Who in the world is middle class? - ?Savings ...

来源:百度文库 编辑:神马文学网 时间:2024/03/29 08:38:31
By Karen Aho, September 24, 2009

Who in the world is middle class?

Almost all of us think we are, but the incomes and comforts of that lifestyle vary widely. Still, discretionary income is a middle-class hallmark, which has marketers everywhere salivating.

In India, a scooter company aims ads at a schoolteacher who earns $2,500 a year and lives in a tiny brick house with no running water. Why? Because that teacher, according to marketers, is middle class.

In the United States, meanwhile, a family that earns $200,000 a year and has a 2,000-square-foot home, two cars, three computers and an Xbox game console so the kids don't have to play outside barely blinks before labelling itself middle class.

* Bing: Household incomes around the world

And yet, experts say, neither is incorrect:

* The Indian teacher, despite his relative poverty, earns an extra sliver of income that will allow him to buy something he doesn't absolutely need. He has escaped poverty.

* The American family, although extremely wealthy by world standards, lives with some degree of financial stress. Both parents work hard but worry about retirement, education and health care costs, and are acutely aware of the fact that they share a country with some who have far more. They feel middle class.

"Everybody sort of defines themselves as middle class" in America, says Steven R. Pressman, a professor of economics and finance at Monmouth University in West Long Branch, N.J. "Self-perception is a funny thing."

The edges of middle-class status may be hard to pin down, but the importance of those who perceive themselves to be middle class is impossible to deny. Unlike the poor, they can buy extras. Unlike the rich, they have to spend much of their income on essentials. They're motivated to move up and to protect what they have.

"If we value democracy and we don't value people at war in the streets, the middle class is important," Pressman says. "Small business, general innovation . . . things that are going to improve our standard of living -- those are going to come from the middle class."

What is middle class?
The only universally accepted definition of middle class is the oldest: neither rich nor poor. And the middle class has always been considered vital to a country's stability and growth.

As far back as 350 B.C., Aristotle said no democracy could last without middle-class rule; the rich and the poor simply distrust each other too intensely to let the other have the reins.

People in the U.S. may not know exactly where they fall on the U.S. income scale ($200,000 is actually in the top 5%) or where statisticians have chosen to draw the line (above $100,000 is sometimes considered "upper class"), but they do understand the idea of the middle class, and that's as accepted a definition as any other.

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More than income, the middle class is an expression of where one's occupation, education, wealth and even attitude fit in relation to those of others. Most prefer to identify as at least somewhat typical -- or near the norm -- in all circumstances, and "middle class" has the added benefit of suggesting both opportunity and self-reliance. It's very North American.

Yet the concept is universal.

Middle class, defined as "the resources to cover all of your needs and some of your wants, plus the ability to save for the future, works for every nation and culture," MSN Money personal-finance columnist Liz Pulliam Weston says.

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Indeed, the business world salivates over a rapidly expanding global middle class that is beginning to indulge its wants and wield its political power in both India and China. At the same time, economists worry about a shrinking middle class in Western nations, including North America.

That's because membership in the middle class isn't solely about income and spending. Health, education, political freedom, security -- the things that allow a poor university graduate here to continue to identify as middle class while living in his parents' garage -- are directly linked to the strength of the middle class.

The U.N. Human Development Report uses these same indicators to rank nearly 200 countries every year. In the 2008 report, the ranking was led by Iceland and Norway -- countries, not coincidentally, with large middle-class populations, with Canada following in third. The U.S. ranked 15th.

An emerging global middle class: $6 to $10 a day
In 2008, the median household income in the U.S. was $50,303 US (Canada was $53,634 CAD in 2005), an amount that might put a family of four in debt in Denver but eight times a middle-class income in China, where people are suddenly buying things.

Multinational companies are champing at the bit to reach this rush of new consumers in the developing world. That cheap labour the companies had hired is now rising out of poverty with a few dollars -- or cents -- that are burning holes in their pockets.

This is the emerging global middle class, expected to more than double to a billion-plus by 2020. The chief executive of Coca-Cola has said it's like a city the size of New York City springing up every three months.

But there's not a lot of jangling in those pockets, at least not yet. The World Bank defines the global middle class as those earning between $10 and $20 a day. Food and rent may cost little, but the cheapest new car still requires $2,500. Coca-Cola has even developed a special ultra-cheap version of soft drink for the rural consumer: It comes in a small glass bottle, and the bottle is returned on the spot.

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"It's a very kind of nebulous concept, at best, the idea of middle class in a developing country," says Abhijit Banerjee, the Ford Foundation international professor of economics at the Massachusetts Institute of Technology. "Sometimes people want to think about it to a U.S. or Western scale, but by those norms very few people are middle class."

Banerjee defines middle-class people as those living on $6 to $10 a day.

"These are people who are in the market. They're not just buying food and the cheapest clothes they can get. They have some choice," Banerjee says. "You could get them to buy something, a nice TV maybe . . . some cheap cosmetics.

"In India, Pakistan, Nepal, Uganda, Ghana, Vietnam . . . these are rich people; they're like way over the 90th percentile. In Latin America, they're not that rich. In the States, they're (below) the poverty line."

Rich is relative
Surveys have found that Americans will identify as middle class all the way up to the top 3% of earners. It's all relative, and they don't feel rich. Probably they feel a little insecure, maybe even unhappy if they can see a neighbour's bigger mansion from their porch.

Even if their perspective is a bit skewed, their insecurity is spot on.

* Tell us: Is the middle class disappearing?

In fact, what researchers will tag as middle class is actually about the middle 60%, from roughly $20,000 to $100,000 a household these days. Worldwide, the U.S. median income (half earn more, half earn less) ranked fourth behind Luxembourg, the Netherlands and Switzerland, according to data from the middle of this decade. In 2008, the U.S. median household income was $50,303.

"Everybody in the U.S. is richer than . . . rich people in most of the rest of the world," notes Banerjee, the MIT professor.

Yet, in a study by the Organisation for Economic Co-operation and Development, or OECD, the U.S. had the third-highest percentage of people living in poverty among the world's 28 leading nations, after Mexico and Turkey.

Translation: If you're middle class in America, you're at greater risk of dropping out of the middle class. In no other developed country does the poverty threshold (currently $22,025 for a family of four) brush so close to the very center of the middle class, even if American poverty looks like extravagance elsewhere.

* Bing: Household incomes around the world

This is the "shrinking middle class" that has economists so concerned. The number of people whose income is within spitting distance of the median has dropped in most Western nations, according to the OECD.

From 1979 to 2000, Pressman found, this middle class -- those making 75% to 125% of the median income -- had shrunk in all but two Western countries, Canada and Norway. In the U.S., twice as many of the missing had slipped down as had climbed up.

The reasons under debate: technology, outsourcing, de-unionization and lower wages. But Pressman isolated for these and pinpointed one that could explain the changes: government. Countries with thriving middle classes helped everyone get access to health care, education and child care, he says.

They're moves right out of America's own stimulus playbook.

"The big benefits to the U.S. came when the government decided it was going to provide a good public education to everybody," Pressman says. "Had we not done that, the U.S. would not have grown, and we would not have the middle class we have now."

Dates of statistics: Income, mortality rates and births, 2007; household spending, 2005; unemployment, 2009; water resources, 2007; tobacco use, 2005; health care spending, 2006; business start-ups, 2007; cell phone and Internet use, 2007.

* Slide show: How the rest of the world lives

Middle-class life in many other Western countries looks much like that in the U.S.

In the 2005 book "Hungry Planet," which featured dozens of families around the world with their food purchases for the week, only the language on the packages seemed to change in many Western countries. The contrast with those from the developing world is stark.

We've selected 10 of the families featured in that book and gathered statistics to offer a picture of life in their homes.