Middle Class

What is the middle class?

  • The middle class is a group of people who fall between the upper level and the working class.
  • The broadest definition includes everyone but the poorest 20% and the wealthiest 20%.
  • This group constitutes more than half of the American population.

Although German philosopher Karl Marx first used the term “middle class” in his analysis of different social classes, the meaning of the middle class has changed and evolved over the years. Its definition now varies among cultures, but the narrowest definition includes everyone but the poorest 20% and the wealthiest 20%. Even experts have different opinions on the definition of the term. Some specialists believe that they should be classified by income, while others describe it by lifestyle.

What are the characteristics of the middle class?

In modern American society, people who would technically classify as working class often use the term “middle class” to describe themselves. A survey conducted by Northwestern Mutual found that 70% of Americans believe that they belong in the middle class. However, the Pew Research Center reports that only 50% of the population is actually a part of the middle class. The survey findings suggest these people who thought that they are still part of the middle class are already below the classification. This means that the social groupings of a country are not definite and can continuously change.

The middle class in Western cultures has a higher proportion of college degree-holders than the working class. They may also have a higher chance of getting a higher-paying job and better income opportunities because of their education. They usually fill in roles for professionals, managerial levels, and civil service posts.

Income level is a common factor that experts use to determine who is the middle class. However, they differ on how much you have to earn to fall into this category. The Pew Research Center launched an income calculator that will automatically determine if you are a part if the American middle class. The U.S.-based think-tank also analyzed the 2014 government data on household income to find out the American social class statistics. They found out that 51% of adults live in middle-income households. Lower-income and higher-income households constitute 29% and 20% of the population’s adults respectively.

Why is it important to know who the middle class is?

As shown in the Pew Research Center study, the middle class constitutes more than a half of the American population. The stability of the middle class dramatically impacts the society because of its numbers. Its members pay a considerable percentage of taxes to the government which is then used to fund social services and other shared resources. The middle class also did not have the same opportunities for investing available to them until a surge in fintech companies like Stockpile. Understanding what income range you are in can help you compare to others in the same, and set goals for investing for your future.

 

Disclaimer

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stockpile assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell. There is no guarantee that any strategies discussed will be effective. Each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services and should seek advice from an independent advisor before acting on any information presented.

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