Once upon a time, we were admonished not to talk about politics or religion at social gatherings, because these were controversial topics. Later, these became the most interesting topics, but sex was considered off-limits. Today, sex is on the table (or under the table or anywhere else), but money is still a taboo topic. Just imagine asking your girlfriend’s mother what she earns, or asking your own parents how much they have in the bank.
This taboo has contributed to a peculiarly U.S. aversion to acknowledging the existence of economic classes. Almost everybody claims to be middle class (or to be middle class, but suffering a temporary setback), and no one acknowledges being upper-class or wealthy. That’s despite the fact, as Catherine Rampell reports, that, “As of 2008, about 21 percent of income was received by just 1 percent of earners.”
What we earn:
What kind of income qualifies as middle class? Census Bureau figures put the middle at $50,221 for a household in 2009. Half of all households have income of more than $50,000 and half make less. Here’s the rest of the breakdown:
Household income and benefits in 2009 dollars
Less than $10,000 – 7.8%
$10,000 to $14,999 – 5.7%
$15,000 – $24,999 – 11.2%
$25,000 – $34,999 – 10.7%
$35,000 – $49,999 – 14.4%
$50,000 – $74,999 – 18.3%
$75,000 – $99,999 – 12.0%
$100,000 – $149,999 – 11.7%
$150,000 – $199,000 – 4.1%
$200,000 or more – 3.9%
(Note: this is the most liberal definition of income, which includes the value of benefits received, as well as earnings. For a table showing income only, click here.)
So, who’s middle class by income? You can draw the lines – but it’s pretty clear that we are not all middle class.
According to an AP report, income inequality increased in 2009:
The top-earning 20 percent of Americans — those making more than $100,000 each year — received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line, according to newly released census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.
A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.
NOTE: The AP report looks like it is using the household income figure, which is the one used in the table above. There are other ways to measure income: family income and per capita income are each different measures. When looking at income figures, these are all legitimate figures. The key is comparing apples to apples, not apples to oranges.
What we own:
Economic class is based not just on how much people earn, but also on how much they have. There the disparity is even greater. More on that in my next post.