With these $100+K incomes in mind it is easy to say, "why isn't everyone saving more???" Whereas if they had half that income, they may sing a different tune. And with 25% of it they would certainly become more empathetic.
When my friends and colleagues start expressing that they are middle class, I start pointing out all of the adults that serve them at stores, restaurants, gas stations, etc in an attempt to help them appreciate their current status and income. Though I accept it is hard to feel well to do while trying to "keep up with the Jones's". Maybe they need to find some new "Jones's" to compare themselves with. This would likely breed more gratitude and less jealousy.
So do these numbers make sense to you? What is your definition of middle class? How can that lower 25th percentile breakout? Thoughts?
City Data Hennepin County (source of graph above)
Census Quickfacts Hennepin County
Hennepin County Fact Sheet 2006
The pdf below is a bit dated, but it has some great info.
Hennepin County Demographics
34 comments:
These days, I define middle class as people who aren't rich but who Fox News says pay taxes. Definitely an endangered species.
--Hiram
That chart makes no sense to me. I can't see how a household income of $55,000 grade puts one in the top 25%. Also, I am quite sure a household income of $100,000 does not put one in the top 4%. I don't have anything else to say about income data that doesn't fit what I see.
So please guide me to a different source.
Ok... The table seemed kinda funny, since the other sources say the median income is $60K.
So I did the math differently and updated the table. (my creation) Now does it make more sense?
By the way, my correction was to multiply the Y variable by the number of 1000's in the X range. I had to guess on the 200K + segment.
From Annie
"What will it take to help people in the lower quartiles earn more?"
In my mind, this isn't the question. To me, the question is how do we become a nation where all our citizens can live with enough money and dignity to have a good quality of life--that means not just finding them more money, but more social supports for education, health care, work.
When I look at charts like this, it makes me more certain that the discussion isn't just about money--the 1% isn't going to willingly give up anything. We need to take a step further back and figure out how to make our society more equitable.
Consider:
NY Times Equity
-Annie
Any thoughts on how to fund the equity without taking it from those who have money? (ie hard to get blood out of a turnip)
And the categories looked pretty expensive. (pre-school, reduce poverty, improve healthcare, etc)
The countries at the top of the list are again those with the lowest immigration rate. Maybe we should only allow wealthier people to immigrate.
Not to nitpick, but "getting blood from a turnip" is an old idiom that means you can't get money from someone who doesn't have any. The rich have lots--double what they had a few years ago. And the majority of them (68% of millionaires) are willing to raise their own taxes (see Friday's WSJ here: http://blogs.wsj.com/wealth/2011/10/27/most-millionaires-support-warren-buffetts-tax-on-the-rich/?mod=e2tw
Our society can't grow/succeed/exist with the wealth so very concentrated at the top. It's in everyone's best interest to have a nation where people have jobs and money to spend on the stuff that is made and sold.
But again, what I'd like is to raise the top brackets and use the revenues to strengthen our infrastucture, schools, health, and so forth. We need to keep the poor out of destitution, but even more importantly we need to rebuild our middle class that has deteriorated. 4 unemployed people for each available job is unsustainable.
And I'm actually in favor of immigration reform. What we have now doesn't work. Neither will ridiculous gimmicks like an electric fence. (really Herman Cain? REALLY?).On the other hand, illegal immigration is at its lowest level in decades, so I'm not sure that's not the main problem here.
--Annie
it obviously doesn't apply to a skewed distribution such as you have here, but normally the "middle" would be defined as plus or -2 Sigma. That covers an awful lot of ground and that is what America is supposed to be. The people at the very top got thereby earning it and if you take it away from them by force, you tell the people at the very bottom that they don't have to work to get theirs, just take it from somebody that has more. That is NOT what America is supposed to be.
I don't have the exact figures in front of me, but the richest 1% currently have about 20% of the income and pay 40% of the taxes. You could argue that that was fair based on taxing "disposable income" rather than total income, but it is not the purpose of the tax system to impose some politician's populist pipedream about what is "fair." It seems to me that what our tax code needs most of all is more fairness, to the point where everybody pays something towards the cost of government, and that it be done without all of the hyper-complex social engineering of today's tax code.
"Keeping up with the Joneses" is what drives our economy. If government steps in and puts barriers in front of Jones to keep Jones from getting ahead, then where is my incentive to try to get ahead? Communism is a marvelous social system and a terrible economic system, because it doesn't recognize human nature. Free market capitalism is a marvelous economic system, but produces unequal results, with the difference being freedom of opportunity. Government needs to get out of the way, restore equality of opportunity and quit punishing success. Quit worrying about how we should divide the pie and make a bigger pie.
J. Ewing
Any thoughts on how to fund the equity without taking it from those who have money?
Not this morning. That's the contradiction of capitalism. What Marx would say is capitalism's answer to this problem is to provide various half measures which sort of ease the pressure. Lower or non-existent taxes for the lower half of society is one such response. Various safety net programs, welfare, social security, medicare are others. The rise of unionism and collective bargaining which give the underclass at least the illusion of some control over their lives is another. But Marx would argue that all of these things are just temporary measures, that simply put off rather then avert the crisis of capitalism. I am not as convinced as I used to be that Marx was wrong about stuff like that.
--Hiram
Annie,
I meant the poor were the turnips, thus we would need to go after the welthy.
We the people can do something about it without govt intervention, if we choose too.
1 Buy only products from domestic companies with high local content.
2. Work to ensure illegal aliens don't have jobs in the USA.
3. Buy only from suppliers with Union employees.
4. Make it socially unacceptable to be on govt programs.
Each of these would drive up incomes. Though they would also impact costs.
Back to self awareness.
Do you agree that your household is as poor, middle class or rich as the table indicates?
Do you feel like it? Why? Why not?notebook
Equality of opportunity is pretty much free in this country and, to the degree it is not, we pay tons of taxes to fund a school system which supposedly gives everyone the opportunity to exceed the limitations of the class into which they were born.
The taxpayers, especially the rich who pay most of the taxes now, are already funding a welfare state which, were it run efficiently, would have every poor person making an upper-middle-class income! That's not rational, nor does it make any sense to overlook the very real contribution that these poor folks have made to their own condition – dropping out of school, having children out of wedlock, getting involved with drugs or alcohol.
The late great Daniel Patrick Moynihan said it best, that the most dangerous economic trend of the late 20th century was the replacement of one viable economic unit – the two-parent family – with two nonviable economic units – single-parent families with children. Rather than tax the rich for doing everything right, how about we tax the poor for their personal irresponsibility?
J. Ewing
J,
Thoughts on these?
Do you agree that your household is as poor, middle class or rich as the table indicates?
Do you feel like it? Why? Why not?
I'll take a shot at my own questions. The table puts our household in the upper 25th percentile. I understand it and have no grounds to disagree, though it seems hard to believe.
We have been in our mid-size 1985 home for ~16 yrs and our cars are 8 and 10 yrs old. And it's not like we have lots of money coming out of our ears.
Whereas their are a whole lot of people in nicer homes, cars, vacations, etc. I mean look West of 494, all they do is build BIG expensive homes.
On the other hand, there are tons of apartments in Plymouth where the population density is much much higher than in a development of affluent homes. One big apartment complex probably holds as many households as a few highly visible developments. And yet one is unlikely to notice them.
So I guess overall it makes sense to me.
Besides I have accepted that many folks are likely more comfortable carrying debt than I am. (ie nicer cars etc that they really don't quite own)
"Desiderata" by Max Ehrmann
Go placidly amid the noise and haste,
and remember what peace there may be in silence.
As far as possible without surrender
be on good terms with all persons.
Speak your truth quietly and clearly;
and listen to others,
even the dull and the ignorant;
they too have their story.
Avoid loud and aggressive persons,
they are vexations to the spirit.
If you compare yourself with others,
you may become vain or bitter;
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.
Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs;
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals;
and everywhere life is full of heroism.
Be yourself.
Especially, do not feign affection.
Neither be cynical about love;
for in the face of all aridity and disenchantment
it is as perennial as the grass.
Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline,
be gentle with yourself.
You are a child of the universe,
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.
Therefore be at peace with God,
whatever you conceive Him to be,
and whatever your labors and aspirations,
in the noisy confusion of life keep peace with your soul.
With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful.
Strive to be happy.
I think there are philosophical differences going on here. One sees comparison as a path to potential bitterness or vanity. The other sees comparison as a powerful enabling and motivating force. Are they both correct?
"If you compare yourself with others,you may become vain or bitter;for always there will be greater and lesser persons than yourself." Max Ehrmann
"Keeping up with the Joneses" is what drives our economy. If government steps in and puts barriers in front of Jones to keep Jones from getting ahead, then where is my incentive to try to get ahead?" J Ewing
Can seeing that people are poorer than you reinforce your feelings of gratitude and motivate you to give more? Can seeing that people have more than you help you to see how you can improve and help motivate you to do so? G2A 5C's to Avoid
I agree with all of the above. My belief is that people should be self and reality aware. What they do with that information is a different topic? There are many happy and miserable people in all of the economic classes...
"Capitalism is the unequal sharing of prosperity; Socialism is the equal sharing of poverty." One can be happy in any of those situations, but I prefer that everybody share in prosperity based on their freedom to achieve, rather than being forced to accept misery just to insure that nobody has more.
The (used to be called) "vast middle class" is the great achievement of American free-market capitalism. It contains all of those who have escaped the deepest of poverty and are trying, with varying degrees of success, to become "independently wealthy." If you start punishing the wealthy, (and depending on how some left-leaning politician decides to define wealthy), you cut off the "engine" of economic progress-- the striving to become wealthy, and the innovation that drives new products and services that the wealthy alone can afford, initially. You also deprive the wealthy of their ability AND desire to be charitable, meaning that those who suffer most from taxing the rich are the poor. Of course, to a committed leftist, that doesn't matter. The poor are only useful as a means of gaining power and wealth for themselves (not that they'll ever admit it).
J. Ewing
What I am having a hard time understanding is why we have such a hard time just commenting on the distribution and what we think about it?
I know money and status is a scary and sensitive topic for many people. Maybe it is hard to face our reality when we can easily stick ourselves on the graph.
Back to the original questions:
- So do these numbers make sense to you?
- What is your definition of middle class?
I am still a bit confused by your data. My family income is a bit over $100,000 a year, which by your chart makes me fairly well off compared to others. So why do I feel like we are not far from living check to check. We also have insufficient funds to pay for college or save for retirement. My house is small (~1700 sq ft), my cars are old, and we mostly vacation in campgrounds. I know lots of college educated people that must make much more than my teachers salary of ~$50,000. It just doesn't make sense to me.
By my estimation as I look at lifestyles around me (homes, cars, vacations, etc) I feel like I am at the bottom of the college educated class. I feel like with our college degrees and 2 incomes we should be better off financially than we are.
I have always thought of myself as middle class, which to me is a bit of a state of mind. If we both lost our jobs and had no income I would still feel middle class.
All right, fair enough--point of order on the original question: I remember reading that something like 90% of Americans call themselves middle class. Clearly, that includes people who, by the numbers, are upper and working class and even working poor. As a society, we don't do a good job of classifying ourselves and we project any number of preconceptions onto that term.
Myself, I think middle class in qualitative terms means thing like having enough HHI to own a home and a couple of cars and take a vacation (maybe the Dells, maybe Disney), save enough to send your kids to a state university and shop at Target (not thrift stores but not Nordstrom). Below that and you're working class or working poor, though nobody admits it.
I think middle class feels very different than it did a generation ago because salaries haven't changed all that much but expenses have sprouted up. Individuals now pay for their family's insurance and it's increased by double digits annually; individuals fund their own retirement where there used to be pensions; both parents have to work so now there's five-figure childcare expenses; college tuition has exploded. Conversely, people also spend on things that weren't around a generation ago--electronics have moved from luxury to necessity, people lease cars rather than buy so payments may be lower but they never go away, etc.
I think a big difference among middle class families is if they're legacy families (ie, received a leg up in getting education/mortgage and will receive an inheritence) or if they're first generation in that socioeconomic status.
So I'll leave the number crunching to other, but The Good Life has slipped out of reach of many working Americans.
--Annie
I agree with your qualitative view.
Now quantitatively, what do we think a family of 4 needs to attain that qaulity of life.
My guess in Hennepin county it is probably somewhere in the $50K to $75K range? Too high? Too low?
Your numbers feel shy to me, for a family with children. For empty nesters, maybe, but if there are kids around let's assume we want the family to:
--save for retirement (assume no match, and let's say 10%-15%)
--save up an emergency fund (6 month's pay)
--have adequate home/auto/life insurance
--pay monthly premiums and co-pays for their health insurance or HSA
--save for their 2 kids' college
--live in a safe but not fancy neighborhood
--have current but not extravagent technology (computer for the family, cellphones for the adults)
--be paying on one car (let's assume one is paid off at any given time)
--have their kids in some activities. Hockey, for instance, is expensive, but even things like swimming lessons and piano and baseball involve tuition or fees.
--give philanthropically to the charity of their choosing
I don't think those things can happen on $50k a year. I'm not entirely sure they can happen on $75k. I'm sure people will jump on me for being too extravagent with my imaginary budget. Maybe. I dunno. I grew up with less. But assuming we're not talking bare minimum, paycheck to paycheck living, that's my take.
What would you add/subtract from their expenses?
--Annie
Here's a pretty good description of what a family of 4 would need to make:
http://www.minnpost.com/communitysketchbook/2010/12/21/24385/whats_the_real_poverty_rate_in_minnesota_higher_than_you_think
Excerpt:
. . . .By this standard, 39 percent of jobs in the Minnesota region pay less than living wage.
"The average annual cost of meeting basic needs for a family of four with two workers in Minnesota is about $58,000.
"To cover these costs each worker must earn $14.03 per hour.
"Thirty-nine percent of jobs in Minnesota — more than a million jobs — pay less than a family-supporting wage of $14.03 per hour.
"At the minimum wage of $7.25 per hour, a couple with two children would have to work 155 hours a week to meet basic needs."
--Annie
Here is a link to Annie's source.
MinnPost Poverty Rate
Annie:
I think your concepts are correct. Not sure how much it would cost?
I picked the $50K and above because I think it would be real hard to "live the dream" for less than $50K...
All,
To help people understand... $50K is 1 income at ~$25/hr or ~2 incomes at ~$12.50/hr.
As I went from the bank, to the bearing store, to the Burger King, to Fleet farm at lunch today, I watched all of the adult employees and thought that they were probably making <$12.50/hr...
On the other hand, if we raised their income to $25/hr, how much would that whopper value meal have cost me? And are we really willing to pay it?
May I object to the whole question? Americans used to pride themselves on being a class-less society (unfortunately in more ways than one, lately), so why would we want to start? Certainly, if you set upper and lower bounds on a "middle class" then you define "upper" and "lower" classes as well, and I find that unacceptable. Better we should concentrate on "equal opportunity" and leave "equal results" out of it.
After all, what it is that you are proposing, in making this distinction, if not that some pinhead bureaucrat decide how much is too much for "the rich" to have, and how much will be confiscated to give to "the poor"? Aren't we doing that already, and hasn't it been a massive failure? Income inequality has gone up, despite the rich paying an increasingly disproportionate share of taxes, while the number of "poor" have gone up despite government programs that COULD make them all upper middle class! It makes no sense.
It's like the old story about the ice man, who sets out with a 50 lb. block of ice, headed for somebody that really, really needs it, but somehow arrives at his destination with barely an ice cube.
J. Ewing
If success of it's citizens is an american goal, then we need goals by which we determine if the system is working correctly. Thus the question.
Now is the Socialist agenda creating the failure or delaying it? That is another question.
Or are you hestitant to answer because it is easier to rationalize if numbers aren't identified? Someone close to me is in the upper 1, and they find that hard to believe/deal with.
"If success of it's citizens is an american goal, then we need goals by which we determine if the system is working correctly."
Who is this "we" of whom you speak in such awed terms? Why isn't it up to each individual to not only determine if they have been successful, but how they can become more successful on their own terms? I've already said that some people will define success as making as much money as possible and strive to do that, while others will accept a lower income in order to spend more time with their family or hobbies or whatever. How can you even begin to measure success on a national scale when no two people will define it the same way?
"Now is the Socialist agenda creating the failure or delaying it? That is another question."
It is creating the failure.
"Or are you hestitant to answer because it is easier to rationalize if numbers aren't identified? "
I'm not trying to rationalize anything; I'm just being rational. You are asking how many angels can dance on the head of a pin, suggesting that there is some absolutely correct "number" of dollars of annual income (in any one year) that defines what "class" someone falls in, when the notion of class is not supposed to exist and, even if it did, the scale of income is an absolute continuum which would technically put every single individual in a class by themselves – not necessarily a bad thing, but hardly useful. It again makes me want to ask: what is the point of the question?
J. Ewing
J,
You are repeatedly critical of the "modern" USA, therefore you must have some strong expectations as to what "success" would look like.
Not vague policies, actual results. How would our citizen's be faring if the USA system was successful? (ie income, quality of life, food availability, healthcare access)
Does that include that a "?? %" of Americans could not afford food, healthcare & housing while working or between jobs? (ie discount freeloaders for now) If so, how many "?? %"?
Without an idea as to what success looks like, it is impossible to say if we are succeeding or failing... Be it do to Socialism or something else.
Talk about wild eyed hypotheticals!
How am I to offer proof of "real results," when unlike liberals I have only one reality to inhabit? I can speculate, at least until the Obama administration outlaws it, so....
Suppose we hadn't taken that left turn at the FDR administration, and come out of the "Great Depression" 10 years earlier, with a 4% growth rate. All else being equal, our economy today might be 50% bigger than it is. Now you could complain that the rich would be 50% richer, but do you really want to complain that the "poor" are 50% richer, too?
Then of course we took both a political AND social left turn under LBJ. We stopped confining welfare to women without husbands and started rewarding women for not having husbands. We stopped CHECKING on AFDC households, even when more children "miraculously" appeared. This continued to the present day, when 70% of children born to black households are "out of wedlock." Success would be having this figure (and the corresponding rise in total illegitimacy) closer to the 1960 norm, and the government's welfare budget likewise. The number of "poor" hasn't gone down in all these years, despite the manyfold increase in government spending.
Then, of course we had the Medicare and Medicaid programs, the two largest entitlements (greater than Social Security) and the cause of much of the increase in health care costs over the years. If the country spent less on health care and didn't pay government, through taxes, to drive them up, our economy would be better by, perhaps, as much as 15%, right now. Compounded over the years I can only imagine.
Finally, we've got the Obama Stimulus, which has held the economy almost flat for the last three years, rather than 4% growth, and the choking regulations of the last decade or two, and the failure of public education to produce a competitive workforce, and you have, what? A massive failure of socialism, even when taken in small doses.
J. Ewing
Again... You are talking about how the furnace is designed, not what temeperature you would like your room to stay at, how much noise it should make, etc. (ie the measureable outputs of success)
Ah, I see. We have a couple of things we can and do measure. GDP is one, standard of living is another. Both are based in money, not "happiness," but since you are the one implying an unbreakable correlation between the two, I will use that, and say that our GDP today would be twice what it is, had it not been for socialist government interference in the free market. Standard of living would also be higher, as would the income brackets constituting middle class. It might even be that we would have eliminated "poverty" completely had not government decided to subsidize it.
J. Ewing
If not by "household income", how would you like to quantify "Quality of Life"? What targets would be "success"?
Would $29 Trillion be an attainable GDP goal to aim for? Even with our higher standard of living?
USA GDP
Also, if the World GDP stayed constant, that would mean the USA would have 46% of the World GDP. I think this may be a bit agressive since we are only 6% of the world's population.World GDP
I picked Household Income as a measure of quality of life because it is easy for us to measure and wrap our heads around. With 25% of the households living on <$20,000 and 47% living <$40,000, I think we have room for improvement. Maybe 10% <$20K and 20% <$40K?, if costs did not shift significantly.
I would like to define quality of life as "quality of life," and give up the notion that it can be quantified, if only to satisfy the confines of definition. If you want to use family income as a proxy, feel free, I am sure there is some general correlation that would let us say, for example, a poor American making only $10,000 per year has a better quality of life than the average Somali making $1 a day.
I don't think "we" should be setting goals for GDP, that's the kind of thinking that gets us central economic planning, socialism, and economic failure. What we should be doing is getting government out of the way of individual economic freedom as much as possible, and then see what GDP goes to. The goal is the freedom, not some particular result.
J. Ewing
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