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.

Comments

[Mike Bradley]

Maybe a third party to democratically debate "Fringe issues" would be healthy to restore some balance to the republican and democratic parties.

[Mike Bradley]

Trickle down economics, and i was only an adolescent in the 80's, may have fallen into the most common trapping of capitalism.

[Mike Bradley]

A government option could force the private healthcare providers to cut their overhead thus streamling costs resulting in a better product. The competion model seems ripe in for this situation.

[Mike Bradley]

Universal care would benefit all if we could only cut the overhead already rampant in the private healthcare system.

[mikecal]

Drew,
I think that you are suggesting that the rich should pay for universal care...and they should CONTRIBUTE disproportionately.

However, the idea that other people should pay for our health care is fundamentally flawed. People should contribute according to their means to a national risk pool that is either a single payer or a very highly regulated non-profit eco-system like they have in France.

So, paying for universal care needs to come from all walks of life. I'm afraid the strategy of "keep what you have" is going to undermine the fundamental benefit of creating that national risk pool. Somehow the premiums that are now going to private insurers need to go into that national risk pool. So the health expenditures of even the lower middle class need to contribute as well.

[roseau]

Another thing that makes the $200k a year family different from the $5k per year family is that they have more of a margin for error, and they probably vote with the interests of the class just above them. They may 'identify' as middle class, but they tend to vote for the interests of their bosses at that level.

[just saying]

what are you talking about? Why would they vote for the interests of their bosses?

[Konnie]

they vote that way every election. what planet are you from? omg no new taxes! for the rich! omg gotta keep that "old death tax" from my door - cause you know my 40 acre
farm might be worth MORE than 10 million some day! they vote against their
own self-interest every time! scare- fear-even hope its called manipulation. and the monied class invented it.

[winchestereast]

anyone object to collecting over-due taxes on folks like rupert murdoch, whose companies' off-shore status, while making billions on our shores, puts them into a low single digit tax bracket? there are a lot of ways to raise money to pay for health care - get busy, ms pelosi - you must have some tax genius interns who can show you where the money is - then go after it, and pay for a public , single payer health program - do we really need to keep a system which pays one ceo $250,000,000 annually?

[FerrellGummitt]

Sheep. All of you are just a damn bunch of sheep. ObamaCare, Cap and Trade, Tax on Health Care Benefits, Government takeover of GM, Chrysler and major financial institutions.

IS THIS THE CHANGE YOU ASKED FOR WHEN YOU VOTED FOR OBAMA???!!!!!

[winchestereast]

rather be hung for a sheep than for a goat - and since the goats in the gop put us all in the dire straits we currently enjoy, BAAAAAAH - Change takes time - the situation was critical - this administration has taken on a herculean task with energy and creativity - will they get everything 100% right? probably not - certainly not with the gop and blue dog dems braying and naying - there will be NO TAX ON HEALTH CARE BENEFITS - there may be new taxes - where were you, gummy, when reagan gave the richest 1% huge tax breaks and paid for them by raising employment taxes (which most of us making over 250,000 pay) and by raiding social security and medicare funds?

[FerrellGummitt]

Here is section 304 of Cap and Trade. Just read the senate is holding back the bill until September.

The bill suggests a number of circumstances under which the states could inspect a building, including:

(A) preparation, and public disclosure of the label through filing with tax and title records at the time of–

(i) a building audit conducted with support from Federal or State funds;

(ii) a building energy-efficiency retrofit conducted in response to such an audit;

(iii) a final inspection of major renovations or additions made to a building in accordance with a building permit issued by a local government entity;

(iv) a sale that is recorded for title and tax purposes consistent with paragraph (8);

(v) a new lien recorded on the property for more than a set percentage of the assessed value of the property, if that lien reflects public financial assistance for energy-related improvements to that building; or

(vi) a change in ownership or operation of the building for purposes of utility billing; or

(B) other appropriate means.

What this means under Cap and Trade your house isn't your house - it's Emperor Obama's if the bill passes.

Pray to God it doesn't.

[cmhmd]

Um,we voted for the guy who stands against pretty much everything you hold dear. So, if you disagree with us on things, why do you expect us to be upset when our agenda is advanced?

Global Warming? We want to fight it with a carbon tax, not just cap and trade.
Health care? We want single payer like France or Social Health Insurance like Germany or Switzerland.
Economic collapse necessitating massive government intervention? We're for it! No, wait that was your guy.

See how that works?

[calirighty]

Are you willing to pay the 25% tax the French pay for their insurance on top of your regular federal, state and local taxes. All French workers pay. Buy you only expect the rich to pay for your plan so it will never work.

[Meggie]

Health Care for ALL Americans....YES
LOTS of changes for the better on environmental issues - YES
Tax on employer provided insurance that closes that loophole - I have to buy my own, and it's with taxed income (or do you want me to continue subsidizing you?) - YES
Making an equal playing field for US blue collar industries so they can compete with foreigners operating in this country - YES

So, I guess, this IS some of the change I expected.
But, I'm hoping for a lot more.
And, I guess I would have taxed every Toyota, Nissan, Hundai, BMW, Mercedes, etc at the VERY SAME RATE that each of their countries taxes an American car sold in their country. No more, no less. And use that money for US health care.

[CyrusBeaucephus]

Sock puppets. All of you cons are just a damn bunch of sockpuppets. I have crappy for-profit health care that costs me thousands and doesn't cover crap. We have the worst healthcare system in the developed world--thanks to greedy ignorant people like you

[tomas0808]

It's well documented that the economic class level one is born into is almost without fail where one stays. The upward mobility thing is for one, unsustainable and two, about as common as hitting the lottery. This more than anything else is a good reason for any society to work towards maintaining a large middle class.

Too bad they've pushed most of the middle class down to the lower class the last forty years.

[singermuse]

The "middle class' is like a town with a single stop sign; if you blink, you miss it. We've been blinking for over 60 years while the repubs have systematically been gutting all the reforms that FDR put in place to CREATE the middle class in the first place.What we have now is the horribly under-valued WORKING class and then a small elite. It's not what you make but what you can buy with it, and wages have been stagnant and decreasing in buying power for many years now. There is no "there" anymore, just people living the illusion while they slowly boil in a pot of water like an unwitting frog.

[Not Blind]

Americans overwhelmingly (by recent polls 72%) favor a single-payer healthcare system.
US business pay 2.4 times more on employee benefits than their foreign counterparts. To remain profitable and competitive, they outsource jobs or move production off shore, exacerbating unemployment. As businesses move, and jobs lost, tax revenues decrease while demands for public services increase, further straining state and federal budgets.
Many in Congress cite the CBO cost estimate of $1.6 trillion (over the next decade) as too much or wasteful. Yet, they voted for the Bush tax cuts ($1.6 trillion), the war in Iraq ($1.4 trillion thus far), and TARP bail out ($1.4 trillion), that cost $4.4 trillion. It's not the money, but political will and priorities.
Many cite the fear of rationing, but private insurers already do. They deny claims, offer incentives to physicians to delay or avoid costly medical treatments, while gouging them for liability premiums. Insurers drop coverage or escalate premiums when someone suffers a serious illness or injury. They deny coverage to those with pre-existing conditions or a propensity (based on family medical history) to any serious ailment.
Those ideologues within Congress who decry a government taxpayer-subsidized healthcare plan should opt out of the one being paid for and provided to them by their constituents, and purchase coverage on the "free" market as they advocate. And for others, who advocate taxing group employer-sponsored benefits, should consider imposing a tax upon their life-time benefits as well.

[winchestereast]

WELL SAID, THANKS!

[yakmeat]

AMEN!

[calirighty]

You mean the same poll that also stated that only 28% of those people would choose to be enrolled in the government plan? You mean the same poll where 58% of the people stated that government run healthcare would be a bad thing? You mean the same poll where less than 25% were willing to pay more than $500 per year more in taxes for insurance? That poll? I love how you liberals pick out the one response in a poll you like while ignoring the rest.

http://www.quinnipiac.edu/x1295.xml?ReleaseID=1344

[blindhog]

Drew, like the old saying goes, you can't get blood out of a turnip. Unfortunately you can't get more taxes out of people making $45,000 a year (ususally two people who are paying extra expenses, such as child care, for the PRIVLEGE [sarcasm, in case you didn't get it])--people who can't afford food, clothing and a roof over their heads. Unfortunately many resort they resort to crime to cover the difference. Heck, even those at the top (Madoff) resort to crime to cover his bills.

Those people making $45,000 and their less fortunate brethren are proportionally bearing more of the tax burden than those making much more.

I hope members of Congress realize this when they create their bills.

[winchestereast]

You may want to thank every republican pres, starting with reagan, for raising employment taxes while creating loopholes for the super wealthy , their corporations, tax havens and lower rates on non-employment income -

[calirighty]

You see? This is EXACTLY the problem with this country. If you can't support yourself, and yes that includes making sure you have insurance, on $45,000/year THEN YOU HAVE NO BUSINESS HAVING KIDS. Second of all your statement about the tax burden is absolutely FALSE. The top 20% of tax earners in this country pay nearly 70% of all federal taxes. The middle class pay less than 30% and the bottom pay less than 1%. This idea that the poor and middle class carry the burden of taxes is ridiculous. I don't care WHAT proportions you use. If people can't afford food, clothing and rent, then their are places to go for that. And I would venture o say that many in this predicament got their by the life choices they made. They didn't just wake up one day like this. So if you want a public health care system like the Europeans, which is what many of you liberals are calling for. Then, yes, you will be expected to pay. I have my own family to support, and I support many local charities. I do NOT need the federal government forcing me to take care of even MORE people.

[blindhog]

Based ion disposable income, YES,YES,YES the lower, and middle class ($45,000, NOW usually forced by economics, dual income) ARE paying more in taxes.

Read your economic history and then you will realize the difference between the richest and poorest hasn't been so great since the Great Depression.

OH, YEAH, YOUR ARE SOOOOO RIGHT, THE POOR SHOULDN'T HAVE CHILDREN---THEY SHOULD BE SELLING THEIR ORGANS---THEY SHOULD BE TAKING ON SECOND AND THIRD JOBS.

AND OF COURSE IT IS THEIR FAULT THAT THEIR FATHER WAS IMPRISONED, OR THAT THEIR FAMILY DIDN'T HAVE THE MONEY TO SEND THEM TO COLLEGE. YOU ARE SOOOOO RIGHT, IT IS THEIR FAULT1

[Whatshop]

"The top 20% of tax earners pay nearly 70% of all federal income taxes". But that's not the only tax. We all pay the same sales tax, fuel tax, energy tax, etc etc. My phone bill has six different fees and taxes.
As a percentage of earning, the low income earners pay a higher percentage than just that Federal income tax figure.
Now let's be fair about this.

[quidam56]

As a former health care giver, I am shocked to see what is called quality health care now in Tennessee and Virginia. http://www.wisecountyissues.com/?p=62 Clearly profit care is more important than patient care.

[OlHippie]

I really hate arguments that start by assuming that someone's taxes must go up to pay for universal health care.

Try to get your brain around this, Drew: We are currently spending $8,000.00 per capita on health care; that is twice as much as any other country in the world. We can have universal health care, and save $1 trillion per year.

The only question is do our leaders have the will to do what is necessary, and give us a single Payer non profit public option? The answers is, "No, they don't." They are all in the pockets of big money, and until we move to publicly financed elections, nothing meaningful will get done.

[cmhmd]

Exactly! It is very telling that someone as obviously educated as Dr. Westen buys into the conventional misinformation.

WHen conducting surveys on health care reform, he question should never be "would you support raising taxes to cover the uninsured," the question should be, "if your wages increased to reflect your employer no longer paying for your health insurance, would you be willing to pay more taxes to cover the uninsured?" or, to those without insurance or buying their own, "if you could be covered by a national health insurance plan, would you be willing to pay higher taxes?" or questions like that.

Kaiser Family Foundation does tracking pollls and in their latest report in the last section of results they note that, people believe health care reform and covering all Americans could be done without spending any extra money. This is no pie-in-the-sky conception, if we adopted a German style Social Health Insurance model or French style single payer model.

So can we start asking questions premised on wholesale reform - transformation to a German or French model - rather than continuing to be asked questions premised on rearranging deck chairs on the Titanic.

"If, rather than minor health care reform, the US adopted a system like Germany's or Frances, with high quality health care for all, no waiting times, and no danger of losing insurance or going bankrupt due to health care costs, would you be willing to pay higher taxes?"

Cheers,

[calirighty]

Yes. And that same Kaiser Foundation stated that those who make less than $50,000/year and do not qualify for any government assistance for insurance, is less than 13 million people. Which is far less than the 46 million people I keep stating that are "unable to afford insurance".

[Spiritgirl2]

While $250,000.00 isn't rich, to someone that makes say, $45,000.00 it's enough to pay their bills and put a lil something in the bank. If on your $250k you send your children to private school, needed to "upgrade" to a McMansion, please don't believe the person making $45k feels sorry because the taxes on that $45k depending on where you live means a much greater percentage of your paycheck than if you were making $250k!

As the corporations and the rich have received money hand over fist for the last 30 years, how about we start taxing them what they truly should be paying! How about we stop funding "Destruction aka Defense" so massively, and how about we stop subsidies to Agribusiness, and how about we start making corporations that off-shore all start to pay their fare share - or even higher! With the "savings" from all of the above fraud, waste, and abuse - we could fund Universal care for everyone in America for at least 25 years!!!