladder into the middle class and we don't like it. We need a health care system that relieves individuals and corporations from the cost of our insurance. I read that the California Blue Cross system sent 1,000,000,000.00 in profits to the main corporation. There is a lot that can be done within the system to fix this. Evey time an insurance premium is increased to effect the insurance companies bottom line another middle class family falls off of the ladder. They may be there on paper but they don't have the cash to meet necessities anymore. If my husband and I only had 55,000 a year we would have no health care and no cash to pay for it. I recently had to pay 1300.00 for a 10 minute xray for a kidney stone. If I had had no insurance the cost would have been reduced 45%, but because of the insurance contract I got screwed, first by the insurance company and then by the hospital. If my taxes were raised 4000.00 a year and for that my family was able to get good quality heath care coverage for 400.00 a month, I would get a raise of around 16,000 and then I would ge to spend my money on what I wanted to spend it on. As it is people don't get to spend their tax refunds on what they want. They give it to th oil companies, insurance companies and drug companies. The middle class is being raped without even a kiss.

[Edith Ann]

35. Middle class

This man probably gets health care from his job and is probably in debt. That's the way GW and Company want to keep us, barefoot and pregnant.

[drmeow]

39. Perception

I have a friend on Long Island whose family owns (shares ownership with mortgage co?) a large house on a large lot in an affluent neighborhood complete with a home theater (not just a tv with surround sound, a full partially sound-proofed room with a large screen tv and this was 10 years ago when large screen tvs were not as widely available and cost a lot more). They own a boat and used to have a vacation home in Pennsylvania (which they, admittedly, had to sell a few years ago although well before the housing slump). She insisted they were middle class but I consider them lower-upper class without a doubt.

My brother used to have a friend in high school whose father is a lawyer. They lived in the "rich" part of town and we lived in the "middle-class" part of town. My brother once asked my mom what class we were. Her answer was the following - in terms of income, we were middle class. In terms of education (my dad has a Ph.D.) we were upper class. I've known other people who made this distinction (people within about 10 years of my mom in terms of age). I think this potentially reflects some of the perception issues of defining class.

I think there was a time when there were the poor, working class (blue collar?), middle class (white collar?), upper class (advanced degrees?), and rich (pink collar falls between working and middle class). Education often played a key role in the class structure until you got up to the rich and those people mostly got lucky, cheated/stole, or inherited their money (we have some disgustingly aristocratic-level rich in the country who don't deserve it). As income and education became less tightly linked (i.e., high school graduates making as much as college graduates, etc), that affected people's views. I.e., if the high school educated construction worker/plumber/grocery bagger who is working class down the street makes as much as I do and I have a college education (middle class), I must not be making as much as I should for my class. Since real estate agents tell you to essentially buy the cheapest house in the most expensive neighborhood you can afford, more and more of those middle class earning working class were moving into those middle class neighborhoods and because we live in a society and promotes and values wealth, keeping up with the Jones became an imperative, especially if the Jones were those pesky "white trash" in the neighborhood. Those middle class individuals suddenly sharing their neighborhood with working class felt compelled to buy up to keep up (because, despite all the mythology to the contrary, we are very much a classist society).

Then real income started stagnating and the rich started getting richer and people saw lifestyles of the rich and famous and got heavily into debt and got convinced they could have a upper-class (rich) lifestyle on their middle-class (upper-class) income and the downward comparison didn't look as good any more and the upward comparison didn't look as good anymore and they couldn't give up their addiction to cheap walmart stuff that looked designer but only lasted as long as the cheapest of the cheap and their debt got worse and pretty soon, they were living paycheck to paycheck.

My husband and I are DINKS and I DEFINITELY consider us solidly upper class. We both have PhDs. Together we make a decent amount over $100 (in a good year, almost $150). We managed to buy a house in what is actually was middle class neighborhood (i.e., 1960's ranch style tract home) before the prices skyrocketed and have no difficulty paying the mortgage. We could have bought in an upper class neighborhood further from the center of town but we wanted to be able to walk to work. We have savings, are saving money for retirement, and a home equity loan but no credit card debt. We can take regular vacations to exotic locations (OK, it does help that we each had a business trip to an exotic location in the past year that work paid for but we could afford for the other to go along and to spend a decent amount of time doing the tourist thing). We do not own a boat nor have we purchased a vacation home. Solidly upper-class but not rich.

So, clearly my perception is very different from my friend on Long Island!

My 2 cents.

[Lorien]

40. Personally I think "middle class" is between $35,000-120,000 a year,

depending on where you live and how many people are in your family. In some cities-like L.A. or Boston- a person can make up to $150,000 or even $200,000 a year and still only manage a strictly middle class lifestyle. Ten years ago I was offered a job in Glendale, CA that started at $80,000 a year. I did a cost comparison and discovered that I could make only $45,000 a year in Orlando and live at the same standard that the $80,000 paycheck would offer me in Glendale, CA.

[BellaB]

46. Between what my wife and I make

We are averaging around 90-95K a year. Most of that is her income as I am still in a part time position (not due to job market, but due to asshole boss) and we are doing ok. The house we live in, my wife bought new 13 years ago so our house note is around 500.00 a month, 800.00 a month on a 401k loan to pay off the Home Equity loan (screw giving THEM the interest, my wife is paying herself that interest) and until last march we had no car payments. Last march my wife hit a deer that totaled her car so we had to go out and buy a car and now we have a damn car payment. I dont make a whole lot because I also pay child support and for braces for 2 kids OUCH LOL

We dropped our home phone an went all cell since 90% of our calls are long distance anyways to either my family who live in state, but in a different area code, or my kids who live in florida and we live in the great lakes region.

Overall we are doing ok, since its just the two of us our food bill isnt that bad. We usually eat out twice a week and I cook the other nights.
Our biggest expense that has changed the most is gas for the cars. She drives 33 miles and I drive 32 miles 1 way to work, and during the spring, summer, and early fall I ride the motocycle. In the winter I drive the Durango (country roads and snow dont mix) that has 4wd and has saved me once or twice.

[TankLV]

47. the one between History and Algebra?

[Yavin4]

53. Once and For All, The Middle Class Is Based on Your Net Asset Value, Not Your Income!!!!

It's the value of what you own minus the value of what you owe. What that number is determines your class. My rule of thumb is that $150,000 of NAV makes you middle class in America. I would further break down the rankings this way:

Less than $0 - Working Poor and/or Non-Working Poor
$0 to $150K - Lower Middle Class
$150K - Middle Middle Class
$150K to $300K - Upper Middle Class

Over $300K - Upper Class


What constitutes Assets? :
- Equity value of your home
- The value of your 401K
- Value of your savings and investments
- Generally, anything that you can convert into cash


What are your typical liabilities:
- What you owe on your home
- Credit Card debts
- Outstanding balance on your car lease or loan
- Educational loans
- Any other loans that can be called


Your income has nothing whatsoever do with your class status because your income can and does change dramatically.

[Tierra_y_Libertad]

55. Petit-bourgeoisie

http://en.wikipedia.org/wiki/Petite_bourgeoisie

Petit-bourgeoisie (or petty bourgeois through folk etymology) is a French term that originally referred to the members of the lower middle social-classes in the 18th and early 19th centuries.

Starting from the mid-19th century, the term was used by Karl Marx and Marxist theorists to refer to a social class that included shop-keepers and professionals. Though distinct from the ordinary working class and the lumpenproletariat, who rely entirely on the sale of their labor-power for survival, the petty is different from the haute bourgeoisie, or capitalist class, who own the means of production and buy the labor-power of others to work it. Though the petty bourgeois do buy the labor power of others, in contrast to the bourgeoisie they typically work alongside their own employees; and although they generally own their own businesses, they do not own a controlling share of the means of production. In modern usage petite bourgeoisie, a class that lies between the workingmen and the capitalists, is often used to refer to the to consumption habits and tastes of the middle class. However, Marxian terminology relates the petite bourgeoisie to its relationship to the means of production and work, not to tastes, habits of consumption, or lifestyle.