What, or Who, is the Middle Class?

[Samson]

Speaking as an American, I don't think "Middle Class" should account in any way for how you earn your money or how you choose to spend it. I think that's how you get into classism, and garbage like whether a person's accent or what sports they follow or what music they listen to makes them low-class. A surgeon can go to the Daytona 500 every year and a plumber can have season tickets to the symphony; I don't know what either has to do with anything.

For the purposes of things like economic policy, I can think of no reason the definition of middle class should be anything other than how much wealth you have.

Why? As I said in my post, I have a work college who feels culturally working class. When I suggested that is incompatable with his role as a computer programmer (with the income that comes with that) he said jokingly "do not oppress me", indicating that at least for him the label working class goes far beyond a simple number on a pay slip.

 

[luiz]

Depending on location, yeah I think they can be comparable. I am able to live pretty comfortably near St. Louis on ~$30k but I couldn't do that if I moved near my brother in NYC - anywhere in NYC.

It think a 3.3 times difference in income is so big that even in NYC you'll live much better with $100K than you would in St. Louis with $30k. And there are cheaper (though not cheap) places to live in NYC. Just not in Manhattan or the fancy parts of Brooklyn. I really don't see why anyone feels like they "have to" live in Manhattan, even if their job is there. Public transportation in NYC does extend beyond the island. Living there is a luxury, so you get what you're paying for.

Additionally, by living in say Manhattan you're buying a lot of "cultural goods" that you don't get if you live in some tiny Midwestern town where living costs are much lower.

Speaking as an American, I don't think "Middle Class" should account in any way for how you earn your money or how you choose to spend it. I think that's how you get into classism, and garbage like whether a person's accent or what sports they follow or what music they listen to makes them low-class. A surgeon can go to the Daytona 500 every year and a plumber can have season tickets to the symphony; I don't know what either has to do with anything.

For the purposes of things like economic policy, I can think of no reason the definition of middle class should be anything other than how much wealth you have.

For the purpose of economic policy, of course. But there there is no need to call it "middle class" either. For the purpose of economic policy, just divide the population in income brackets, or income percentiles, and avoid the whole class thing.

But classism does exist, so for the purpose of debate it's valid to ask if being middle class is solely about how much you make or if there are cultural components to it. Or if it's even an useful term in this day and age.

Well that is only true if the middle class was supposed to be an actual thing. Something pre-existing we only have to recognize as such.
The first question is not what the middle class is, but what you want to show. If you know that, middle class can be IMO an extremely useful heuristic to understand what is going on within a society.

Give me a couple tables with the evolution of the median income by household instead.

 

[EgonSpengler]

Why? As I said in my post, I have a work college who feels culturally working class. When I suggested that is incompatable with his role as a computer programmer (with the income that comes with that) he said jokingly "do not oppress me", indicating that at least for him the label working class goes far beyond a simple number on a pay slip.

My answer lies in his, actually. I don't think we should, for example, allow a person who earns $100,000 a year and owns his house to claim a discounted rate on education or health care simply because he follows NASCAR instead of tennis (or, if he's in the UK, because he follows football instead of rugby). The really insidious (in)version of that would be if a poor person is denied an education tax credit because they like golf and opera. As your friend says, don't oppress him. Don't give him tax breaks he doesn't need or deserve, either.

 

[Terxpahseyton]

I'm actually torn on this subject because on the one hand, I don't like that certain cities are developing into large wealthy-people-only zones (or at least large chunks of them are). I mean, it is natural that there will be different neighborhoods with different income levels but there seems to be a trend in some places like DC or NYC that is really squeezing everyone but the wealthy out of large chunks of the city and even those in the 'bad' areas can hardly afford to live there.

On the other hand, I am not sure that I am completely comfortable with lots of government intervention to try and make areas more affordable for everyone when the reality is some people just shouldn't live where they can't afford to live.

I think at the bottom line it is a no-brainer. The result of doing so in Europe are IMO on the whole a huge success story (in comparison, not to say it was all wonderful and without any problems). Not only for the greater diversity, but also because the people who financially profit from it don't do it because they have 'earned it'. They are more like leeches sitting on finite resources. There just is IMO no good reason to not do it, in some manner.

And what does that

On the other hand, I am not sure that I am completely comfortable with lots of government intervention to try and make areas more affordable for everyone when the reality is some people just shouldn't live where they can't afford to live.

Even mean?

 

[luiz]

I think at the bottom line it is a no-brainer. The result of doing so in Europe are IMO on the whole a huge success story (in comparison, not to say it was all wonderful and without any problems). Not only for the greater diversity, but also because the people who financially profit from it don't do it because they have 'earned it'. They are more like leeches sitting on finite resources. There just is IMO no good reason to not do it, in some manner.

And what does that

Even mean?

The problem with government interfering in housing, to make sure poor people can live in "desirable locations", is that the housing supply goes down as does its quality.

Rent controls are a huge failure. At the end of the day living in the Manhattan or the desirable locations of Paris is a luxury for which there is a limited a supply. How do you decide who gets to live there? Naturally, the only efficient way to do it is by "bidding".

 

[Terxpahseyton]

Eh I don't get the impression that housing in New York or DC is vastly superior for it in comparison to say Germany. It sounds more like a lot of rip-offs. It is not like that there is no renovation and development going on in Germany. But of course you have to balance regulations with initiatives for investment.
Why do you think it is a 'huge failure'?

The market still decides who gets to live where. It just is a market put on the leash. It is not like rents are all the same or whatever or that you can't build luxury housing.

 

[Samson]

My answer lies in his, actually. I don't think we should, for example, allow a person who earns $100,000 a year and owns his house to claim a discounted rate on education or health care simply because he follows NASCAR instead of tennis (or, if he's in the UK, because he follows football instead of rugby). The really insidious (in)version of that would be if a poor person is denied an education tax credit because they like golf and opera. As your friend says, don't oppress him. Don't give him tax breaks he doesn't need or deserve, either.

Surely the answer then it not to give tax breaks dependant on something as ephemeral and culturally loaded as class. We should give tax breaks on income?

 

[EgonSpengler]

For the purpose of economic policy, of course. But there there is no need to call it "middle class" either. For the purpose of economic policy, just divide the population in income brackets, or income percentiles, and avoid the whole class thing.

But classism does exist, so for the purpose of debate it's valid to ask if being middle class is solely about how much you make or if there are cultural components to it. Or if it's even an useful term in this day and age.

But economic policy is what the ongoing discussion, in the article cited by the OP and elsewhere, is about. Avoiding class terminology may be the way to go, but I'm not sure what the alternatives are, nor what value there is to keeping the old definitions. Samson's friend likes to call himself "working class" and a lot of Americans insist on calling themselves "middle class." If we had different language for the important stuff, I guess I wouldn't care what they call themselves, but at least in this country, we're talking about whose $100,000 college funds should be tax-free and whether everyone should get paid sick-days.

Simple income brackets may not work, for the aforementioned reasons. Although disregarding where a person lives has an attractive simplicity to it, cost of living is often tied up with job availability. There's a reason you can buy a "fixer-upper" house for $1,000 in parts of Detroit. Good luck finding a job there. We can't just say that everybody struggling to make ends meet in New York or San Francisco should just move to Memphis or Indianapolis.

 

[luiz]

Eh I don't get the impression that housing in New York or DC is vastly superior for it in comparison to say Germany. It sounds more like a lot of rip-offs. It is not like that there is no renovation and development going on in Germany. But of course you have to balance regulations with initiatives for investment.
Why do you think it is a 'huge failure'?

The market still decides who gets to live where. It just is a market put on the leash. It is not like rents are all the same or whatever or that you can't build luxury housing.

NYC has a lot of strong rent controls and that's part of the reason why housing there is inferior to that of other large American cities.

The logic is pretty simple. If you force rents to be artificially low at a desirable location, a lot of people will want the same units. How do you decide who gets it? And why would the landlord renovate the units and etc. if rents can't go up?

It's not rocket science. Any economist worthy of the name will tell you rent controls are stupid, regardless of his politics.

 

[warpus]

What do you think? How do you define the middle class, and who is in it?

Depends on the city/state/location, IMO.

I would say it's gotta be related to your purchasing power, and that depends on your income and cost of living, and that all is driven in part by geographical location - so I would have to say that someone who is middle class in Lansing, Michigan, is not necessarily going to be middle class in Manhattan.

"The middle" is after all a relative term, and in my opinion "middle class" is referring to that class in between the class that's hovering around or under the poverty line (working class?), and the class that is off well enough to be able to spend most of their income on luxuries (1%/ruling/elite class?).

As such to me the middle class is a group of people which drives the economy by being able to purchase a significant enough part of their income on luxuries... but not to an extent such that their lives revolve around them. However, do to their relatively large number, they end up driving a consumer-driven economy.

I'm not an economist though, so..

 

[EgonSpengler]

Surely the answer then it not to give tax breaks dependant on something as ephemeral and culturally loaded as class. We should give tax breaks on income?

I would say wealth rather than income, but yes. For countries where "class" is culturally loaded, then maybe just abandoning the terminology is the path of least resistance. I wouldn't know what to replace the terminology with, though.

EDIT: Come to think of it, some of the language is changing already. "Low income" and "working poor" have largely replaced "working class" in this country, for example.

 

[Zelig]

Three wealth/income levels of people:
People whose money can move markets.
People who can live off their investments.
People who live on wages or welfare.

I don't know that wealth alone is really sufficient to determine class... you have both people who are nominally very wealthy but probably can't actually move markets with that wealth for whatever reason (Queen, Pope, etc.) and people who aren't market-moving wealthy but wield more influence than most market-movers and don't live lifestyles that most people would consider "middle class". (Various heads of government, Linus Torvalds, Brian Krzanich, Jony Ive, Terry Myerson, etc.)

 

[luiz]

But economic policy is what the ongoing discussion, in the article cited by the OP and elsewhere, is about. Avoiding class terminology may be the way to go, but I'm not sure what the alternatives are, nor what value there is to keeping the old definitions. Samson's friend likes to call himself "working class" and a lot of Americans insist on calling themselves "middle class." If we had different language for the important stuff, I guess I wouldn't care what they call themselves, but at least in this country, we're talking about whose $100,000 college funds should be tax-free and whether everyone should get paid sick-days.

Simple income brackets may not work, for the aforementioned reasons. Although disregarding where a person lives has an attractive simplicity to it, cost of living is often tied up with job availability. There's a reason you can buy a "fixer-upper" house for $1,000 in parts of Detroit. Good luck finding a job there. We can't just say that everybody struggling to make ends meet in New York or San Francisco should just move to Memphis or Indianapolis.

You could use "disposable income by household", or "adjusted purchasing power", or whatever metric you prefer. Clearly referring to class is not the ideal way to handle public policy.

 

[EgonSpengler]

A thought on the appeal of the "middle class" label for Americans: I think it may have a lot to do with our work ethic, and whether a person's wealth is earned or not. People may think that being called "rich" or "upper class" implies they don't really work for a living. Books like The Great Gatsby and Less Than Zero inform and reflect American opinions on the idle rich. The UK version of the same thing can be found in the movie Bright Young Things (an adaptation of Evelyn Waugh's Vile Bodies, which I've never read).

 

[EgonSpengler]

You could use "disposable income by household", or "adjusted purchasing power", or whatever metric you prefer. Clearly referring to class is not the ideal way to handle public policy.

Sure, something like that. I wouldn't mind if it was something a little less geeky, but maybe this is something that really shouldn't be simplified too much. I think for some people, merely referring to something as a "metric" can make them roll their eyes and walk away.

 

[Mise]

The distinction between "Middle Class" as a cultural identity and "middle class" as an income/wealth stratum is really interesting.

...that's all I really have to say right now sorry.

 

[Borachio]

Link to video.

 

[Terxpahseyton]

NYC has a lot of strong rent controls and that's part of the reason why housing there is inferior to that of other large American cities.

Oh okay didn't know that. I was under the impression that the US knows little tenant's rights. Perhaps they don't, but still at times rent control.

The logic is pretty simple. If you force rents to be artificially low at a desirable location, a lot of people will want the same units. How do you decide who gets it?

You repeat this point - the answer is: those who is first I guess. Is that necessarily worse than those with more money, in itself? I don't think so, but it seems implied by you. Is this some kind of 'moral' angle you drive? That if someone can pay more then this should be alway the deciding factor?

And why would the landlord renovate the units and etc. and if rents can't go up?

That is a better point, but from my understanding a good rent control will foresee the possibility for renovations and corresponding higher rent. I see it happening all the time. Rents still will vary with the location and quality of the housing. I am baffled it could be different because that is totally unknown to me.

It's not rocket science. Any economist worthy of the name will tell you rent controls are stupid, regardless of his politics.

Yeah I don't see it. Obviously, rent controls can harm investment in housing and in some manner always will. You are right that surely every economist will realize that. But as said, from my POV it is a balancing act. Maybe they do a bad job of balancing it in NYC, I don't know.
On the one hand you have the wish for investment, alright - but on the other hand you have a finite resource (land) and a very inflexible resource (housing) which if unchecked opens the doors wide open for exploitations of tenants in a high-demand-area.

Housing is an extremely imperfect market - and you want to tell me that any economist worth his salt has nothing to say about that but just goes "free market FTW!"?
I don't believe it. That just seems extreme and simplistic to me.

 

[luiz]

Oh okay didn't know that. I was under the impression that the US knows little tenant's rights. Perhaps they don't, but still at times rent control.

The thing to keep in mind about the US is that it's very big and diverse, and states and cities have vast autonomy. Some cities may have virtually unregulated housing markets, while others - like NYC - have heavy regulations.

You repeat this point - the answer is: those who is first I guess. Is that necessarily worse than those with more money, in itself? I don't think so, but it seems implied by you. Is this some kind of 'moral' angle you drive? That if someone can pay more then this should be alway the deciding factor?

It's quite straightforward why paying more is a better way to determine who gets to live in a desired location then just being the first in line. For starters, the whole of the population gets more out of it - if you pay more rent, you pay more housing taxes which can then be used for, among other things, build affordable housing in affordable locations.

Additionally, if your system is "whoever gets there first gets it" you're essentially guaranteeing that people will work around the system to make money. Say there is a zone of controlled rent at $1,000 per month per unit but the real "market value" is $3,000 (Ie, that's the market-clearing rent). People with nothing better to do will stay in line until they get one unit, and then sub-rent it unofficially for say $2,000. The city will lose tax money and the rent control will still fail.

That is a better point, but from my understanding a good rent control will foresee the possibility for renovations and corresponding higher rent. I see it happening all the time. Rents still will vary with the location and quality of the housing. I am baffled it could be different because that is totally unknown to me.

If it foresees renovation and rent increase it ceases being rent control at some point. Or is the control going to tell the landlord just how "nice" he may make his own apartment into? And how do you assess hoe much rent may rise after a renovation? Based on the renovation cost? What if he got a quotation from a contractor who is his friend?

See, the market is very good at determining how much something is worth, while governments are very bad.

Landlords want to maximize the return on their investment. And apartments aren't the only investment available. If rent controls makes the return on their investment inferior to other returns available on the market, they'll invest somewhere else and let the apartment rot.

Yeah I don't see it. Obviously, rent controls can harm investment in housing and in some manner always will. You are right that surely every economist will realize that. But as said, from my POV it is a balancing act. Maybe they do a bad job of balancing it in NYC, I don't know.
On the one hand you have the wish for investment, alright - but on the other hand you have a finite resource (land) and a very inflexible resource (housing) which if unchecked opens the doors wide open for exploitations of tenants in a high-demand-area.

Housing is an extremely imperfect market - and you want to tell me that any economist worth his salt has nothing to say about that but just goes "free market FTW!"?
I don't believe it. That just seems extreme and simplistic to me.

There's a reason why it's an unanimity (or as close to one as it gets). Rent controls reduce the tax base, guarantee a black market, and reduce both housing stock and housing quality.

 

[Zelig]

Oh okay didn't know that. I was under the impression that the US knows little tenant's rights. Perhaps they don't, but still at times rent control.

Most of Canada has fairly strong tenants' rights but no rent control, I don't really consider rent control to be relevant to tenants' rights.