THE BLOG
08/08/2009 05:12 am ET | Updated May 25, 2011

Who is the American Middle Class? Lessons for Health Care Reform

Economists may define "middle class" as the group whose income lies some distance from the mean family income (the average of all households) or the median income (the income level above which half of American families fall below and half above). But in the United States, as surveys over many years have shown, middle class is as much a state of mind as a state of wealth. Most Americans consider themselves middle class (although many now see themselves as having fallen out of it or in danger of doing so), even though their incomes are either below or well above -- including substantially above -- the $45,000-or-so household income that defines the median income in the United States. For example, most people who hover between the upper 2-3 percent, between $200,000 and $250,000, consider themselves middle class.

So are Americans just bad statisticians? No. Most people who consider themselves middle class, whether they're construction workers, nurses, middle-level managers, small business owners, or teachers, think about how they got to where they are -- usually through hard work -- and think of middle class in terms of "middle class values." People who consider themselves middle class view themselves as participants in the American Dream -- the idea that through hard work, talent, and opportunity, we should all be able to expect to earn a decent living, own a home, and expect our children to have at least the same chances we had. (The "middle class" in this sense has been shrinking since the Bush years just as has the statistical middle class.) Working and middle class Americans do not expect to be wealthy, but they don't begrudge earned wealth, either.

During the 2008 election, I had contact with more than one of the Democratic presidential campaigns and suggested they stop talking about people who make $200,000 a year as "wealthy." Most people whose family income falls in that range do not think of themselves as wealthy, particularly when their income depends on two careers, with all the stresses that entails, and when they do not have the disposable income to put away money for their kids' college education, particularly if they live in or near a city, or are paying high property taxes while simultaneously paying for private schools for their kids because they live in a city or state where the public schools are substandard. Most people in this income bracket also consider themselves middle class because they go to work, and they wouldn't have economic security if they didn't.

As importantly, although Americans in this income range are among the most fortunate -- in the upper 2-3 percent of U.S. incomes -- over the last 30 years they have barely benefited from the nation's economic growth at a rate any higher than those who earn the median family income of $40,000-$50,000. They have not disproportionately shared in the rising inequality since the Reagan years. That distinction has been the good fortune of the truly wealthy, the upper 1 percent, who have made a killing as the middle class -- including the upper middle class, but especially those toward the bottom of the economic pyramid -- have seen their incomes and net worth stagnate or shrink.

So why does this matter? It matters not only because we have increasingly become a society of the have-everythings and the have-to-get-bys but also because we pride ourselves in this country on some basic norms of fairness. Tell the average parent making $200,000 commuting 3 hours a day to and from New York City, Los Angeles, Houston, or Atlanta that he or she is privileged to spend that time in the car or train instead of with his or her kids and you'll get an earful -- and rightly so.

As the administration and Congress figure out how to pay for health care reform, they need to bear in mind the meaning of middle class in America, because understanding or failing to do so could make the difference between strong or weak popular support. Consider, for example, proposals to tax higher-priced employer-provided health care plans. That tax would no doubt largely fall on people who fall in the upper 2 to 20 percent nationally (as well as others with family members who have conditions that require flexibility in where they can be treated), and would be inconsequential to the upper 1 percent, for whom a few thousand here and there wouldn't make much difference. Most Americans would not only consider a health tax on middle-class American families as an unfair burden on people who have worked hard for what they have but would worry -- and appropriately so -- that it would ultimately undermine choice -- one of the key values at the heart of the health care debate -- as employers would simply cut the better, more expensive plans. That would be the fastest way to see health care reform defeated.

When it comes to paying for health care, if someone's taxes need to go up, Americans have a much easier time imagining it being the super-rich who have benefited disproportionately from the massive redistribution of wealth that has occurred over the last 30 years, or the artificially low capital gains rate on those of disproportionate wealth rich who have not only been paying less for speculating than for working but for speculating with our security. And they have a much easier time imagining taxing products such as fast foods and cigarettes that bear a direct relation to the cost of health care in America, and demanding concessions from the industries that have led to the spiraling costs of health care in the first place, most importantly the pharmaceutical and health insurance industries.

So before we start going after middle class taxpayers, both as good policy and good politics, we would do well to remember that the middle class is and always has been the backbone of our economy, and that the greed of those who have preyed on them over the last decade with doubling premiums and non-negotiable drug prices is a pre-existing condition it's time to eliminate.

Drew Westen, Ph.D., is Professor of Psychology and Psychiatry at Emory University, founder of Westen Strategies, and author of The Political Brain: The Role of Emotion in Deciding the Fate of the Nation.

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