On Oct. 6, CNBC shared an article on Twitter stating that a “family living in a large city making 400k a year is not wealthy, but merely upper-middle-class” in response to a comment made by former Vice President Joe Biden. Biden had claimed, in a campaign speech made a day earlier, that he planned to increase the tax rate only on wealthy families, families he identified as making over $400,000 per year.
People across the country rejected CNBC’s claim as elitist and “out-of touch,” since a family making $400,000 per year is within a fraction of the 1%. It seems impossible that such families, securely in the highest income tax bracket and within the top half of the 1%, could be considered “the middle.”
What the Twitterverse misunderstood is that CNBC’s claim is partially correct, since many of these wealthier families who live in large cities, like New York City, San Francisco or Washington D.C., would actually consider themselves middle class or upper-middle class. But, even in these large cities, Biden is also correct: $400,000 is still within the top 1% of household incomes. Given this discrepancy, who really is “the middle class?”
If we define the middle class strictly by the median income, $400,000 is certainly not middle class. The median income in the United States was approximately $69,000 per year in 2019, a fraction of $400,000. The median income is roughly the same or lower in most major U.S. cities. Any family making the median income, regardless of where they lived, would be ecstatic if they made over triple their income.
But the American middle class is not just about income. The middle class is a concept from the postwar period that still defines the American popular consciousness; it is the suburban life with 2.5 children, a dog and a white picket fence. It is putting your children through college, paying for medical care, and having the discretionary funds for vacation and leisure. Despite its centrality to the American Dream, this “middle class” of the 1950s was never ubiquitous — for BIPOC Americans, non-heterosexuals, and single women, for example, this ideal was almost unattainable. At the same time though, people across social classes experienced its benefits: a blue-collar working family could still afford college, medical care and savings.
Today, this is no longer the case. As the cost of living rises, formerly middle-class families can no longer have it all. They have to choose, whether between providing for their children’s college tuition and paying down a mortgage or between saving money and paying for the rising costs of healthcare. Today, almost 40% of Americans would have to take on debt if confronted by an unexpected $400 expense. The income brackets that used to be the middle class are now dictated by choices: financial choices that families are forced to make between the elements of middle-class life.
For a family to avoid making these choices, they need to be wealthy. In areas with expensive houses and high costs of living, only families within the top 1% of the income distribution can comfortably pay for college, travel, stay on top of medical bills, and still afford some amount of discretionary spending. Even families who earn up to $150,000 per year can still qualify for financial aid from Harvard College because such a family could have major, possibly prohibitive, difficulties paying full college tuition. Even though they would be within the top 10% of the United States’ income distribution, families paying for their children’s education might have to cut other “middle-class” essentials like certain health care costs, or yearly vacations.
CNBC alluded to, but did not articulate, that there is a distinction between the upper class — those who can afford to have all the trappings of the middle class — and the ruling class: those with multiple homes, business and political connections and the choice whether or not to work a day-to-day job. This distinction is often missed during these debates about income brackets and class. The reason most upper-class individuals identify themselves as “upper middle class” is that they do not live like the ruling class, and cannot imagine having that level of wealth — even though a family income of $400,000 per year is more money than the vast majority of Americans are earning. CNBC’s tweet fell into this understanding of the middle class.
Across the board, families in all income brackets identify as some kind of “middle class,” whether they make $30,000 and fall on the edge of the poverty line or they make $400,000 and fall within the top 1%. No one likes to consider themselves poor, and upper-class Americans have an aversion to calling themselves wealthy because they distinguish themselves from the ruling class. But, today, those who are able to participate in middle-class life — by sending their children to a four-year college, paying their healthcare costs, living without substantial debt and having substantial savings — are really the upper class.
American society presumes that “the middle class” dominates American culture, so it can be uncomfortable to confront how the American middle class has become so dramatically depleted. People who make the median income cannot attain a “middle-class” life. People who can afford it all make far above the median income. When the people who live like “the middle class” are so widely detached from those who make up the middle-income bracket, is there truly an American middle class?
Image by Avi Waxman is licensed under the Unsplash License.
