The Myth of the Middle Class
As part of his proposed health care reform plan, Obama envisions two new tax increases: one on non-wage income for individuals making over $200,000 a year and families making over $250,000 a year; and another, an additional Medicare assessment, on earned income for the same group. The proposal takes on so-called “high-earning households” as part of Obama’s promise not to increase taxes on the middle class. But the idea that someone earning $199,000 is “middle class” remains laughable to many Americans and to economists.
The political reality is that nearly 80 percent of Americans self-identify as “middle class,” 2 percent identify as “upper class” and 18 percent identify as “lower class.” Only the latter total is likely accurate.
Standard statistical practice is to divide the country into five groups, or quintiles, each representing 20 percent of the population. Median household income in the United States in 2008 was $52,029, which fits squarely in the 3rd quintile, where households range in income from $39,000-$62,725. That’s what the statistical middle class really looks like. If one wanted to encompass the middle of the entire range — which is to say the middle 60 percent of the households in America, including the “lower middle” and “upper middle” classes — the range of middle class could be expanded to those households earning between $20,000 and $100,240 every year. There’s a lot of daylight between the highest earning households in the bottom 80 percent of the population, and individuals earning $200,000 year.
In fact, only 5 percent of the households in America earn more than $180,000 to begin with, so “high earners” comprise something less than 5 percent of the country. Interestingly enough, rank-and-file members of Congress, senators included, will make $174,000 in 2010, putting them just outside the top 5 percent of earners in this country if they aren’t married or their spouses don’t work. The president earns $400,000 a year, meaning he makes more than $100,000 more than the average salary of the top 5 percent of Americans.
By those standards, people making $199,000 a year probably do seem somewhat middle class. That, however, doesn’t mean that they are.