Poor Vs Middle Class Vs Rich in America

Every other country in this world is stratified into layers of social classes. Whether you live in developing countries or developed world you fall under a social class.

In this article we look at one particular country called United States of America. USA is still largest economy in the world and it impacts the world economy at large.

In this article we look class system in America, average income divided among classes, inequality, its reasons and finally impact of this on the political landscape.

Class System in America

Before we know about America’s poor, middle class and rich we should take a look at America’s class system first.

poor rich & middle class

To be honest America has an insane class system.

You can divide them into five categories. Here is each one of them in great details.

1. Top Tier: Super Rich: Super Rich are 1% of the population and they are millionaires whose monthly income exceeds $300,000. They are executives, lawyers, doctors and people from Ivy League.

2. Second Tier: Rich: They are also rich but not as rich as Super Rich. Second tier rich are just 5% to 6% of the American population. Their monthly income could be well over $50,000. They do have a college degree.

3. Middle Tier: Middle Class: Then comes the middle class which is the backbone of the social order. They are over 45% and make $60K to $75K per year.

They may or may not have a college degree.

4. Middle Tier: Working Class: Working class or Lower middle class is the 4th class in the social order. Working class is about 40% of the population.

A man from this class earns $30k to $40k per month and a woman makes $20k to $25k per month. They are just high school graduate.

5. Bottom Tier: The Poor: Poor are at the bottom of the pyramid and they constitutes 12% to 15% of the population.

They may live below the poverty line with a yearly income of just $18k to $20k.

In recent years there is another class that has emerged, it is corporate elites. They are on the top of the food chain and very few in numbers.

They aren’t millionaires but multi billionaires.

So these are the classes in America.

Wealth Gap between Middle Class and Rich

Let us see the wealth gap.

The Average Upper Income = $650K

The Average Middle Income = $95K

You can see the difference and it is growing each year.

Average Upper Income increased from $590K in previous year to $650K this year, so an increment of around $60K.

However, the Middle income has remained steady and not increased the way upper income had.

The middle income in America is now around $55k to $60K and it is further declining.

Who is to Blame?

So the data clearly tells about the widening gap between rich and the middle class. Poor are the worst.

Who is to blame for all of this?

Well! It depends upon which side you are on. Left blames the right and right blames the left.

And this is the exact problem.

Economic System: Capitalism or Socialism

American is a capitalist country that believes in free market and free trade. But some on the left believe this is the exact reason for the inequality in the country.

Rich are not paying taxes and the system is created in a way that it helps rich to get richer. Whether you take bailout or tax breaks etc.

On the other hand the right believes its socialist policies like extra spending on social sectors, taxing rich, regulations etc is responsible for widening income gap.

Both sides have points but you can’t fix the problem unless we find a middle ground.

Inequality can grow in either of the two economic systems.

Immigration

Another reason blamed for inequality is immigration. In fact immigration is the main issue of the Republican Party.

There argument is immigration drives the wages down hence increased poverty.

On the hand liberals do not believe this; in fact on the contrary they say immigration is good for the economy.

Globalization

The real reason why middle class in America is not doing well is Globalization. Now a company can make same product incurring lower cost in rest of the world but not in America.

So they are shifting their plants to countries like Mexico and China. And that creates unemployment hence decline in wages for middle class in America.

How Poor Vs Middle Class Vs Rich Income Divide Affecting Politics

This is very important. How the income inequality in America is affecting its culture and politics.

Just look current presidential race. I will name two candidates Bernie Sanders and Donald Trump.

Both are outsiders, one is from far left and other is from far right. Why people in this country are going for these two extremes?

The answer is quite simple, people are fed up with the government. They don’t bother ideologies left or right anymore. They are looking for a candidate who is just honest. So they go for either Bernie or Donald.

Both of their supporters are from working blue collared folks and not the rich.

America Compared to Rest of the World

How America is doing compared to rest of the developed world.

As far as inequality goes it is worst compared to Scandinavian countries, even worse than Germany.

However when it comes to China and other developing world USA is still better.

But the real problem is wages of blue collared workers. It is a fact that wages are coming down for blue collared workers in America.

While the rich are becoming richer in this country however on the other hand middle class is shrinking rapidly.

What is the Future?

I will conclude by saying future is not really great because the inequality is going to rise and middle class income will continue to shrink.

Reasons are simple. Companies are able to find cheap labor in other countries and they will continue to outsource their jobs.

Moreover government is also not interested because they too are in control of big businesses or lousy bureaucracy.

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