For example, some retirees may report very little annual income but place toward the top of the wealth distribution given the value of their homes, pension assets, and bank accounts. Wealth-based definitions appear to resonate with the general public. Wolff defines the middle class as the middle three quintiles of the wealth distribution. His analysis also reveals differences in the ways that the middle and upper classes store wealth.
The wealth of the top quintile is highly concentrated in investment assets, including real estate, business equity, stocks, and bonds. By contrast, housing makes up more than three-fifths of the assets of the middle three quintiles, though mortgage debt amounts to almost half of middle-class home values. Homeownership might indeed be a defining feature of the middle class—but according to Wolff, so is mortgage debt. While income is the most common cash-based measure of class, followed by wealth, some scholars point to other approaches, including consumption-based definitions, or those which capture financial vulnerability or risk.
On this basis, what matters most is not what we bring home, but what we can buy. Other studies focus on some measure of vulnerability to poverty , or on income volatility , or on economic progress for specific individuals or families over time.
We will return to these specific issues of volatility, risk, and vulnerability in a later paper. What unites all of these approaches is that they share the same basic currency for class determination, money—whether in earnings, income, wealth, spending, or over time.
The middle class, here, is an economic category. Of course, for most people, their economic position is strongly related to their credentials, of either the educational or the occupational kind. Or they may be the way in which class is more usefully defined; and we turn to those next. But most people see class as being about more than money.
Status is defined not just by cash, but by particular credentials, especially in terms of occupation and education. We may intuitively rank a museum curator with a PhD differently from an HVAC engineer with a certificate from a community college, even if their incomes are identical; and perhaps even if we knew their lifetime incomes would be the same. There is an international divide here: occupational classifications are more popular among European scholars than U.
Most contemporary occupational class schemes are based on the work of British sociologist John H. Goldthorpe and colleagues. These include, for instance, human resources specialists, K teachers, and physical therapists. Murray also divides the population into the top 20, middle 50, and bottom 30 percent of socioeconomic status, based on the cognitive requirements of their occupations. Here he is drawing on a literature on occupational status , in which particular occupations are placed on a distribution of status scores, somewhat like an income distribution.
As always, however, the selection of specific dimensions, or the weight placed on those selected, can generate very different rankings. Hauser and Warren show that some occupations, like elementary school teachers, have low wages relative to occupations with similar education levels, but high prestige ratings relative to their education and earnings. Other occupations, like truck drivers, have high earnings relative to their education, but low prestige relative their education and earnings.
So: are truck drives and elementary teachers in the same class? One problem with occupation-based definitions is that while occupations are held by individuals, class is typically applied to families or households.
But what if, say, a husband and wife have occupations with quite different statuses? Perhaps one is a professor and the other is a firefighter. Class categories may then be skewed towards male occupations. Equally, the use of simple occupational categories may obscure important differences between the position of men and women within occupations.
Finally, occupation-based class schemes have to be regularly updated as certain occupations become more or less important to the economy and society.
Entry into occupations of a certain class status depends on acquiring certain skills or qualifications. Occupational and educational credentials tend to go hand in hand. Education is also seen by many as a strong marker of class status in and of itself.
Most often, possession of a four-year college degree serves as the threshold for determining class position. This is both because education or degree attainment is a relatively easy and consistent variable to measure and because it is closely correlated with other indicators of economic status, like income.
Education is, at its core, an investment in human capital, which often yields large returns in the form of higher incomes and wealth accumulation. In , the average worker ages with a college degree or more earned about 35 percent more than the average worker with a high school degree. By , this premium had increased to nearly 80 percent.
College-educated workers tend to experience greater job stability and autonomy than those with lower levels of education.
In the wake of the U. The implication here is that those with a college degree are middle class. But this is not a general view in the population.
Fewer than one in three 30 percent of Americans believe that a college education is needed to be considered part of the middle class, according to a recent Pew survey. Popular definitions of middle class status may then overlap with expert definitions of the working class. Yet few would claim that the middle class is the same as the working class—that is, limited to only those without a college degree.
One problem associated with defining the middle class by education is that the relative values of educational credentials change over time. Another problem is that the value of a college degree can vary wildly across fields. Education levels can be used to supplement rather than substitute for other measures of class status. This means that the middle class contains roughly 55 percent of all households: 50 who are in the middle of the income distribution, and 5 who have reached a high income bracket, despite never completing a four-year degree.
The definition used by Williams and Boushey has the advantage of inclusiveness—it intentionally includes a portion of the population who, defined by income alone, would be omitted from the middle class.
However, the measure ends up being more complex, and more influenced by normative assumptions. It is striking that when Williams summarized her work on this group in an influential book, its title was White Working Class: Overcoming Class Cluelessness in America. Skip Navigation. Earning Money doesn't make you middle class, experts say: Here's what does Aditi Shrikant.
Fundamentally, one of the things that makes a person middle class is this aspiration for their children to do better. Class is tied very closely to a particular set of aspirations and whether or not people have the economic capacity to achieve those aspirations.
The middle class is also the class that sets the tone, culturally, in the country. VIDEO Video by Courtney Stith It's not only income, education, occupation, and where you live that decide who is middle class. Dreading a job interview? Nothing helps 'more than preparation': How to answer 3 hard questions. Gili Malinsky an hour ago. How to approach the job market, according to a recruiter, since 'it's even more competitive' right now.
Mariam Abdallah. Personal Finance. Your Practice. Popular Courses. Wealth Lifestyle Advice. What Is the Middle Class? Key Takeaways The middle class is a socio-economic strata that falls in between the working class and the upper class. The middle class constitutes a slim majority of the U. Those in the middle class have enough disposable income to afford minor luxuries like vacations or restaurants, but also rely on borrowing for big-ticket items like homes and cars.
Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. The term upper class is used to describe individuals who reside above both the working class and middle class of a social hierarchy. Marxism: Theory, Effects, and Examples Marxism is a set of social, political, and economic theories created and espoused by Karl Marx that became a prominent school of socialist thought.
What Is an Inferior Good? It finds the middle class under both Pew's and Brookings' definitions for national and metro area incomes, and uses your income adjusted for a household size of three, since the average American household contains 2. Sign up now: Get smarter about your money and career with our weekly newsletter. Don't miss: This mistake could drop your credit score by as much as 50 points—here's how to avoid it.
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