Thursday, November 12, 2020

What is middle class and what percentage of American voters can't get there?

What would make someone "middle class" in 2020?

I like to think of this in terms of what a "middle class" 30 yo adult should have or be able to do without inherited wealth [1]:

  • basic health, life, dental, and disability insurance.
  • enough savings to live without income for 3 months.
  • at least two weeks of vacation a year plus holiday
  • ability to take the family on a local or auto based holiday
  • cover the basics: food, utilities, broadband, mobile phone, automobile, two laptops, a game console, netflix, a bicycle
  • together with a partner
    • enough income to cover a 15 year mortgage on an average American non-urban home with good-enough public school services
    • enough income to raise up to two children to adulthood (but not pay for their college -- that's upper class)
    • a second car
That's not a comprehensive list, but I think it's not hard to fill in the rest. Things that are often beyond middle class include:
  • international travel
  • paying for children's college education
  • a short commute
  • weekly restaurant meals
  • multiple bicycles
  • substantial savings esp. retirement savings
  • routinely buying work lunch
  • multiple streaming services, cable TV
  • a subscription to the New York Times digital services (this is a problem)
How much compensation, including income and benefits, does it take to be middle class today?

In the absence of good data my impression is that a new teacher is at the very bottom of middle class (compensation increases over time). says the range for all teachers is $50K-$74 plus. Add on benefits that are worth at least $10K and the entry to middle class America in 2020 is probably $60K for an individual. 

2014 Pew report article on "middle income" estimated that "a three-person household would have to earn between $42,000 and $126,000. I believe that number omits benefits so it supports my $60K compensation number as a good reference. 

For a 50 week year at 40 hours a week a $60K/year compensation works out to about $30/hour or twice peak minimum wage. Google tells me the hourly wage for a plumber or electrician is about $25/hour, enlisted American soldiers get $20/hour but with benefits and allowances for food, housing, etc they may be in the $25 range. In 2000 motor vehicle manufacturing workers made a similar $20 hour, with benefits that might get compensation up to $22/hour. In US government a GS-7 level is about as high as one can get without a college degree and it maxes out at about $50K/year -- just barely middle class given benefits.

All of these are below my "middle class" threshold though federal employment comes closest.

It's hard to make it into the American middle class range without a college degree or some degree of business ownership [2]. Since no country on earth has gotten much more than 50% of young adults through college this means a middle-class-or-better life, which still comes with quite a bit of economic stress and uncertainty, is only available to about half of Americans.

Half of US voters unable to attain the basics of the bottom of the middle-class is not a politically viable situation. More on that in a post that updates this one.

- fn -

[1] If you live in American for a while it eventually dawns on one that a lot of white folk inherit a substantial amount of money. I'm excluding that from this definition but it does explain some unusual consumption patterns.
[2] Bruce Springsteen, Bill Gates, Steve Jobs, Wayne Gretzky, yada yada ya. Don't make me come down and bop you.

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