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Where is the Middle Class?

The term 'middle class' is widely used now, even though it lacks any certain definition. The class attribute is taken for granted, and could be either income, or wealth, or values, or anything else. This article looks at some possible ways of defining a 'middle class'.

What is said
John Prescott, as Deputy Prime Minister, said with a certain lack of logic, that we are all middle class now, although he was not specific about what that meant. Then Ed Milliband referred on the Today program to a 'squeezed middle' for which he felt great concern, and then struggled to define this class in terms of income. His best shot was to point to an indeterminate region in the neighbourhood of the average value of UK income.

A Theoretical class

The idea of a middle class probably originated in the mid-nineteenth century from Karl Marx's theory of the means of production in society, which defined three social classes: the proletariat whose work produced the goods and services required by society, the so called bourgeoisie class who employed the proletariat and distributed the goods, and the aristocracy who ruled and controlled the overall society. This bourgeoisie class became known as the middle class presumably because their economic power as individuals lay between the proletariat and the aristocracy.

A Legendary class

100 or more years ago there was a class of people with money to spare beyond the essentials of food, shelter, and clothing; who could afford a good level of education, health care, culture, and leisure; a class portrayed in the novels of Galsworthy and Forster, 'well off' but not owning much property, more likely to derive an income from a family business.
They were said to be a Middle Class, with an income lying between that of unskilled workers, sufficient only for the essentials of life, and the much greater income of people who had inherited wealth to draw on. It was a class associated with a certain style or culture.

Social class today
Now we have universal education, health care, and a common culture spread by TV, radio, and internet, so that class divisions have become blurred, even eradicated. Social virtues and vices are spread evenly around, so that Prescott was not so wrong if he meant that there is only one cultural class. But Prescott's 'middle class' hardly resembles the legendary Middle Class of the past – it is more like a moneyed working class. So the middle class that commentators have in mind is probably a middle income class.
A middle can only be defined by reference to its ends; in this case the ends are a lower versus a higher income class, which can be defined in meaningful terms by looking at the UK income distribution, as shown in the graph below.

Income Distribution

The above graph shows the UK income distribution in 2006/07 in £10 per week bands, for household (not individual) incomes from zero upwards. Incomes are measured after tax and before housing costs, and are adjusted for household size against a standard of a household with two adults and no children. It shows a state of affairs existing just before the financial crash of 2008.

The most Common income, or mode, is £275 pw It is possible to define a significantly large class of population in this part of the distribution, but it would be more a lower income class than a middle class.

The Middle or median value is £377 pw; this is the value which divides the population into two halves: 50% earn more and 50% earn less than this. This could be the centre of a middle income class, but the limits above and below would be arbitrary.

The Average or mean of £463 pw is much higher than the median income, being biased upwards by the 2.7 million people, about 5% of the population, with high incomes much greater than £1000 pw.

A Lower Income class
The most widely accepted value for a poverty defining threshold is 60% of the median value of income. For the income distribution shown this corresponds to an income after tax of £226 pw, and is surprisingly not far short of the Mode or most common income of £275 pw. This class, with a net income of less than £226 pw, would include the first 20% of the population, and is considered by government to be sufficiently 'poor' as to be eligible for benefits.

An Upper Income class
The first higher tax band of 40% takes effect on a gross income of above £35,000, which corresponds to a net income after tax of about £600 pw and over. This class would include the upper 20% of the population, and is considered by government to be sufficiently 'rich' as to qualify for a higher tax rate.

A Middle Income class
This necessarily lies between the upper and lower income classes, and can be defined therefore as those income values which fall between £226 pw and £600 pw after tax, corresponding to gross incomes before tax of £13,000 to £30,000; this middle class includes 60% of the population. The max to min income ratio of nearly 3, although large, is much smaller than for the upper and lower classes defined above.

GP 23 December 2011

Income Distribution values taken from Dept of Work and Pensions publications