Since when is $250,000 a year ‘middle class?’

Updated
Ted Rall
by Ted Rall

COMMENTARY

Class—not the poise and manners kind, but the Karl Marx variety—has become a defining factor in the 2012 presidential campaign.

Given the dismal state of the economy, with its unprecedented mix of sky-high long-term unemployment, it isn’t surprising that the have-nots—who now have even less than they used to—are resentful of the getting-more-all-the-times. Still, it’s a noteworthy development for the class divide to emerge so markedly in the United States, where two-thirds of citizens identify themselves as members of the middle-class or upper middle-class.

This class war 2012 edition is playing out now in the debate regarding renewing George W. Bush’s tax cuts, which mostly benefited the wealthiest income earners. Republicans want to extend them all for at least another year. If President Obama gets his way, only the first $250,000 of income would qualify for a tax break.

“We’re saying, ‘Let’s extend the middle class tax cuts for a year,’ ”said Obama surrogate Gene Sperling, director of the White House’s National Economic Council.

In the media, the debate was framed similarly as headlines and cable networks brought in various experts explaining the merits and demerits of such “middle class” tax cuts.

Which prompts a nagging question: What world do we live in, where $250,000 is a middle-class salary?

 

Perhaps it has something to do with this year’s presidential candidates—a duel between two extraordinarily wealthy men.

President Obama (a 1-percenter) recently reminisced about his childhood stays at Howard Johnson motels. Former Gov. Romney ($21 million per year, an income that puts him well inside the top 0.01%) is seen “roaring across Lake Winnipesaukee on a powerboat large enough to hold two dozen members of his family who had gathered for a weeklong vacation at his estate in New Hampshire,” en route to “a $75,000-per-couple dinner at the home of David Koch, the billionaire industrialist,” as per The New York Times.

Reality check: Median household income in the United States fell to $49,445 in 2010. 

People who earn $250,000 aren’t members of the middle class—they are, in Occupy Wall Street parlance, members of the top 2%. At least. The average household size is 2.59, so an individual who earns $250,000 is a rarer bird with more golden plumage.

It’s about time that we began focusing on the class divide. The United States has one of the biggest gaps of income inequality among industrialized countries, and it’s getting worse. But we can’t have a conversation about class unless classes are clearly defined.

So who is middle class? A good place to start is with the “third quintile.” The Census Bureau divides income earners by five, so those in the middle—the third quintile—are those who earn more than the bottom 40% and less than the top 40%. As of 2009, that meant household (not individual) income of $39,000 to $60,000. The American middle class, it turns out, is, well, poor.

Where do those Washington politicos and Manhattan media types get the idea that a salary in the low six-figures—which means you’re well into the top quintile—qualifies you as middle class?

At the risk of coming off like a judgmental right-winger, some of America’s political and media elites make lousy lifestyle choices. Sure, they live in cities—Washington, New York, and Los Angeles—with higher-than-average costs of living. So do a lot of other people, making a whole lot less. Median household income in New York City is $50,285, so even on the Upper East Side  $250,000 affords a comfortable existence.

Unfortunately, many $200,000-a-year types hobnob with $800,000-a-year earners—and try to compete by buying into a lifestyle they can’t really afford.

A few anecdotes from New York: One friend who earns $250,000 as a banker—about $180,000 after taxes—pays $4,000 a month rent and sends his three children to elite private schools that charge $35,000 tuition a year. That leaves $27,000 for everything else. He’s a 1-percenter but he feels like he’s struggling—and he is.

Another buddy pulls down $160,000—an enviable salary—at an ad agency. But he got hit in divorce court. Minus taxes of about $40,000 and alimony and child support of $90,000, he’s living la vida ramen on $30,000 net.

The divorcée ought to go back to court. And if that doesn’t work, flee the country. The banker should move somewhere cheaper—Brooklyn is nice—and accept that he can’t afford to opt out of the public school system. In other words, these 1-percenters need to stop pretending they’re upper class, stop saying they’re middle class, and learn to live within their means.

Then they should focus on those who really need help: the real middle class. And the poor.

A wealthy society that tolerates poverty is no society at all.

Ted Rall is a columnist, cartoonist, author and independent war journalist. He is the winner of numerous awards and a finalist for the Pulitzer Prize. His new book is The Book of Obama: How We Got From Hope and Change to the Age of Revolt.  

 

Since when is $250,000 a year 'middle class?'

Updated