The Life Cycle and American Class Structure

Earlier this week I found myself reading a lot of posts about what income brackets should or shouldn’t count as “middle class.”

Something that I think you see in the 47 percent data is that annual income is actually a pretty poor guide to the American class structure because there are so many life-cycle effects. Common sense has it that a man pulling down $85,000 a year doesn’t suddenly stop being middle class and become a poor person if he retires at 67 and starts collecting Social Security and Medicare and living off savings. What he’s done is retire. And by the same token, a man earning $85,000 a year on his 60th birthday and looking forward to retirement is in a very different economic position from someone earning $85,000 a year on his 30th birthday and looking forward to some raises.

A bit oddly, I do hear this brought up occasionally but almost always in the form of reference to housing costs: Someone will note that $100,000 in Manhattan isn’t really the same as $100,000 in Manhattan, Kan. That kind of adjustment is, I think, actually the least compelling one to make. Manhattan housing is, among other things, a kind of luxury consumption good. And you can always move to the Bronx where I promise you the median income is well below $100,000. What you can’t do is change your age.

Tax policy is bound to be about income, but I think it makes more sense to try to go back to the older meaning of class as a social phenomenon. If you have a low income because you’re currently attending Harvard Law School, that’s not the same as being poor. When a good friend of mine from high school left a philosophy Ph.D. program and took a job at a hedge fund, he didn’t radically alter his position in the American class structure. That’s all common sense, and I don’t think anyone really denies it, but it’s worth taking seriously. That’s particularly true because some of the most rhetorically vicious “class” conflicts in America essentially are arguments between educated professionals earning a lot of money in the corporate world and their peers from college who’ve taken lower-paid positions in education, the arts, or the public sector.