For as much as politicians address the “middle class,” you’d think it would be more clearly defined. There is little consensus on what middle class really means, but everyone certainly wants to be middle class: Nearly 70% of Americans consider themselves middle class, but only about 52% would qualify based on income. The Pew Research Center found that middle-income families–in a three-person household–earned between $45,200 and $135,600 in 2016. The Brookings Institute offered a broader range, from $37,000 to $147,000 for a household of three, while others argue that the swath of Americans below the top 10% is middle class.
But you needn’t look much further than a recent CNBC story, which featured a detailed budget breakdown from a couple jointly earning $500,000 that still felt “average,” to grasp just how muddled the middle class label is. American households like that one, whose earnings could be reasonably described as “upper income,” may consider themselves middle class, or close to it. Perhaps you’d count yourself among those people, some of whom may have aspired to rise from middle income to upper income, but are now reluctant to label themselves as such.
In fact, since 1980, it’s the upper middle class whose gains have remained in step with the U.S. economy, while income growth in the middle class has lagged behind overall economic growth. So why do so many people who fit squarely in the upper middle class–if not upper class–self-identify as middle class?
The more you earn, the more you spend
Money goes further depending on where you are, which means one person’s upper middle class might be another’s middle class, and vice versa. Most people tend to measure their success and standard of living against the people directly in their line of sight. For those living in cities or suburbs with a high cost of living, their income relative to that of the folks in their orbit may seem average at best. “My take is that people who absolutely have to work in order to maintain their lifestyle, both in their own eyes and in terms of social status, feel ‘middle class,'” says financial planner Robinson Crawford.
That feeling is compounded by so-called lifestyle creep, when your cost of living expands as you earn more. The things you might have considered luxuries as a middle class American may feel necessary once you’ve ascended to the upper middle class. One couple that wealth adviser Natalie Schmook has worked with earned $450,000, which came down to $275,000 after taxes; after paying for housing, which Schmook estimates at nearly six figures, and private school costs for two children, they were likely left with no more than $135,000 in a year. “The biggest trap is lifestyle creep,” Crawford says, “and the idea that your family must continue to spend six figures a year, after taxes, to stay alive, healthy, and happy.”
Many people who misclassify themselves as middle class may simply be oblivious to how the other half lives. “One of the biggest ways to not feel like you’re struggling when you’re doing better than most of the world is to actually go out and meet the rest of the world,” Schmook says. “It’s really easy to get upset about people on welfare if you don’t bother to go out and get to know what their life has been like, and how they got to where they are. It’s easy to hate Obamacare if you’ve never had a child with a medical need.”
Even the well off don’t feel financially secure
The crux of the issue might be that Americans of all stripes were sold the idea of the American Dream–that they could hold down a good job, buy a home, and comfortably raise children. But between the rising cost of living and a changing job market, that feels increasingly out of reach for many Americans. “As housing costs have increased, you feel poorer because you can’t go out and take that next step,” Schmook says.
Some of these anxieties are universal, which explains why some of the upper middle class–even those spending beyond their means–feel financially adrift. But it’s also a byproduct of the most recent recession. “I really saw a big shift after 2008, when everything kind of went awry,” Schmook says. “A lot of people who were previously thought to be untouchable got burned really badly. They lost their jobs and had to sell their houses–people in professional roles. Even though we’re back to peak employment rates today, I think there’s a lot of people who don’t feel like they’re back to where they were.”
Another key component? The $1.5 trillion in student loan debt that hangs over 44 million Americans. And the white-collar workers in the upper middle class are arguably more prone to believing a college education at a prestigious school–and the social cachet that follows–is worth putting yourself knee-deep in debt. That’s doubly true for people who earn multiple degrees without doing the necessary cost-benefit calculus. Will they make enough money afterwards to pay off those loans? “There’s this expectation that everybody deserves an elite education, and people rack up debt to get there,” Schmook says. “There’s a disconnect between why it’s so important to get an education and what you do with it.”
The lifestyles of the 1% are wildly unattainable
The cultural signifiers of what it means to be upper income also shape how people perceive their own affluence. Many folks in the upper middle class likely don’t see themselves–or their more pedestrian realities, juice bars and all–in the upper crust types whose lives are splashed across the media. If you can’t afford to take multiple lavish vacations a year, can you be anything but middle class?
“In a world of Kardashians, Real Housewives, and $300 million baseball contracts, our perception of what upper class really means has become a little bit jaded,” Schmook says. “I think a lot of people look at what we see in the media and on TV and think that’s upper class–when that’s really the .000001%, not the 1%.” The same holds true if you look to the business world, where techies reap the benefits of eye-popping valuations and exits–and then use their bounty to collect “rare air-cooled Porsches.”
And then there’s the political sphere, which doesn’t paint a “warm and fuzzy illustration” of wealth at the moment, Schmook points out. “There’s no better illustration than looking at our past two presidents,” she says. “Our past one really wanted to stick it to the rich guy–and our current one is the rich guy.” As political rhetoric has shifted left, it has also started to zero in more on the true everyman. In the past, Democratic politicians capped the middle class household income at $250,000; but today’s Democratic candidates are pushing for tax reforms that focus on households earning no more than $100,000, for example, or childcare plans that largely benefit a middle and working class defined as the bottom 90% of Americans.
In her line of work, Schmook has found that people have always been private about having money. But she has seen more of a shift over the last decade or so. “Being ashamed of your wealth has been a thing for a while,” Schmook says. “But when Occupy Wall Street happened, I think that really changed the way people felt. There’s a lot of anger over people who have money. So I think people sometimes identify as being middle class intentionally because they don’t want to be a social pariah.” A family that can afford a Tesla, for example, might opt for a more modest alternative with less of a brand name.
When it comes down to it, most Americans probably feel that it’s more socially acceptable to be middle class–or, at the very least, to self-identify as middle class. And much of that may be tied up in how closely money is linked to emotion. “At the end of the day, money is mostly about feelings,” Schmook says, “and how you feel about it and what it can do for you, and your expectations of it.” If you feel middle class, your bank balance may not matter a hoot.