Middle-class crunch: Who's to blame?

By Liz Pulliam Weston

Write about money, and you're going to tick someone off.

Write about poverty, affluence, whether the middle class is disappearing and if so, whose fault it is . . . and people go berserk.

Reader reaction to stories MSN Money has posted on these topics, including "Surviving (and thriving) on $12,000 a year," "I make $6.50 an hour. Am I poor?" and "Middle class living on the edge," has been overwhelming and mostly positive.

But each story has touched off vociferous debates on message boards and in e-mails about who's to blame for financial failure.

In one camp are the folks who are convinced that American workers are being squashed by the economy, the government, big corporations, lenders, the system in general. They see many, if not most, people as helpless pawns in a game that's rigged against them.

In another are those equally sure that there's no excuse for failing. If you've fallen down the economic ladder, or never figured out how to climb it in the first place, in their view it is solely and entirely Your Own Damned Fault.

The truth is somewhere in between. A decent job is no longer an easy ticket to a middle-class life. It's not just that things like health care and pensions are disappearing; it's that they're disappearing at the same time as our expectations about our lives have risen.

I believe a middle-class life is still possible for most people. But you have to be smarter, more cautious and faster on your feet than ever before. You have to obey some deceptively simple rules. And one thing is certain: Wherever you currently stand on the economic ladder, the surest way to rise is to pull yourself up.

What's middle class, anyway?

"Middle class" is a squishy concept if ever there was one.

If we define it solely by income, then according to the U.S. Census Bureau, a household income of $36,000 to $57,657 in 2005 landed you squarely in the middle class. If you want to expand the definition to include "lower" and "upper" middle class, the range widens considerably, from $19,178 to $91,704. Here's the breakdown, with each "quintile" representing 20% of U.S. households:

Population group	Lower limit	Upper limit
1st quintile	$0	$19,177	Poor/working poor
2nd quintile	$19,178	$35,999	Lower middle class
3rd quintile	$36,000	$57,657	Middle class
4th quintile	$57,658	$91,704	Upper middle class
5th quintile	$91,705	Bill Gates?	Upper class

Of course, there are plenty of problems with using income figures, most notably because income alone doesn't reflect the huge variation in living costs across the U.S. Simply put, $50,000 might buy you a comfortable life in Iowa or Kentucky but keep you scrambling in San Francisco or Manhattan. And there are plenty of folks living in high-cost areas with nominally "upper middle class" or even "upper class" incomes who would adamantly reject those labels.

A more flexible definition for middle class would be having the resources to cover all your needs and some of your wants, plus the ability to save for the future.

That definition:

• Doesn't necessarily mean homeownership, although it probably will; homeownership is still an achievable goal in most of the U.S., where close to 70% of all households own their own dwellings.
• Certainly doesn't mean two new cars in the garage, or even one, although it probably means at least one reliable vehicle.

• Doesn't mean being able to retire at 50, but it does mean being able to save for a retirement in which cat food is not a factor (unless you actually have a cat).

Sometimes, a middle-class life is out of reach

Am I setting the bar too low? Some of you may think so. But inflated expectations about what constitutes a middle-class life lead many people into the kind of spending decisions that endanger their long-term financial security.

Those who are too eager to buy the trappings -- the "wants" -- are the ones who wind up with credit card debt and who overspend on homes ("The 3 worst money moves"), educations ("How much college debt is too much?") and cars ("The real reason you're broke").

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