Opinion

opinion | Jodi Beggs

Who is actually the middle class?

Despite a growing income gap, most Americans answer, ‘I am’

There is a fundamental obstacle to most conversations about income inequality: Just about everyone likes to believe that they are average. Whether you make $32,000 or $200,000, you tend to think that you earn at or about the US’s median income.

Of course, this can’t be true — actual US median income is about $51,000. Yet the term “middle class” is often bandied about in political discourse because, correct or not, a significant majority of people self-identify as belonging to the middle class. When asked to define “middle income,” a plurality of poll respondents at each income level state that middle income is whatever they themselves make. In addition, researchers Michael Norton and Dan Ariely find that where people are on the income spectrum affects not only what they believe wealth distribution looks like but also what an ideal wealth distribution would look like — not surprisingly, people tend to think that an ideal distribution gives their income group more wealth than people in other income categories think is ideal. More surprisingly, however, all income groups understate the true level of wealth inequality in the United States but nonetheless believe that an ideal wealth distribution should be more equal than the status quo. That makes it all the more important that discussions on income and wealth inequality be put in the context of what the actual distributions look like.

Breaking through these misconceptions is necessary in order to start having an intelligent conversation regarding the impact that growing income inequality has on our society: how a widening wealth gap can stunt macroeconomic — and, therefore, job — growth, how changes in inequality can diminish tax bases needed to pay for municipal services, including access to public education, and how the strong correlation between inequality and decreased economic mobility has the potential to hinder future generations. Americans today are finding it harder and harder to get ahead, and we need to know where people stand on the income and wealth spectrum in order to understand why this is and what can be done about it.

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Unfortunately, traditional measures of income inequality are somewhat abstruse — not many people know how to interpret a Gini coefficient of 0.477, for example. Or understand in real terms what it means that the US poverty rate has stood at about 15 percent for the last few years, meaning that 15 percent of individuals live in households with incomes below the federal poverty line. That said, we can learn a lot by dividing households into five equal-sized groups based on income (known as quintiles) and examining the characteristics of these groups, so here are some simple numbers to get you started.

Jodi Beggs is a lecturer and assistant director of research for the CREATE initiative at Northeastern University.

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Graphic: Defining the middle class