The news of Congress' decision to not extend benefits to unemployed Americans while demanding we pay for tax cuts for the wealthy did nothing to ease the discomfort of those who believe there is an attack on the middle class. If the economic crisis has taught us anything it's that struggle does not discriminate. Americans of every economic and social class have been adversely affected by a crisis that has resulted in prolonged unemployment and home foreclosures for millions. A conversation about how we define class in America may be the first step towards our recovery.
The holiday season will inevitably bring out two of the very traits that America needs to get through this economic crisis: volunteerism and spending. We volunteer more than ever during the holidays, but we spend more as well. The National Retail Federation (NRF) reports that 17 million more shoppers visited stores and websites over Black Friday weekend, spending on average $365.34. Signs of a return to pre-crisis spending underscore how important it is we examine what motivates our spending. The holidays are also a good time to examine whether crises pull Americans apart or push us together. Does the middle class spend money differently from the rest of America? Has the economic crisis eroded the artificial lines dividing the middle class from the working class and the wealthy?
Amid all the discussion about "Middle Class Tax Cuts" and the "War on the Middle Class," there has been little attention paid to the puzzling fact that Americans still do not have a hard and fast definition for middle class. The most common measure of middle class is income. Many studies characterize anyone earning $25,000 to $100,000 as constituting middle class. In a survey of the so-called middle class and middle-income Americans, the Pew Research Center Survey noted being middle class is merely a state of mind. The survey reflected that when Pew referred to the "middle class" they were describing the 53% of adults who identified themselves as such in a survey question that asked them to place themselves into one of five socioeconomic categories. Conversely when referring to those who are "middle-income," Pew was describing the 35% of adults who live in a household where the annual income falls within 75% to 150% of the national median.
A more nuanced proxy for middle class exceeds salary and can include one's education level, health, homeownership, lifestyle, or any other indication of one's value system. But for many Americans middle class is something that is defined for them, rather than a choice. The popular conception that anyone making an annual salary of less than $250,000 is middle class leads many to identify as such without reaching the middle-income threshold. The Pew study shows that middle-aged, middle class, adults are more likely than both younger and older Americans to report financial stresses, even though they have more income. Younger adults, older adults, African-Americans, and Hispanics are all more likely than their counterparts to describe themselves as middle class, even though their income levels are lower. Can the disparity in middle-income earners who identify as middle class be the root of why so many Americans live beyond their means?
The unfortunate effect the economic crisis is having on middle-aged Caucasians would seem to support the notion that misinterpreting one's class status does not tell the entire story. Surely responsible Americans of all races and ages will be able to make informed decisions about their spending habits based on their current circumstances. After all the NRF reports approximately 62% of shoppers say the economy will impact their spending and plan to spend less this year. But how does the perception of one's class status affect future spending? Before one can make a determination about what factors influence the average middle class family's spending, it is important we first fully understand whether they consider themselves to be middle class at all. Defining middle class may be the beginning of that process.
Skeptics of defining middle class cite household debt, geographic differences in cost of living, and annual salary as support for their case. The reality that $50,000 goes a lot further in Austell, GA than it does in Fort Washington, MD makes it difficult to create a universal definition. A similar dilemma arises when we try to compare someone heavily in debt making $100,000 to someone with no debt making $50,000. Americans on the fringes of the middle class often opt-in and make decisions they assume their fellow middle-class Americans will. Unfortunately, studies show Americans overestimate how many people have certain high-end goods and services leading them to make decisions that even middle-income earners aren't making.
The erosion of the artificial lines separating America's middle class from the wealthy and working classes began with the proliferation of easy access to credit. The lines have been further blurred during the current economic crisis as Americans of every class struggle to survive, albeit at different levels. We urgently need to define what it means to be middle class. Any future use of the ambiguous definition for middle class may be the first step towards creating the environment that perpetuated the crisis. Experts agree that the economic recovery will not happen over night and it is less likely to happen with sweeping legislation that doesn't take into consideration the unique needs of each American. A proper definition for middle class could be the first step towards reforming our tax policy so that it works better for Americans on every point of the income spectrum. We need leadership with ideas that cut through the heart of our crisis like a scalpel not a hatchet