What does it mean to be “doing well” in America today? How much income would you need to feel — if not “set” for the future — but at least solidly middle class?
The “disappearing middle class” isn’t simply a turn of phrase. The American middle class is literally disappearing. A generation ago, 61% of Americans earned enough to place them in the middle income category. Today, it’s 50%, according to Pew. That’s a stunning drop. In fact, the middle class is no longer the majority in America. There’s more folks in the lower or upper income brackets than the middle bracket.
Let that sink in.
The trend is long-term, but it’s recent, too. A 2016 Pew Report found that From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas examined. The decrease was often substantial, measuring 6 percentage points or more in 53 metropolitan areas.
One could argue about what middle class means forever, but I’ll take a stab at it: You feel like you live in a safe place, you eat pretty well, your kids will get a decent education, you go on a couple of vacations each year, and you believe you can grow old comfortably.
Defined that way, I’d guess fewer than one-third of Americans feel like they are “doing well.” And in a moment, I’ll provide proof. But let’s back up.
Middle class is a bit of an elusive concept. It’s about income, but it’s obviously about more than that. -A six-figure income might make you a 1 percenter in some parts of America, but in other places, it’s barely enough to survive. (Really!) That disparity of living expenses makes this conversation much harder, and contributes to the lack of empathy.
Here’s a conversation I hear from friends all the time. “I feel like I make a lot of money, way more than my parents, but I still feel like I’m drowning.”
And whenever I try to write about this group, I hear something else — all the time: “They sound like spoiled brats.” And underneath that is some variation of, “They think THEY have it bad; well, they should see my bank account…”
We all have a “monthly nut.” That’s the number you need to hit every month. The mortgage, the gas, the school tuition, the student loan, the food. How your income relates to your monthly nut largely defines whether your life is comfortable or fragile.
Two years ago, when hundreds of you sent me your monthly budgets, roughly half had a big red number at the bottom. Money coming coming in was less than money going out.
This is a large and growing chunk of Americans. A Gallup poll conducted in 2015 found than 36% of Americans said they were afriad they couldn’t pay their bills every month. This year, that number climbed t0 41%. More than 4 in 10 Americans are afraid they can’t pay their bills.
By the numbers, median income nationally means your household income is around $55,000. But if you don’t make your nut every month, you are decidedly not middle class.
To be “doing well,” you’d have to earn much more than your nut. You’d have to be setting aside perhaps 10 percent for retirement, another 10 percent for emergencies or future capital costs, and 10 percent for — God help us — vacations and fun. If one-third of your earnings isn’t truly discretionary than you are not doing well.
“Doing well” is even more elusive than “middle class,” but here’s a stab at it. Only 27 percent of Americans say they are “living comfortably” in last year’s Federal Reserve “well-being” report.
Here’s some other data from that report.
- 31 percent, or approximately 76 million adults, are either “struggling to get by” or are “just getting by.”
- Twenty-two percent of employed adults indicate that they are either working multiple jobs, doing informal work for pay in addition to their main job, or both.
- Forty-six percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.
Americans are hurting right now. They are angry; they feel wronged. As a result, I think we are suffering from a nationwide empathy shortage. We know things are broken. But who is most aggrieved? Who gets to first stand in line for help? The dreadfully-named named “White working class?” who live in America’s nearly-abandoned mid-sized cities between the coasts? Minorities who don’t feel safe in their cities, much less safe in their bank accounts? The young and their student loans? The middle-aged, who traded good jobs for bad jobs during the recession? The old, who enjoy Social Security cost of living increases of…..yes, this is true…0.3 percent?
It should surprise no one that Blacks and Hispanics are considerable more likely to report that they are “just getting by” or worse (about 38 percent to 28 percent). Tellingly, equal numbers (40 percent) describe themselves as “doing okay.” America, the land of doing okay.
Even families with a tidy 6-figure income wonder how they will pay for their kids’ college, or their own old age. Only 54 percent of those earning more than $100,000 said they were “living comfortably.”
As I tried to show at the beginning of The Restless Project, $100,000 doesn’t go so far when you have to pay $3,500 a month for a house near good schools. (After taxes and that kind of mortgage, our well-off family has roughly $30,000 left over for everything else.)
But when I wrote about 6-figure families who still feel anxious about the future two years ago, the swift block I received astonished me. How dare a family with all that income complain! One of my subjects was actually doxxed…Internet antagonists even went online and used Google Earth to show his house had a pool, and posted this as proof he couldn’t possibly be struggling! This, despite the rare form of cancer that his child endured, which almost ruined him.
Our lack of empathy seems to know no bounds.
Take a stab at it now. Add up some numbers for a monthly budget. See how quickly $4,000 of take-home pay — which requires a salary of perhaps $65,000 — disappears every month, like this:
Mortgage — $1,074.56
Electric — $198.03
Maintenance — $61.22
Tithing — $518.27
Phone — $37.47
Internet — $42.13
Cell phone — $89.60
Life insurance — $97.35
Medical — $0.00
Car insurance — $110.40
Fuel — $496.92
Car maintenance — $35.96
Groceries — $525.47
Eating out — $149.76
Dates — $24.22
Family outings — $0.00
Travel — $132.05
School — $0.00
Other — $138.52
Total — $3,731.93
That’s a real family budget, share by a real Red Tape reader. Note the “dates” and “family outings” categories. Less than $25 per month. There’s no unnecessary lattes here.
Again, let me be clear: This family spends $45,000 annually. To support that monthly nut, household income would have to be in the $60k-plus range, before taxes. That’s “above” median income.
The numbers just don’t work. Forces beyond our control are driving us mad, and setting us against each other. It’s not the Mexicans, or the gays, or the Chinese, or the women, or the Irish, or the Muslims who are making your life harder. It’s the numbers.
Want to see if you are middle class in your area? This Pew calculator is a great tool.
But today, I’m interested in your monthly nut. What is it? Do you earn it every month? How do you plug that gaps? Tell me. Let’s continue a dialog about what’s not working about America, and how to fix it. Let’s not fight over who’s suffering more, or who’s spoiled. Let’s talk about the numbers. And then, let’s make our leaders fix it.
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