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Five ways to tell if you're middle class

Job security keep you up at night? Concerned over more money spent on less benefits? Wish you had gotten that degree after all?

As recession looms, inquiring minds want to know:

How close am I to falling out of the middle class?

Fortunately, some concrete ways exist to measure your vulnerability. Answer these five questions — honestly — and you'll have a better sense of whether you're on Easy Street or nearing the exit ramp to harder times.

First, let's define "middle class" these days. It ranges from roughly twice to six times the federal poverty guideline — that's from $40,000 up to $120,000 — for a family of four. We're talking about the middle 50 percent of all U.S. households. Let's get started:

1 Assets: How many months can you live at 75 percent of your current living expenses using your net financial assets?

If you say nine months or more, bravo! If you can only cover three months or less, you're vulnerable.

The trend? Down. For every $1 in middle-class assets owned in 2000, by 2006 a family held 78 cents.

2 Education: Did you finish college? High school?

This is a no-brainer. In October, the U.S. unemployment rate for someone with a bachelor's degree or higher was 3.1 percent, up from 2.1 percent a year ago. For a high school grad, it was 6.3 percent, up from 4.6 percent a year ago. And for those not finishing high school: 10.3 percent, up from 7.4 percent in October 2007, say U.S. labor statistics.

Follow the numbers. You can see who's most vulnerable.

3 Budget: How much money do you have left at the end of the year after paying for living expenses and paying your taxes?

If you can save $25,000 a year — $480 a week — then you are in great shape. If you save only $5,000 a year — about $100 a week — or less, you're vulnerable with so tiny a safety cushion.

4 Housing: What percentage of your after-tax monthly income is spent on housing?

If it's 20 percent or less, you're in good shape. If it's more than 30 percent, you're vulnerable. (Those with adjustable-rate mortgages, whose payments can escalate quickly, pay special attention. Floridians also got clobbered here from skyrocketing property insurance rates.)

The trend? Down. Middle-class families defined as "housing burdened" rose from 31 to 37 percent from 2000 to 2006. Imagine how much higher it is now.

5 Health care: How many members of your family are covered by private or government health insurance?

If everybody's covered, three cheers. If a member of the family is not covered, you are vulnerable to crippling medical expenses.

The trend? Down. The number of middle-class families in which at least one member lacks health insurance grew from 18 percent in 2000 to 25 percent in 2006.

Many findings here are in a new report: "From Middle to Shaky Ground: The Economic Decline of America's Middle Class, 2000-2006." It was released Wednesday by the policy center Demos and the Institute for Assets and Social Policy at Brandeis University.

The trend? Less assets, more debt. Slipping out of the middle class is getting way too easy.

Robert Trigaux can be reached at

Five ways to tell if you're middle class 11/19/08 [Last modified: Friday, November 21, 2008 7:47pm]
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