If an income of $200k/year is "middle class"....

[dmallind]

23. Another definitional quandary

Some people say anything in excess of median income is not middle class, but by that definition we have the absurd idea that 50% of the country is rich. (as others have stated, to more than half the world's people, 90% of the US is rich, but I think it makes sense to keep a national rather than global perspective here).

So clearly stopping at the median is silly. How far up do we go? Depends how many classes you want really. In the simplest lower-middle-higher model it may make sense to use quartiles and assign the middle two to "middle", which would leave us with a lower limit of about 25k and upper of just under 100k for middle class in 2009 dollars according to the most recent census. Does 13$/hr make you middle class? not in my book surely. So does 90k/yr make you rich when the distribution is nigh identical? Seems too few who are lower income and too many called rich if we use that.

Even here we see regional problems too. 24% of NE households exceeded 6 figures in 2009, only 17% of Southern ones did. Do we need to move higher incomes in the South to 75k to keep it at a quartile? A bit too blunt still. Atlanta is not cheap, and has many high incomes. Rural MS is and has fewer. Does who is rich vary there?

What about family size? Married couples saw 100k+ incomes 32% of the time, single women living alone 3.9%. Certainly couples have slightly higher expenses in consumables etc, but not to such a large extent. My income married or solo afforded me essentially the same standard of living personally.

If we want a more nuanced look it gets even more complicated. Who is upper middle or upper-lower? Surely a person making $13/hr is far far better off than one making $8, but the resulting 10k annual difference makes far less of an impact when you make 100 or 110k does it not?

The tranches simply cannot be made to conform to equal %ages, as we get far too much segregation at the upper end and far too little at the lower end. Even though I love numbers, I think words are the best choice here albeit with a numerical basis. Here's my stab at it.

If your income is insufficient to pay for the rent of a safe 2br apartment, a reliable used car, and all utilities, gas, insuarance plus enough to feed and clothe your reasonably sized family in comfort but not extravagance, you are low income.

If you can do all that and have money left over for a week or more vacation and eating out biweekly or so, you are lower middle.

If you can add a mortgage, a new car and some fun toys you are middle.

If you can add a 2500 sq ft+ well maintained home in a nice area, multiple new cars, more frequent vacations and eating out plus some "play" money for investments or bigger toys like RVs or boats you are upper middle.

If you can quit work today and maintain the upper middle lifestyle for the rest of your expected lifespan without worrying about dying bankrupt, you are rich.

What you do spend money on is immaterial to what you can, and the latter should be the yardstick here.