BEAUTIFUL COUNTRY
By LI YUAN

Pondering 'Middle Class' in America
January 29, 2008 2:34 p.m.

A friend of mine recently complained that she can't afford a three-bedroom apartment near her daughter's school in Beijing, even though she and her husband take home about 300,000 yuan a year ($41,446) and have done well in the stock market. An apartment in a nice neighborhood easily costs three to four million yuan, or $417,000 to $555,000.
"But everyone in the U.S. knows that China's middle class is buying houses and cars," I said. Her response was laughter: "Me? Middle class?"

Several New Yorkers discuss the definition of wealth by today's standards, and their perceptions of the middle class.Middle class is a new concept in China. Thirty years ago everyone was poor, and the Chinese government still avoids the term -- the National Bureau of Statistics uses the term "middle-income family" to describe households with annual income between 60,000 and 500,000 yuan, or $8,300 to $69,420. (As a socialist country, we're not supposed to have classes.)
On Chinese online forums, people debate what makes one middle class, considering everything from income level and profession to educational background. Yet even well-off Chinese don't want to be called middle class. To them, the term suggests a lifestyle with a big house, a nice car and overseas trips – the kind of lifestyle many Chinese see in Hollywood movies and mistake for the way ordinary Americans live.

That's not how most middle-class Americans live their lives. But it raises a question: How is "middle class" defined in this country, anyway?
Just as Chinese are debating what makes one middle class, there's no consensus definition of the term in the U.S. either. A lot of the time, people seem to use it to refer to the majority of American society. This is partly because Americans believe in equality: Being middle class is an important part of the American dream, so many people are eager to claim middle-class status. This includes both lower-income individuals eager to claim the status and very wealthy individuals determined to live modestly. The most-famous example is probably Warren Buffett: The third-wealthiest person in the world, he still lives in the same house he bought decades ago and eats at the same Omaha, Neb., restaurant he's frequented for years.

A 2007 report called "Who Are the 'Middle Class'?" by the Congressional Research Service warns that "no attempt to identify the middle class in the income distribution can be expected to yield a precise answer," quoting survey numbers of middle-class household that yielded incomes from $20,000 to $250,000.
The report concludes: "Whatever else they may have in common, those who constitute the middle class may have, more or less, similar sentiments regarding their position in the income distribution."

This conclusion applies to China's middle class as well, particularly when the cost of living in different places is considered. My friend in Beijing would be able to lead a comfortable lifestyle in many smaller cities, but her money doesn't go nearly as far in Beijing. Housing prices have doubled and even tripled in major Chinese cities in the past few years -- 36 out of the 100 wealthiest Chinese on Forbes 2007 list are real-estate developers.
I can commiserate with my friend, because I'm a New Yorker (Except for the 10 months I spent in Washington, D.C. as a graduate student, I've spent almost all my time in New York since I arrived in the U.S. in 2002.).

The consensus of brokers and home owners I interviewed is that you need at least $200,000 to have a middle-class life style in New York City. Glenn Gray, a retired technology consultant, says that when he was young, a million dollars was a lot of money.
"Today, a millionaire is not a very, very rich person any more," he says.

Mr. Gray is selling his one-bedroom duplex in midtown Manhattan for $1 million. If that sounds like a lot, it isn't: According to Prudential Douglas Elliman Real Estate, the average sales price of a one-bedroom Manhattan apartment was more than $1.4 million in the last quarter of 2007, while the median price was $850,000.
Renters' situation isn't a lot better. According to Citi Habitat, the average rental price for a one-bedroom Manhattan apartment in the last quarter of 2007 was $2,592. (That excludes apartments subject to rent control.) Such high prices are why many of my colleagues and friends either have to share with roommates in Manhattan or move to more-affordable Brooklyn.

After moving back to New York from Washington, D.C. in 2004, I couldn't find a Manhattan apartment as affordable as Columbia housing had been during my first year in New York. So I moved into a studio apartment (rent-controlled!) by myself in Park Slope, a Brooklyn neighborhood that has become a refuge (although an increasingly expensive one) for writers and artists priced out of the Manhattan real-estate market. Even though I'm unhappy that my apartment doesn't get much sunlight and I need to travel to Manhattan on weekends to meet with friends, I also know that I don't want to spend so much of my money on rent that I can't go out or take a trip.

But middle-class New Yorkers also run the risk of forgetting that New York City isn't your average U.S. city. For $60,000 -- the average salary in New York City, if you exclude Wall Street -- you can have a comfortable lifestyle in most parts of the country. The median home price was $288,278 in Dallas and $322,210 in Atlanta in September 2006, according to Coldwell Banker Home Price Index Study. And the cost of living in Manhattan is more than twice as the average of top 20 U.S. metropolitan areas, according to a 2007 index released by Council for Community and Economic Research.

The cost of living is much higher in Beijing and Shanghai than in most Chinese cities, yet millions of Chinese have moved to those places for job opportunities and the excitement of city life. So it is here: People like me would rather live in New York City than most anywhere else.
But it strikes me that what's happening in Manhattan epitomizes the growing income disparity and decline of a true middle class in the U.S. An increasing number of middle-class Americans can't afford health care and some have become working poor, with their salaries not enough to pay bills. This is happening when Wall Street firms are paying record bonuses year after year ($23.9 billion in 2006 and $20.5 billion in 2005) and the wealthiest 1.5% of American households – those with an annual income of $250,000 – are becoming increasingly wealthier.

When I first arrived in the U.S. in 2002 to attend Columbia University's journalism school, I was taken aback by my classmates' affluent backgrounds. Besides me and a girl from Louisiana, 13 out of 15 classmates in my Reporting and Writing One class had graduated from private colleges. Their parents were either lawyers, doctors or executives in big companies. When the ethics professor asked the students in my year what images they projected to their interviewees and how it would affect their reporting, a lot of them identified themselves as upper middle class, and many of them used the term "WASP."

At the time, I was writing a column for a Chinese newspaper, and I told my Chinese readers that "Americans like to believe that everyone is equal in their society racially and class-wise. In fact, white people are reluctant to talk about race for fear that they will be labeled as racist. But at least they have been talking about it in the past 50 years or so. Now I think they should talk about class. They've been avoiding this topic for over 200 years."

Some Americans think their country has become a winner-take-all society. I wonder how they would feel if they were middle class in China, where income disparities are even bigger and the middle class doesn't have much of a safety net to fall back on. I wonder when China's middle class will have a voice in policy-making, and if they will have any way to ensure that economic benefits are more evenly spread. Maybe we should spend more time discussing these issues instead of focusing on the exact income level that makes one middle class.