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Being Middle Class Isn’t Just a Matter of Income

For lower-income people, the desire to identify as middle class is clearly aspirational.

Being Middle Class Isn’t Just a Matter of Income
‘Piggy banks’ sit on display. (Photographer: Billy H.C. Kwok/Bloomberg)

(Bloomberg Opinion) -- My late grandmother drilled into our heads that we were middle class. To her, this was a source of great pride; being middle class wasn’t just better than being poor, it was also better than being rich. And she apparently wasn’t alone. Surveys consistently find that most Americans consider themselves middle class. Although making more than $100,000 a year puts a household in the top 30 percent of the U.S. income distribution, a 2015 Pew survey found that most such people use some form of the label “middle class” to describe themselves.

Being Middle Class Isn’t Just a Matter of Income

Some of this may be due to differences in local living costs — $100,000 is a great income in rural Kansas, but doesn’t allow for much luxury in San Francisco. But some is probably due to the value Americans place on the idea of being middle class. Like my grandmother, they want to see themselves as being neither rich nor poor.

Where does this desire come from? For lower-income people, the desire to identify as middle class is clearly aspirational. For higher earners, it may come from a sense of social humility; placing oneself above one’s fellow citizens can appear unseemly and arrogant. But the desire to be seen as middle class isn’t strictly personal. By wanting to identify as middle class, people like my grandmother are also expressing a desire to live in a middle-class society.

There’s plenty of evidence that visible signs of social inequality bother lots of people. For example, a recent paper by political scientists Melissa Sands and Daniel de Kadt found that when people in South Africa saw an expensive car, their willingness to raise taxes on the wealthy increased. Plenty of economics experiments in lab settings have found strong aversion to inequality.

Of course, there are many possible reasons for these effects. One is simply that poor people are envious or resentful of the rich. But this doesn't explain why many people seem to feel uncomfortable having more than others. In a common experiment called the dictator game, involving the division of a pot of money, subjects who have the power to keep all the money for themselves tend to give some of it away. And when the so-called dictator has the power to divide money up among others, he or she tends to prefer an equitable distribution.

Furthermore, surveys regularly find that Americans underestimate the amount of inequality in their midst — although this could be due to simple ignorance, or an illusion created by neighborhoods where most people have similar incomes. But it also probably reflects wishful thinking. The idea of an unequal society probably offends many people, even those on top of the hierarchy.

Understanding exactly how and why inequality bothers people is the key to creating a happier society. Traditional remedies include redistribution of income and wealth through taxation, as well as so-called predistribution — reshaping the economic system to produce more equal market outcomes — through unions and other pro-worker institutions.

Although compressing the distribution might be good, there may be additional approaches that foster a broader middle-class sensibility. Reducing actual inequality is good, but reducing visible status differences along a few important dimensions may also be helpful.

For example, there’s public space. In a society where beaches are private, communities are gated and open space is fenced off, people without access to the land are constantly reminded of their subordinate position in society. But public parks, beaches, roads and other common areas create a feeling of inclusiveness and equality. These are spaces where the wealthy mingle with those of lesser means on a plane of rough equality — he may have a more expensive beach umbrella, but on a public beach a rich person is just another human being sharing the same sand and water as everyone else. Public transportation is similar — when the wealthy ride the same local trains as common laborers, it creates a space where visible status differences are reduced.

Housing can also help reduce perceptions of glaring disparity. When wealthy people live in mansions and poor people in shacks, it provides a constant reminder of inequality. But building public housing or subsidized rental units in dense cities allows low-income people to have dwellings that, while not the same as multimillion-dollar condominiums, are not wildly different either. The suburbs, whose sprawl is often bad for the environment but provides many lower-income people with the opportunity to own a free-standing home, can also provide a form of equality — especially if the government assists people of modest means to own their own homes.

A third example is public education. Integration of school districts puts kids from wealthier backgrounds in the same classes and the same social settings as kids of lower socioeconomic status. They eat at the same tables, do the same homework and (mostly) join the same clubs.

In addition to compressing the income and wealth distributions, therefore, society can foster a middle-class esprit by providing public goods and services — spaces and institutions that reduce or eliminate invidious status differences. This is a way to justify people’s perceptions of being middle class, and cement the idea that we live in a middle-class society. It’s a way to encourage people to connect with their common humanity, and with the broader communities of their cities and their nations. Ultimately, that connection and feeling of commonality might really be what defines the middle class.

To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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