What qualifies as rich? What qualifies as poor? Most importantly to the on-going political debate, what qualifies as “Middle Class”? We hear a lot of rhetoric from politicians trying to get elected about the struggles of the middle class. Are they really struggling? By whose measure? And, if they are struggling, why? Is it really that the rich have squeezed them? Or maybe the government is to blame? Let’s back up for a minute.
I’m a child of the 80’s and of a very average middle class family. But what did middle class mean in the mid 1980’s? It meant:
- $34,000 a year earned by Dad – Mom ran the house.
- Parents and 3 kids in a 1400 square foot house.
- Two cars (the teenagers borrowed one, they didn’t get their own – oh the horror!).
- A used boat and a used camper – buy what you could afford, not what you wanted or what your neighbor had.
- Two televisions and no cable! – I know this is hard to believe, but it’s true, we had just 4 channels.
- One vacation involving air travel in my entire 18 year childhood.
- No computers, no cellphones, etc. etc. etc.
- Kids mowing the lawn, raking the leaves, washing dishes, shoveling snow (we were abused!).
Don’t misunderstand me, I’m not complaining; not even a little bit. We had a great childhood. That was middle class in 1985. Comfortable, safe and a little spare money for some entertainment. But, let’s compare that to today. The $34,000 Dad was making in the mid 80’s equates to a household income of $67,000 today. The politicians would have you believe the family making $67,000 is in trouble, they’re struggling, the American Dream is dead. It’s unfair how they’ve been treated by the “rich”. Well, they are dead wrong; the dream isn’t dead. What’s really happened is they’ve moved the line on us! They have changed the standard for middle class and in so doing have created an entire class of manufactured poor. Let’s examine what a middle class family looks like today? Or perhaps what I should say is, what the politicians want you to believe a middle class family should look like today?
- Parents and two kids in a 2800 square foot house. And forget it if they have a 3rd child, they’ll have to get a bigger place cause they’re out of room.
- A car for every driver, and in some cases a spare.
- Boats, ATVs, Snowmobiles, etc.
- Flatscreen televisions in every room of the house and a $150/month cable or satellite bill so they can have every HD channel imaginable.
- A trip to Disney World every couple years starting when the kids are toddlers.
- Computers and cell phones for everyone, hurray!
- A second home at the lake or the ocean.
- A gardener and/or a cleaning lady.
I could go on and on, but you get the point. Of course, every middle class family doesn’t live like this. But this is what society is now defining as “middle class”. I know this hypothetical family; they grew up down the street from me, and in 1985, they were RICH! But, this is what the politicians and the talking heads would have you believe middle class is supposed to look like in 2009 and therein lies the problem. You can’t live like this on $67,000 a year. Does that mean these people are struggling, that their government needs to rescue them? I don’t think so.
To me, and up until the last 20 years I think to most people, middle class means you can put a roof over your family’s head, plenty of food on the table and have a little something left over. By that standard the vast majority of Americans make enough money to be in the middle class, problem is they don’t want to be middle class they want to live like the proverbial “other half” lives. In a perfect world, the standard of living would improve with each subsequent generation. And, yes, it would be nice if the new “middle” was the old “rich” every twenty years or so, but apply that test to the present versus the future. What would the “middle” need to earn in 20 years? $200,000, $300,000? That is not realistic.
The total net worth of American families has risen from $10 Trillion to $51.5 Trillion since 1980 according to the Federal Reserve Board’s most recent report. That’s 500% growth in 29 years! Americans are clearly wealthier today than we have ever been, so why don’t we feel it? Because they’ve moved the line!