The Education Predicament of the Middle Class

There once was a time when the term "middle-class household" was synonymous with the majority social class with economic stability, somewhat comfortable life styles. In this post, we shall analyze and compare the definitions of the middle class in China and the US.

Now, with the chain reaction of the pandemic bringing worldwide high living costs, inflation, and an economic recession under way, the correlation between middle-class households and economic stability is becoming weaker and weaker.

From an economics point of view, using investable assets as a scale, middle-class families in China can be defined as families with investable assets between 100k yuan to 6 million yuan.

Characteristics of Chinese middle-class families: middle-aged, highly educated, and mainly office workers

▼Chinese middle-class families are mainly distributed among people over 35 years old, with more than 60% aged between 36-55.

▼Overall, the level of education is relatively high, with nearly 70% of the population holding a college degree or above.

▼ Office workers account for over 60%, mainly in the Internet industry (18.8%), manufacturing (18.5%), and the financial industry (13.7%), with a quite uniform means of wealth accumulation.

▼The annual income is mostly between 100k and 500k yuan, with the scale of investable assets and the scale of invested assets are between 100k and 300k yuan. Over 30% of middle-class families state that their investment needs are not fully met.

There has been debates around the definition of the term “middle class” in the US, with no universally accepted definition. For now, the most commonly used method of measurement is by income growth.

Are you middle class in the US?

What is the median income of an American middle class family? According to an analysis by Pew Research Center, approximately half of American adults belong to the middle class.

However, simply judging by income can be misleading. After all, the consumption levels of states are different, and being middle class in one state doesn’t guarantee staying middle class if a household were to move to another state.

Therefore, based on Pew's data, GoBankingRates defines the middle class of each state according to the income level and consumption level of that particular state. Here, we present to you three examples:

California

Median income range for a middle class family of two: $52,681 - $157,258

Median income range for a middle class family of three: $57,796 - $172,524

Median income range for a middle class family of four: $66,091 - $197,288

New York State

Median income range for a middle class family of two: $46,674 - $145,296

Median income range for a middle class family of three: $57,889 - $172,802

Median income range for a middle class family of four: $70,331 - $109,944

Texas

Median income range for a middle class family of two: $44,975-$134,254

Median income range for a middle class family of three: $49,410 - $147,494

Median income range for a middle class family of four: $57,212 - $170,782

The Shrinking Middle Class

According to a 2018 Pew Research Center report, 52% of the U.S. population is middle-class, up slightly from 50 percent in the 2015 report. Historically, however, this figure has shrunk considerably since 1970.

In 1971, middle class made up for 61%. By 1981, that number had shrunk to 59%. Since then, middle-class population in the US has shrunk to only 50% by 2021.

Meanwhile, the proportion of low-income and upper-income continues to rise. As seen in the above chart, compared to low income groups, the proportion of high-income groups has increased more rapidly. At the same time, the increase in income level is almost horrendous, increasing by 69% between 1970 and 2020. With such a large population base and such rapid increase in income level, the gap between the rich and the poor has thus opened wide up.

Income and Education

There appears a correlation between income and level of education. A statistic shows that most children from the top 1% income level households in the United States go to four-year universities, many of which are among US News’ Top 30 and Top 50 Universities.

(Source: The Upshot)

Meanwhile, more than half of children from households with income in the bottom 20% did not attend college.

(Source: The Upshot)

As seen from the figure below, 40% of people with a four-year college degree in the US are currently in the upper income group. The higher the education level, the higher the income level. High-income people also tend to be more willing to invest in their children's education.

We can also see that the proportion of the middle class (represented by khaki box in the chart) is gradually shrinking. Among those who received an undergraduate degree, the proportion of those earning high income increased by only 3% over 50 years, while another 5% of them fell into the lower income group.

For those who have not obtained a degree in junior high school, high school, or university, the proportion of falling into lower income has been increasing as well. For these people, making it into the upper income group has become even more difficult.

Overall, the trend presented by these data is this: going to college is still one of the most important ways to climb the social ladder. Education, more than anything else, is still the key to securing a better economic condition for the next generation.

Meanwhile, different families have different needs and goals when it comes to investing in education, and these differences may determine a series of choices such as where to attend school, what major to choose, etc. At Enlighteens, with the bigger picture in mind, we are dedicated to providing personalized assistance in planning and applying for students and families to help achieve their long term goals.