Al Gore and George W. Bush are each promising to make life much, much better for the middle class. What is the middle class?
While the government has a definition for being poor (in 1999 it was income of less than $17,029 for a family of four), it does not have a definition for being middle-class. However, the U.S. Census Bureau does keep statistics on household income distribution–right now the median is $40,816, an historic high–which allows economists to come up with their own definitions of middle-class. One formula is to find a range between about the 30th percentile of income and the 80th–which would make those households earning between about $30,000 and $75,000 a year middle-class. Others, with a flusher view of things, say that the formula should be about three times the poverty rate for the low end and seven times the poverty rate for the high end, putting households with between $50,000 and $120,000 of yearly income (at $120,000 many tax credits start to phase out) into the middle class.
From the end of the 1970s until the mid-1990s, the middle class seemed to be shrinking–income inequality grew as more people become poor and more became rich. But for the past few years, the inequality gap has been closing as the poverty rate declines and real median income increases. In 1999 about 12 percent of Americans were below the poverty threshold, the third consecutive decrease. On the other end, the booming economy has pushed more people out of the middle class into the top levels of income. In 1999 about 12 percent of households had income of more than $100,000 a year, the sixth consecutive increase. But being middle-class is more a state of mind than money. When surveyed, about 90 percent of Americans say that’s what they are.
Explainer thanks Henry Aaron and Gary Burtless of the Brookings Institution, Sheldon Danziger of the University of Michigan, and Wendell Primus of the Center on Budget and Policy Priorities.