The conventional definition of working class is based on income and education: the working class household earns between $30,000 and $69,000 annually, and the highest education credential in the household is a two-year community college degree or trade certification.
The definition of the middle class is also based on income and education, but adds financial security as a metric: the middle class household earns $80,000 or more, holds 4-year college diplomas or graduate degrees, owns a home, has a 401K retirement account and so on.
But in some key ways, income and education are misleading metrics: the key attributes that actually define the working class are:
1. Stagnant incomes: incomes that over time barely keep up with real-world inflation or even lose purchasing power.
2. Income insecurity: wages, benefits and pensions are not as guaranteed as advertised.
3. Not enough ownership of financial capital to be meaningful. Financial capital excludes household items, vehicles, etc. Financial capital includes stocks, bonds, certificates of deposit, ownership of a profitable business, equity in real estate, precious metals, bitcoin, etc.
By meaningful I mean enough to:
— augment Social Security benefits in a way that greatly improves the household’s lifestyle and retirement options
— equity that is significant enough to fund college educations so one’s children do not have to become debt-serfs to attend college
— enough capital to fund (or help with) a down payment for a house, i.e. inheritable wealth that transforms the children’s lives while the parents are still alive
— income from capital, i.e. income isn’t dependent on a government agency or government transfer.
How many U.S. households qualify to be middle class if that means:
— the household income has outpaced real-world inflation over the past 20 years
— the household’s financial capital/assets have grown to become meaningful (as defined above) in the past 20 years
— the household doesn’t depend on government transfers for much of its income / spending
— the household income and wealth are not dependent on financial bubbles, corporate guarantees, local government pensions on the verge of insolvency, etc.
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