Class Structure

ECONOMIC CLASS IS often seen as a function of income and wealth levels. According to this way of thinking, there are lower, middle, and upper classes, or alternatively, the poor, the middle class, and the rich. Members of these economic classes would not necessarily have any functional economic interests in common, but rather would have lifestyles and material interests in common.

[Page 175]The three classes differ first by the annual incomes of their members. In the United States there is an official federal government poverty level that could be used as the line between the poor and the (lower) middle class. In 2005 this level was set at $19,500 for a family of four (U.S. Census Bureau, 2005). This means that any member of a family of four whose annual income was less than $19,500 was living in poverty, and thus was a member of the lower class (poor). Demarcating the middle class is not so easy. Certainly, the lower income limit would be $19,500, but what the upper limit would be is unclear. Some people would put it at $200,000, some people at $500,000, some even higher. Given that there is no generally accepted definition of the maximum income for the middle class, the range for the upper limit is quite large. At some income level, however, the upper class (rich) begins. As for the upper boundary for the upper class, the sky is the limit.

The second difference between the classes is net wealth, defined as the value of the total assets held by a household minus its debts. What is interesting to note about wealth is that a significant proportion (18 percent) of U.S. households have no wealth. Those with no wealth would include the poor, as well as the lower end of the middle class. The rest of the middle class would have minimal to fairly high levels of wealth, perhaps up to $900,000. Wealth really begins to accumulate, however, with the rich (after all, they are considered wealthy). As with income, the upper boundary for wealth is fantastical; for a single family it is in the billions of dollars.

When class is viewed in this tripartite fashion, the middle class is by far the largest of the three in the contemporary United States. Those classified as poor are about 13 percent of the population, while those who are rich constitute about one percent or two percent depending on where the upper income limit for the middle class is set. That leaves about 85 percent of the population who would be considered middle-class. By this standard, the United States is quite homogeneous by class.

The relative size of the middle class varies considerably across countries by this definition. In India, for example, the middle class constitutes about 20 percent of the population, with the rest of the population living in poverty (the percentage who are wealthy is negligible). The Chinese middle class is even smaller, with only three percent to 13 percent of the population considered as such (China Daily). As a general rule, the more developed economies have a larger middle class, while the less developed economies have a smaller middle class and a correspondingly larger proportion of the population living in poverty.

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