Why Do Some Rich Families Feel So Middle Class?
(Bloomberg Opinion) -- Back in 1972, New Yorker film critic Pauline Kael was incorrectly quoted as saying she couldn’t understand how Richard Nixon had won a 49-state landslide since she didn’t know anyone who’d voted for him. The anecdote is often trotted out as an example of liberal snobbery and indifference to “ordinary” Americans. Kael’s actual quote was more self-aware: “I live in a rather special world. I only know one person who voted for Nixon. Where they are I don’t know. They’re outside my ken. But sometimes when I’m in a theater I can feel them.”
Nevertheless, the debate over President Joe Biden’s American Rescue Plan certainly appears to have exposed a pronounced cluelessness among some urban elites. As Congress haggled for weeks over who exactly should be eligible for assistance, some high-earning households argued that they, too, should qualify as “middle class” and receive full stimulus checks.
In its initial version of the bill, the House of Representatives proposed to send $1,400 stimulus checks to individuals earning up to $100,000 annually and households making up to $200,000. The Senate lowered those thresholds to around $80,000 and $160,000, respectively. That led to pushback: On social media many people, presumably living in households cut off by the lower limits, were aghast that they might not be as firmly entrenched in the middle class as they believed.
Such confusion is understandable. According to the U.S. Census Bureau’s 2019 American Community Survey, more than two-thirds of all U.S. households (68.6%) earn less than $100,000 a year. Those who make between $100,000-$149,999 annually account for another 15.7%, while those earning $150,000-$199,999 comprise 7.2% of households. Only 8.5% bring home more than $200,000 annually.
In other words, fewer than 16% of U.S. households earn more than $150,000 per year. That would certainly seem to put those families in the country’s elite.
Still, it’s easy to see why some of them might not feel terribly rich. Given widely varying costs of living, one city’s middle class is another’s affluent class. In the New York metro area, 42.9% of all households earn more than $100,000 a year, with nearly one in six (16.1%) earning more than $200,000 a year. In the Washington, D.C. metro area, more than half (53%) of all households earn more than $100,000 a year, while 20.3% earn at least $200,000 annually.
Contrast those figures with, say, Indianapolis. There, less than 30% of households make more than $100,000 a year and only 7.2% make more than $200,000 a year, putting the city slightly behind the national average. The same goes for St. Louis, which comes in at 31.1% and 7.5%, respectively. If Indianapolis and St. Louis are “middle-class” metros, then New York and Washington, D.C. would be “upper-middle class” metros. Median income is what matters to a household struggling to make ends meet in an expensive city, not raw salary data.
The question this debate raises is whether there should be a national definition of what constitutes the middle class in the U.S. Most politicians have sought to avoid one, preferring to define the middle class by a mix of social mores and markers of class status, such as being a suburban homeowner in a metropolitan area. This works in a “we’re all in this together” sense but includes many people who meet the right social or class standards yet earn much more than many others in the same cohort.
Perhaps “middle class” should have a narrower definition — say, those within the middle 60% of the nation’s household income spectrum. Households in the bottom 20% would be considered low-income, while those in the top 20% would be considered wealthy. Nationally, that would mean all households with incomes in the range of approximately $35,000-$125,000 a year, using the American Community Survey figures, would fall into the middle class.
Those figures could be adjusted for cost of living in metro areas across the country, in order to account for what “feels” middle class in different cities. For example, the range in metro San Jose, which includes Silicon Valley, would be something more like $50,000-$200,000 a year — closer to the middle-class lived experience in Silicon Valley, even if unfathomable in much of the nation.
The decision not to lower the stimulus thresholds too far has quieted the controversy for now. But just wait until Congress takes up Biden’s plans to raise taxes on households earning over $400,000 a year. It would be hard for anyone in that income bracket to insist that they count as middle class. But, until we come to some consensus on what that term includes, some of them surely will.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Pete Saunders is the community and economic development director for the village of Richton Park, Illinois, and an urban planning consultant. He is also the editor and publisher of the Corner Side Yard, a blog focused on public policy in America's Rust Belt cities.
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