Read about the current crisis of the middle class.

Who is the Middle Class?

America is sometimes called a "middle-class country," but nobody — not economists, sociologists, or the U.S. Census Bureau — seems to have a clear definition of who the middle class actually is. The notion of where a dividing line between "middle class" and "working class" might be is an elusive one. In November 2003, Chris Baker of THE WASHINGTON TIMES reported in "What is middle class?" that the Census Bureau shows the middle 20% of the country earning between $40,000 and $95,000 annually. The Drum Major Institute for Public Policy, a non-partisan and non-profit organization, reports that the middle class has conventionally come to mean families with incomes between $25,000 and $100,000 each year.

But if you ask the American people, you'll get yet another response. According to statistics from the National Opinion Research Center, as reported by Baker, large numbers of American define themselves as "working class" or "middle class," including:

  • 50% of those families who earn between $20,000 and $40,000 annually
  • 38% of those families who earn between $40,000 and $60,000 annually
  • 16.8% of those families who earn over $110,000 annually

As NOW reported in "Middle Class Squeeze" (December 13, 2002), the shape of income distribution in America is changing and many are finding it increasingly difficult to afford housing while keeping up with necessities such as food, clothing, transportation, and health care. In Baker's article, Anirban Basu, chairman and CEO of Optimal Solutions Group, explains, "Based on those [income data] numbers, the statistical middle class can't afford the middle-class lifestyle. I think that's why there is so much confusion about what it is and why so many people have trouble identifying themselves as anything but middle class."
 
Debunking Common Myths about the Middle Class

In THE TWO-INCOME TRAP: WHY MIDDLE-CLASS MOTHERS & FATHERS ARE GOING BROKE, Elizabeth Warren and Amelia Warren Tyagi consider the factors that have changed the financial stability of today's middle class. The following statistics are based on the research in this book.

10 Reasons America's Two-Income Families Aren't What You Think
(According to Harvard Law professor and bankruptcy expert Elizabeth Warren)

  1. Two-income families today make 75% more in inflation-adjusted dollars, but have less money to spend than one-income families did 30 years ago.
  2. Two-income families today spend: 21% less on clothing, 22% less on food, and 44% less on appliances compared to one-income families a generation ago.
  3. Every 15 seconds an American family files for bankruptcy.
  4. This year, more kids will live through their parents' bankruptcy, than through their parents' divorce.
  5. 1.6 million families will file for bankruptcy this year, 9 million more are already in credit counseling.
  6. Home mortgage foreclosures are up more than three-fold over the last generation and car foreclosures have hit record levels.
  7. More than 62% of families say that they worry about making ends meet.
  8. The average family spends 69% more in inflation-adjusted dollars on their home mortgage than their parents spent a generation ago.
  9. The average family spends 61% more on health insurance, than their parents spent a generation ago.
  10. Credit card default rates are at a record high.

You can find tips from Elizabeth Warren for middle class families trying to manage finances, as well as an excerpt from the book, on THE EARLY SHOW Web site from CBS. Source: NOW program on PBS