White House defines "middle class"

[firecat]

This is a perennial topic on the Innertubez and I am happy to see someone in the current US Presidential administration offering a definition:

http://www.whitehouse.gov/blog_post/smc_your_comments/

I think it’s important for us to use a broad definition of "middle class" that encompasses the various levels of middle class. The Census Bureau tells us that the median household income—the income of the household smack in the middle of the income scale—is about $50,000, so that’s certainly got to be considered a middle-class income. But a more comprehensive definition must go a lot further. My boss, the Vice President, often describes the "middle class" as any family that can’t afford to miss more than two or three paychecks without financial difficulty. Given job market turmoil, that’s an awfully timely way to think about the question. It used to be that the middle class was able to achieve the American dream of owning a decent home in a safe neighborhood with a good public school, having access to affordable health care, saving for college and retirement, and enjoying the occasional meal out, movie, and vacation. The problem is that many middle class families are no longer able to achieve this dream. The task force will focus on making the American dream accessible again to the middle class.
—Jared Bernstein, and I am the Executive Director of the task force and Chief Economist and Economic Policy Advisor to the Vice President

I like this definition because it gets at the concept from two different positions, one of which includes capital (savings). Definitions that include only yearly income mislabel some people, in my opinion.

It's incomplete because it doesn't define financial difficulty. If it's true that there is a class of people who have very little savings but a pretty luxurious lifestyle, for them financial difficulty might mean "Can't make the payment on the leased Jaguar," and that's a different sort of financial difficulty than some people face.

Then again it's probably smart that the definition doesn't get into specifics on that, because "what standard of living is reasonable to expect" is a divisive topic.

Comments

[leback.livejournal.com]

I like your analysis of the definition. The lack of definition of "financial difficulty" was troubling to me too, though I think you make a good point about why it's politically problematic to delve too deeply into that.

If one does want to define it more carefully, I think part of the problem is that people's established financial expectations structure not only the degree of luxury we expect, but the kinds of financial risks we've imposed on *ourselves*. If the Jaguar is a car the family drives only for enjoyment, not being able to make the payment on the Jaguar may feel like difficulty without actually making them worse off than most other people. On the other hand, if it's the car they use to get around on a day-to-day basis, losing it may make it hard for them to look for new jobs, to get their kids to school, to get medical care, even to buy food. They could have avoided landing in such dire straits by buying a cheaper car without taking on any debt instead of leasing the Jaguar, or by leasing a cheaper car and keeping some money in the bank so that they could continue to afford the payments during a rough patch. So even if we had a definition for financial difficulty that would describe this family's situation after losing the Jaguar, it might be problematic to call them middle class.

I'm following your example in the above paragraph, but the first way I thought about this was with regard to my house. Alexei and I could be placed in more dire straits by a few missed paychecks now than we would have a few months ago, because now instead of a pile of cash that could have paid our rent through a long period of unemployment, we have very little cash and steeper mortgage-payment obligations than our old rent. So we'd be at much greater risk of losing our home, and given the current market, possibly walking away with very little cash to pay future rent or other expenses, even supposing someone would lease us an apartment while we had no income. Possible homelessness (or really, in our case, possibly being driven to rely on the generosity of friends and family to keep a roof over our heads) seems like it would constitute "financial difficulty" under most reasonable definitions, but it doesn't make sense to me to say that we're middle class now when we weren't six months ago, when the change is entirely due to choices that we made in full awareness of their implications.

Maybe one could dodge this particular problem by saying that the middle class includes everyone who has the realistic option, while maintaining a reasonable standard of living, to structure their finances so that they could avoid financial difficulties in the event of the loss of a few paychecks? That framing would seem to distinguish Alexei's and my possibly not having *taken* that option from many people's not having had it available to them, which makes me much more comfortable.

[firecat]

middle class includes everyone who has the realistic option, while maintaining a reasonable standard of living, to structure their finances so that they could avoid financial difficulties in the event of the loss of a few paychecks?

I like that.

I think another reason for the "financial difficulty" definition is that we are coming out of an era dominated by people who tended to think that people's misfortune was usually directly caused by their individual behavior and if they were in difficulty they should be punished for it by not being helped out of their difficulty.

But (a) such punishment does not improve an already staggering economy.

And (b) it is looking like Obama's administration has read Don't Think of an Elephant and is trying to reframe the political debate using the metaphors discussed there.

[leback.livejournal.com]

Ooh, yeah, that's a really good point. Thanks for the insight!