Economix Blog: Defining Middle Class

CATHERINE RAMPELL

Dollars to doughnuts.

In a discussion on “Good Morning America” about his tax plan, Mitt Romney suggested the cutoff for middle income was for households earning “$200,000 to $250,000 and less.” President Obama has used a similar threshold in talking about extending tax cuts for the middle class.

To be clear, both politicians appear to be talking about the ceiling for the middle class, not its midpoint. It’s a pretty high ceiling, though; here’s a chart showing household income distributions for 2011, based on calculations from the Tax Policy Center:

Source: Tax Policy Center

As you can see in the chart, households earning $250,000 fall somewhere just above the 96th percentile. For context, the Tax Policy Center placed the median household at about $42,000 in cash income in 2011. (Using a slightly different metric, the Census Bureau reported on Wednesday that the median household income was about $50,000.)

As broad as these politicians’ definition might be for middle class, historically Americans of all income levels have predominantly self-identified with that category. In a survey conducted in July by Pew Research Center, about half of American adults surveyed said they were middle class, including almost half of those earning more than $100,000.

Those self-identifications are changing, though.

Pew also found that the share of people who self-identify as lower class or lower middle class has risen substantially, from 25 percent in 2008 to 32 percent in 2012. The greatest growth is among younger Americans.

Since people seem to define middle class by culture and values as much by income, it will be interesting to see if this growing self-identification with lower class sticks in the years ahead as this younger cohort ages, and if it does, what kind of pressure (if any) that might put on politicians to redefine their stated socioeconomic class categories. As I mentioned in an earlier post, even as the median American family has gotten poorer, Americans overall have lowered their expectations for what the rich should pay in taxes.

Article source: http://economix.blogs.nytimes.com/2012/09/14/defining-middle-class/?partner=rss&emc=rss