Tom: We’re talking about class perceptions this morning?
Mellody: We are. Last week, a very interesting survey from NBC and the Wall Street Journal was released. The study measured the sentiments and viewpoints of Americans as they relate to how – and where – they view themselves on the economic ladder in this country, and how this actually plays out in reality. What the survey found is that even after the great recession, the long recovery that followed, and some ongoing economic headwinds, most Americans believe they are solidly in the middle class. Overall, Americans have an unshakeable belief that they represent the average.
Tom: What else did this survey tell us?
Mellody: The poll shows that the percentage of Americans who identify as middle class has have not really changed in 20 years. When asked in 1998, 46% of Americans said they were in the middle class. Today, 41% of Americans respond the same way. But the fact is the middle class – when measured by income – has been getting smaller over this time period. And in the last decade, the middle class has been shrinking because the proportion of Americans in the low income bracket has expanded. At the same time, wealth inequality has grown to levels not seen for 80 years.
The survey does show an uptick in those who identify as poor in the wake of the great recession – 12% in 2013 compared to 6% in 1998 – but that number has now fallen back to single digits, hitting 9% this year. And one last interesting piece of the survey? The percentage of Americans who call themselves well-to-do has never risen above 3 percent. All in all most Americans consider themselves right at the average. And even though most of us are not, the survey shows that people really hold on to the idea that they are part of our country’s storied middle class.
Tom: It is really interesting that perceptions haven’t changed. So what is middle class in reality?
Mellody: That’s the thing, Tom: there is no concrete definition for middle class. While the median family income in the United States is just under $52,000, what this survey tells us is that Americans are not simply comparing their income to that number. The results very clearly show that there are other factors in play.
One key piece of how Americans perceive our economic selves is how content we are at the moment. If we are feeling optimistic – as individuals and consumers – that will filter in to our class perceptions. Another big factor at play is how we feel we’re doing relative to those around us. Keeping up with the jones is a big piece of whether Americans perceive themselves to be middle class. If they are keeping up with their peers, they are more likely to say they are middle class. This also plays a role in making the middle class appear larger than it is, as well-off families place a significant weight on their ability to keep up with their neighbors, not their overall income.