The Term Middle Class Doesn’t Mean What You Might Think

The state of the universe.
June 12 2014 8:06 AM

Who Is Middle Class?

You get a very different picture of the world depending on whose definition you use.

(Continued from Page 1)

Of course, you can stretch a dollar a lot further in some countries than others: Someone making $5 a day in Namibia is in relatively better economic shape than someone making the same amount in Belgium. Differences in purchasing power between countries and currencies make it difficult to come up with a common definition for what makes someone middle class.

Some have even argued we should ignore income entirely and look at purchases instead. Shimelse Ali and Uri Dadush of the Carnegie Endowment for International Peace say the ability to buy a car is the best indication of middle class-ness. (Using this method yields a much larger middle class than Milanovic’s preferred method—almost twice as large in the case of India.) Mexican pundits Luis de la Calle and Luis Rubio base their argument that Mexico has become a middle class society on people’s access to technology such as cellphones.

Birdsall argues that a sense of economic security is what makes someone middle class: You’ve crossed the line when you no longer have to worry about falling back into poverty. She notes in a recent blog post that Mohamed Bouazizi, the Tunisian street vendor whose self-immolation set off the Arab Spring, lived on about $5 a day at the time, making him middle class according to a number of traditional definitions. While he was not living in what’s generally considered abject poverty, his situation was precarious enough that he was facing economic oblivion after the police confiscated his cart.

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This sense of security may be possible to quantify. Having looked at household survey data for Latin America, Birdsall argues that a rough but more reasonable standard for that region would be $10 a day.

“When you get to $2, you are still really poor,” she says. “You are not secure at $2 even in really poor countries. At least in Latin America, it’s only when you get per person something like $10 that you’re reasonably secure from being thrown back into poverty. Until you get to $10, you’re kind of bouncing around.”

Her research found that at $10, people had only about a 10 percent chance of falling below the poverty line within three to five years. At $5 a day, there’s a 40 percent chance.

Changing our standards to something close to this line would force us to adjust our expectations for global growth. “In the developing world, for the next 20 years, most people will still be below $10,” Birdsall says. “They won’t be middle class except in the mythology that $2 is middle class.” The Times of India has pointed out that going by Birdsall’s definition, India—one of the most-touted economic growth stories of the past 20 years—has literally no middle class: “everyone at over $10 a day is in the top 5 percent of the country.”

But this view of the world isn’t really as pessimistic as it sounds. “It’s real that people around the median of global income have gained during the era of globalization, almost doubled their income,” says Milanovic. “The problem is that when people use the term middle class, they imply a middle class at the U.S. level.”

The notion of the United States as a middle-class country, with the health of both its democracy and economy rooted in the strength of that class, has been fundamental to America’s self-image since at least the time of de Tocqueville, and the much mythologized middle class features in the political rhetoric of both parties. The fact that that middle class is feeling particularly insecure at the moment is one reason why certain debonair French economists are burning up the best-seller lists.

Talking about a “global middle class” can imply an emerging population of people in the developing world who will live and spend like Americans or Europeans. Despite the incredible reductions in absolute poverty we’ve seen in recent years and the economic stumbles of America and Europe, we’re still a long way from that world.

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