Money can't buy Class

But a lot of extra cash would sure help, especially if someone wants to be considered a part of the "upper class" of our society; but that is only when measured by one's personal wealth and/or income (and not by their moral fortitude). A lot of us still wonder — besides just plain luck, how did so many rich people get to be soooo rich in the first place?

As in other countries around the world, most of us in the U.S. (as defined economically) probably wonder where we really exist in the class structure of our society. How well are we doing when compared to most other people? If someone doesn't spend an adequate amount of time doing research on the internet (or going to a library), and/or reading the newspapers and news magazines — and they only catch short sound bites from the radio or from the headline news on TV — they would probably get more accurate reporting from Stephen Colbert or Jon Stewart. Otherwise, they may have a limited capacity for truly understanding where they actually exist on the wage scale ladder.

And if they only watched reality TV shows, they wouldn't have any clue at all — and so, they should take 6 minutes out their very busy lives to watch this YouTube video (currently with over 16 million views so far).

If most people in the suburbs just look around at their neighbors, and at other people in the town they lived in, and if they perceived most people lived in three bedroom homes with attached garages, are married and have spouses that earn similar wages, they may think that, if they do too, then they also are part of the so-called "middle-class" — because most people that they know or associate with might live in similar circumstances.

But people living in urban public housing projects, as compared to those living in trailer parks in rural areas, might also have vastly different perceptions of what the "middle-class" might really be. Just as if someone were earning $28,000 a year (the national "median wage") in a small town in the South, they most likely will be doing a lot better economically than someone else earning $28,000 in New York City — just because of the local cost-of-living.

But their perception of how they rank in the overall economic classes would also be a lot different as well. Those in that small town might feel "middle-class" (maybe because almost everybody drives a 5-year-old vehicle), whereas the person living in Manhattan might feel poor because they see their wealthy neighbors being chauffeured around in stretch limousines, while they themselves are struggling to pay bus and subway fairs. (In NYC, taxis cost too much — as does auto insurance and parking in Manhattan, especially if you're only earning $28,000 a year.

The last census showed that about 81% of the U.S. population lived in urban areas (population centers with 50,000 or more people), while 19% lived in rural areas (2,500 people or less). It's pretty much common knowledge that the vast majority of the population resides either east of the Mississippi River (named after the poorest State in America), or in our Western States.

The most recent Census data shows 14.5% of Americans, or 45.3 million people, lived below the poverty line of $23,834 a year for a family of four. Poverty is heavily concentrated in the South. Sumter County, Alabama was named the poorest county in the nation, which had an annual "median household income" of $22,186 (no matter how many people in the home were working) — and a poverty rate of 38% (no matter how many people had received some form of government assistance).

According to Business Insider, in the graphic below are the poorest States in America, which are highlighted in red — and also includes Washington D.C. (It should also be noted that most of the so-called "right-to-work" laws in Southern States (where anti-unionism drives lower wages) also contributes to their poverty, as well as their low minimum wages laws — especially for tipped employees.)

* Click the animation below to see the actual census map.

Pew Research recently reported that 72% of people they surveyed said that the government’s policies since the Great Recession have done little or nothing to help middle-class people, and nearly as many say they have provided little or no help for small businesses and the poor. But who thinks of themselves as middle-class and poor?

Recently in the New York Times ("Middle Class, but Feeling Economically Insecure") Patricia Cohen referenced this Pew survey and reported that nearly nine out of 10 people consider themselves middle-class, "regardless of whether their incomes languish near the poverty line or skim the top stratum of earners."

If this were true, then this would be a very big problem. But what the New York Times reports, is not quite what Pew Research reports. Here's what Pew's survey says (with editorial comments):

• 1% say they are the upper class (And 1% of this group — the top 0.01% — are 16,070 families with an average net worth of $371 million).
• 11% say they are upper middle-class (Which is about right. According to wage data from Social Security, 10% of wage earners make $90,000 a year or more.)
• 47% say they are middle-class (Almost half of those surveyed believe this, but it's not 9 out of 10 as the New York Times reports — it's less than 5 out 10 according to Pew; but even that is probably more like 2 out of 10 who earn a real middle-class wage, that is, if we said a middle-class income was between $50,000 and $100,000 a year.)
• 29% say they are lower middle-class (Not only does this ring true, but shows that the poor can be humble.)
• 10% say they are lower class (meaning, dirt poor — but the word "poor" or "desperate" wasn't on Pew's list of definitions.li>

If most people, instead of comparing themselves to their neighbor, but instead, compared themselves to the total wealth stream in this country, most of them would realize that they are far much poorer than they believe they are. Again, they should watch this YouTube video.

Rakesh Kochhar, a senior research associate at Pew, says “Middle income is not necessarily the same thing as middle-class. Even as the proportion of households in the middle-income brackets has narrowed, people’s identification with the middle-class remains broad. That’s because the middle-class label is as much about aspirations among Americans as it is about economics. But a perspective that was once characterized by comfort and optimism has increasingly been overlaid with stress and anxiety.

Here's what the St. Louis Fed recently reported on the subject in a post "The Middle Class May Be Under More Pressure Than You Think"

It is common to define the "middle class" based on a simple ranking of families' incomes or wealth. For example, the middle 50 percent of families in the 2013 Survey of Consumer Finances (SCF) included all families with annual income between $24,349 — the 25th percentile in a ranking from lowest to highest family income — and $89,887 — the 75th percentile. According to this definition, every family with an income between about $24,000 and $90,000 in 2013 would be in the middle class.

Would $24,000 to $90,000 a year really put someone in the middle class? Maybe at the higher end, especially if they lived in Sumter County, Alabama — or in any of the poorer States outside a major metropolitan area. They might even consider themselves wealthy.

Pew Research also reports that, of those with family incomes (Note: The Pew survey states "family" incomes, and would most likely mean "multiple household incomes") of $100,000 a year:

• 40% say they are either upper-middle or upper class (True, even if it's two earners in the household making $50,000 a year each.)
• 51% say they belong in the middle-class (These people are really understating their ranking. Whether a single or dual/multiple household income, they still have income that is almost TWICE that of the "median household income" of $54,417 a year.
• 8% say they are lower-middle class (This people must be delusional!)

Among those with incomes of $75,000-$99,999 and $50,000-$74,999, majorities describe themselves as middle class. (Even here, this can be rated as "true" — especially when one considers that, even with two household incomes, it's still TWICE the "median" income of $28,023 a year for wage earners. (The term "median" meaning, half earn more and half earn less.)

Pew also reports "Those with smaller incomes [smaller than $50,000 a year as noted above] are more likely to say they are lower middle-class or lower class." (A dual household income with each earning the "median wage" would also earn about what the "median household income" currently is ($54,417) — so one can say (for the sake of simplicity) that roughly half of the people in the U.S. live in a home with two or wage earners (or other forms of revenue streams, i.e. Social Security, etc.) making less than $50,000 combined a year — and the other half, more.

But people earning a "middle" income and living in a "middle" household is not to say they are "middle-class", because income "classes" are usually divided into 5 quintiles (sometimes defined using different names):

• Upper class — People who are very well-off, such as famous trial lawyers, national politicians, neurosurgeons, (etc.). The ultra-rich, such as corporate CEOs of the S&P 500, hedge fund managers, private equity partners (etc.) and those who obtain generational wealth passed down through families (like the Walmart heirs) are in the "uber-class" (the top 0.01%) and don't even rank as a "quintile".
• Upper middle-class — Professionals such as doctors and other very well-educated workers — some small business owners (meaning, something like a mom-and-pop family business owners, not hedge fund managers.)
• Middle-class (When dad used to work a 40-hour week job and paid the mortgage and car payment, while mom stayed home to serve milk and cookies to the kids when they came home from school. High school dropouts, high school grads, and those with some college (maybe a bachelor degree) working in a union manufacturing job, or as a retail or production manager.
• Lower middle-class (People who lack high school or college educations, come from family backgrounds with no "social" standing and/or lack strong networks (know influential people), work at menial jobs and earn low wages (usually, without any benefits.)
• Lower class (Part-time and /or temp workers who are severely struggling and/or the unemployed, retirees or the disabled (etc.) — the very poor.

* Editor's note: Having wealth or very high incomes doesn't necessarily designate "class" per se, as many wealthy people (e.g. Donald Trump, etc.) have gobs of money, but they have no class at all; because just like love, money can't buy class either. Many people all over the world think Sister Mary Teresa had a lot of class.

Pew also reports that there also are racial and ethnic differences in how people describe their social class; about half of blacks (51%) and Hispanics (48%) say they are either lower-middle class or lower class, compared with 35% of whites.

From another post at EP: "If by using the New York Times' definition for what might be considered middle-class (those earning more that $35,000 a year, but less than $100,000), then according to Social Security data for wage earners, then 34.5 percent earn a middle-class wage [but] a more reasonable assumption might be (at the very least) $50,000 a year before payroll taxes — in which case, only 19.4 percent of all wage earners would generate a true middle-class income."

Remember, according to the St. Louis Fed, by one measure, all "families" with annual incomes between $24,000 and $90,000 would be in the middle-class. Again, the term "family", as in a household's income, whether it's from one wage earner, or from several different streams of income. So if the "median wage" is $28,013, two earners with median incomes (totaling $56,026) would place them right about in the "middle" of a "middle-class household" — or slightly more than the "median household income" of $54,417 in December 2014.

According to the SSA wage data, 50% of wage earners made $24,013 a year or LESS — and the Fed says (just based on wages) a "household with wages of $24,000 ranks at the bottom of the scale as "middle-class" and $90,000 at the upper end of the scale. 50% earned more than $28,013 and 10% earned more than $90,000 — so by this measure, 40% would still be middle-class. But if a person were living alone and paying rent and utilities by themselves, who can seriously believe $24,000 is a middle-class wage, let alone if they were also trying to raise a family, send their kids to school, save for retirement, pay for healthcare costs, pay on an auto loan and auto insurance, pay for cell phone and/or landline and internet service, and pay for anything else (other than rent, utilities and food) if that was all someone had to live in on — other than those who lived in the poorest States or Counties in America, where the cost of living might be lower?

The article at the New York Times also reports:

There isn’t one middle class, but many middle-classes. Still, what all of them ultimately require, experts say, is a sense of economic security. Economists and other researchers have repeatedly found that the satisfaction a paycheck brings is related not only to its size, but how it compares to other people’s. That verity is apparently more pointed for middle-income households than for those at the lower and higher end of the spectrum. A review of the latest studies on the middle-class by the Congressional Research Service concluded that “when those at the upper end of the distribution fare much better than they do, the level of middle-class satisfaction is generally lessened.” Yet in the last 15 years, nearly all of the gains in income have streamed toward the upper end of the spectrum. [* The New York Times article is an excellent read, as well as the recent articles by both Pew Research and the St Louis Fed.]

Money can't buy class, but fair incomes paying "living wages" can go a long way towards providing dignity, self-reliance, security, independence and economic freedom for those who already possess a whole lot of class. But compared to billionaires like Donald Trump, when it comes to real "class", Senators Elizabeth Warren and Bernie Sanders are both solid class acts — because they want to EXPAND the middle-class across the entire nation (in all States); whereas, some politicians just want to continue to feed the rich and starve the poor, while shrinking what's left of the middle-class (a lot more than it has already shrank.) Here's an animated visualization of the shrinking middle-class.

As Mark Thoma noted at CBS News (referring to the St. Louis Fed post), the demographically defined middle class reveals that families that are neither rich nor poor may be under more downward economic and financial pressure than common rank-based measures of income or wealth would suggest. In effect, the bar has been rising to remain near the middle of the income and wealth distributions.