SIZE OF MIDDLE CLASS AND POVERTY LEVEL

Unfortunately, there is no single definition of "middle class" or "poverty level" that economists agree upon. All attempts to define them have their problems.

The definition of "middle class" here is defined as those people with incomes between 33 percent less than the national median and 50 percent more than the national median.

The definition of "poverty level" here is defined as those making less than half of the national median.

The obvious objection to these definitions is that different nations have different medians. The U.S. has the highest median in the world, so those under its poverty level might actually be doing better than the poor or even the middle class in other countries.

Although true, defenders of the American status quo frequently overestimate this effect. The poor in America are probably better off than the lower middle class in Third World nations. But when we are comparing the richest nations in the world, all of which have relatively high medians, this observation loses its force.

Specifically, the average U.S. income (by purchasing power) is 39 percent higher than Finland's, the lowest rich nation on our list. But U.S. poverty is 229 percent higher than Norway's, the lowest rich nation on that list; child poverty is 367 percent higher. (Compared to second-place Canada, the U.S. has 36 and 45 percent more poverty, respectively.) As you can see, American poverty is still greater in absolute terms than in other rich nations.

More inarguably, these statistics reveal the greater inequality of American income.

Return to Overview