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We get the occasional complaint from readers who think that our content is not pertinent for the ‘average’ American. In our defense, we don’t have a clue what average American means and if you know his or her name and address - please send it our way because we’d like to invite him over for an interview. It’s fair to assume however, that the average American is middle class. That’s a very vague social and economic designation but it’s a label most Americans are comfortable with. We have millionaires that consider themselves Middle Class being waited on by minimum wage workers who also identify themselves as Middle Class. It’s all very confusing and the term has lost whatever meaning it was supposed to have. In the U.K. the vast majority of people that we consider Middle Class would be considered "Working Class". We're fantastic marketers in the U.S. hell bent on making everyone feel good.

Being middle class has always been a state of mind more than anything else. People are now middle class by a process of elimination. If you’re not poor or destitute and if you’re not rich, you’re supposedly middle class. So, we’ve come up with a way to determine if you’re still eligible for the middle class label. If you’re not something else, you’re Middle Class. Read these 12 points of elimination to see if you still qualify as "Middle Class".

1. You’re not middle class if you’re one of the 40 million Americans on food stamps. One out of five children lives below the poverty line. So, they’re not middle class either.

2. The 7.8 million millionaires in the United States are not middle class, although most of them still walk around wearing middle class hats. Even if all your wealth is tied up in your house in San Francisco, you always have the option of selling it, moving to a cheaper locale and retiring. Not Middle Class.

3. The ratio of the average top executive's paycheck to the average worker's paycheck is like 300 to one in large corporations. If you’re the executive, you’re not middle class. Even if you happen to screw up, you've got a golden parachute in place to ensure that you never have to enter the ranks of the Middle Class ever again.

4. The bottom 80 percent of American households hold less than 10% of the liquid financial assets. If you’re in the top 20%, don’t call yourself middle class, unless we can get the bottom to realize that they are Working Class. And if you’re part of the bottom 50 percent of income earners in the United States, you and 150 million Americans collectively own less than 1 percent of the nation’s wealth. So you’re not Middle Class either. You might think you are middle class based on your income, but you're not. That leaves the 30% in the middle and by all accounts, that figure is shrinking faster than a bullet train.

5. If you’re the average Federal worker, you're probably middle class because you earn 60% more than the average private sector employee and of course, you have some of the richest benefits that will ensure a nice retirement. Just remember it took thirteen trillion in deficit spending to keep you in the middle class and we can’t run 1.4 trillion annual deficits forever. Enjoy it while it lasts.

6. More than 40% of Americans who are employed are now working in low paying service jobs. Chances are if you’re in the service industry, you’re not middle class even if you do have a middle class car payment.

7. If you’re one of the 60% of Americans who live paycheck to paycheck, you might be living a Middle Class life style but maybe you really can’t afford it. Two out of five Americans don't contribute anything to retirement savings. They might be Middle Class now but they won’t be for long. You can’t live a Middle Class life style on just a social security check.

8. If the stats are to be believed, 43% of Americans have less than $10,000 saved up for retirement. That’s a price of an entry model car or a jazzed up refrigerator with a built in stereo. You’ll still retire on a social security check and you won’t be Middle Class even if you keep the refrigerator.

9. The 400 richest Americans have more wealth than 155 million Americans combined and top hedge fund managers make $900,000 an hour. They’ll never be Middle Class again and they won’t have to read this article to discover that factoid (unless they’re one of the Hunt brothers.)

10. One out of every four American workers have postponed their planned retirement age. You want to know why? Well, it’s likely because they want to retain their middle class amenities (or the debt they accumulated maintaining it) until they decide to throw in the towel just short of their 85^th birthday.

11. Last year, 1.4 million Americans filed for personal bankruptcy. A lot of them will never be Middle Class again.

12. If you're one of the millions of Americans that has seen wage stagnation for the last decade, you might have been Middle Class, but eventually you won't be. Unfortunately, you're not alone, if you look at a chart of labor costs over the last 10 years, it is rapidly approaching zero and trust me, the health care component is definitely positive meaning wages are increasingly negative.

The sad reality is that fewer and fewer ‘average’ Americans qualify as Middle Class. Even if they do qualify in terms of income, a vast majority don’t have the sense of security that used to come with a Middle Class paycheck because they can’t know for sure if they’ll have the same job for very long. When you break down the numbers and take into consideration the absence of job security and defined pension plans, it might be that only one in five workers really qualify as middle class.

The undeniable fact is that this generation of American workers will probably have a harder time maintaining a Middle Class standard of living and adjusting to that reality will require that they get more bang out of every dollar they earn. On that count, there is one positive indicator that says that an increasing number of Middle Class aspirants are ‘getting it.’ The savings rate is going up. . If you really want to remain a member of the middle class, don’t depend on higher wages, watch your money and make the best of the wages you currently earn. Otherwise, you might not be Middle Class for much longer.

To the Federal Employee Debate.  This just released on USA Today:

Federal workers have been awarded bigger average pay and benefit increases than private employees for nine years in a row. The compensation gap between federal and private workers has doubled in the past decade.

Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available.

The federal compensation advantage has grown from $30,415 in 2000 to $61,998 last year.

Read the full article.

• The Terrible Economics of Dual Income
• Houston. We Have a Population Problem

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NY1212  - I thought it was funny |2010-08-13 08:25:17 I laughed. Poking fun at people buying far too expensive appliances. Much of the reason people are broke. Laugh a little we all still have it good. Reply 0 1

frugal nomad  - Thanks |2010-08-13 11:30:20 Sometimes our humor fails. Well, at least nobody is throwing rotten tomatoes at me. Speaking of rotten tomatoes - did you know you can get them real cheap and that they make for the best sauce. I thought the refrigerator line would kill the crowd. So they retaliated by hiring professional assassins to hunt me down. Thanks for appreciating that line and 'getting it.' You're not alone - I thought it was funny too. Reply 0 0

dianne  - How to Tell if Your Middle Class |2010-08-13 05:42:42 I could not appreciate the humor regarding the refrigerator in your article. This seemed inapropriate for such a serious and sensitive article. I am, like many Americans, striving to hold onto what once made me very middle class. The article could have been better written with pertinate data and less about the fortunate millionairs. Reply 0 1

Anon |2010-08-11 20:37:30 You lost me at #4. How are readers supposed to know where they fall? If you are promising a list of 12 items to help people determine whether or not they are middle class (no matter how frivolous the exercise is), please try to deliver on that promise. This article quickly devolved into a bunch of seemingly-random (and unsupported) stats, some of which repeated earlier points. (Surely the 400 richest Americans [#9] are among the 7.8 million millionaires [#2].) Also, (and I don't mean to heap on the criticism, since I do generally enjoy LiveCheap), I'd appreciate a less US-centric point of view on the site. There's no reason that a discussion of what constitutes middle class should be solely defined by American benchmarks. What about those UK lads? Or in Canada, Australia, or the EU? Reply 0 0

haverwench  - Who are the middle class Americans? |2010-08-12 06:41:38 I don't think the US focus is unreasonable, since I think social class in America is quite a different animal from social class in Europe. Perhaps "Are You a Middle-Class American?" would be a better title. A minor point: item #2 says a millionaire isn't middle class, "even if all your wealth is tied up in your house in San Francisco." Actually, the figure cited (7.8 million millionaires in the USA) refers specifically to people with $1 million or more *in addition to* the value of their primary residence. (http://www.reuters.com/article/idUSTRE6282M220100309) I do think that a million dollar net worth, including home equity, could still add up to a "middle class" lifestyle in some parts of this country. On the whole, I don't think this article is actually all that helpful for figuring out if *you* are middle class. You keep saying what middle class *isn't*, but you never say what it *is*. Do you have to own a home to be middle class? Do you have to have income above a certain level? What is it we're trying to define here? Reply 0 0

haverwench  - Also... |2010-08-12 06:45:26 I don't think social class is quite as fluid as you're making it out to be here. You keep referring to people falling out of the middle class because of job loss, or ascending out of the middle class (into the upper class, presumably) because they make so much money--as if income were the only factor involved. I don't think it's quite that simple. Education, occupation, and upbringing all play a role in the complex equation of social class, and those factors are more or less disregarded here. Reply 0 0

frugal nomad  - You had two comments |2010-08-12 07:38:24 You had two comments and they both deserve a response. You're absolutely right, the yard-stick for a millionaire does not include home equity. I did state that middle class was a state of mind. So I agree with you that it's not only a function of money. But money is a vital determinant of people's class. I'll give you an example, If you don't have money, you tend to live in the rough side of town, especially in cities like New York. And an address in a poor neighborhood is enough to disqualify you from the middle class, in your head and in every body else's head. And in my defense, the article did say that you'd find out if you're middle class by a process of elimination. I'm not being defensive here. I liked the article - otherwise I wouldn't have written it. I think some subjects is so sensitive - that you should avoid lacing it with a little dark humor. That was obviously a mistake. Nobody seemed to appreciate the refrigerator with the built in stereo. Reply 0 0

frugal nomad  - If only |2010-08-12 07:45:51 we had input from the otherside of the pond. We do have a little cult following from places like Canada, Australia and England. You might pick up on that in some of the comments we get. On this particular topic, it would definitely have been more relevant if we had given it a European dimension - because it's an entirely different social dynamic over there. But we get in enough trouble and controversy opining on the United States to go looking for intellectual brawls on the other side of the pond. As to how we framed the article, readers were supposed to find out if they were middle class by a process of elimination. If you are something else, you are not middle class. Reply 0 0

Omiewon  - U.S. Focus |2010-08-12 09:15:59 I'd love it if we had enough UK readers to spend the time. Canada, Australia, and the UK are our #2 through #4 countries in terms of readership. From my understanding of the middle class in the U.K. it is a very different concept and much of our middle class in the U.S. would be considered your working class in the U.K. But I have no first hand experience with it. Reply 0 0

Colin |2010-08-11 16:35:53 I guess as a working class member I should chime in. I have always looked at compensation of govt workers as sort of an ideal standard. I mostly know state workers so that;s where these views come from. Here a state worker can expect a lower starting salary then the private sector for an office job but a higher salary for a labor job. However once you move on from entry level the differences stand out. In private sector if you move from manual labor to a supervisor position you might expect a 30% wage increase, where as most of the state workers I know saw a 15% wage increase with a similar move. Obviously there are exceptions to this as with anything. As too work well I know some state workers that believe it or not are overworked but you are correct in that most have union protection. I seriously considered a move to a state job doing similar work to what I do now (Insurance) in the private sector. While the benefits were very attractive it would have taken over 8 years to equal my current salary something that was just not doable. Reply 0 0

frugal nomad  - factoring in defined pension benefits |2010-08-11 17:14:09 One of the reasons average private sector wages have taken a dive relative to government wages is that private sector employees are now more likely to be in the service industries which have much lower wages than manufacturing and rarely have unions to represent workers. Private sector workers can experience loss of income due and long bouts of unemployment due to lay offs, mergers and bankruptcies. So that cuts into their lifetime earnings. But if there is one thing that really distinguishes the compensation package of public employees it is that they are more likely to work for the same employer for decades and accumulate very generous degined pension benefits. Police and Military personnel often recieve pensions with as little as 20 years employment and they have the luxury of opting for early pensions in their forties. I knew a marine who got out on a pension when he was thirty eight. He'll probably be collecting benefits for the next fifty years plus having health insurance. It's not uncommon for city employees in Seattle to retire at 50 with pensions and health insurance. Again, all I am saying is that these economic factors give most public sector employees virtually permanent membership in the middle class. And that's a nice thing to have. They might not get rich, but they certainly have peace of mind. I don't know why making this point is bothering anybody. A lot of private sector employees have lost jobs they thought they'd have forever and with the loss in employment came an eviction notice that tossed them out of the middle class. With the shock waves of this great recession still rippling through the economy, many middle class families are a little paranoid about losing their middle class life styles. That's just a fact of life. We're just giving people a heads up that it might take a little more effort to remain in the middle class and part of the effort is watching your money and adding to your savings. Reply 0 0

Amy |2010-08-11 07:36:59 Care to offer citations or substantiation for any of the figures you toss out with such seeming authority? I'll be honest -- the smug, self-satisfied and holier-than-thou tone of this blog had already begun to stick in my craw, so it's no surprise that your (rather cliched) dig at federal employees kind of got under my skin (Item 5, for anyone playing along at home). For the record, I am a federal attorney who turned down an offer from a big law firm to accept my job and accordingly accepted a $99,000 reduction in starting salary. While my salary increases rapidly, my federal earning potential will max out below what I would have earned as a first-year associate at the firm. I'm not looking for pity here: this made sense for me in terms of career trajectory and lifestyle, I believe in public service, and I am still very fortunate to have a fulfilling, secure, comfortably middle class job. However, I do take exception when some hackneyed joker tries to score points by once again taking aim at public servants and our earnings. Reply 2 1

frugal nomad  - I never said federal workers were overpaid |2010-08-11 08:46:10 I just said that on average, they are now being paid more than workers in the private sector. Of course, lawyers are an exception because they're overpaid in both sectors. Reply 1 0

Amy |2010-08-11 09:14:35 By what metric? I mean, that may well be, but once again you're just spouting an unsubstantiated and rather sweeping claim. Reply 0 0

Omiewon |2010-08-11 10:34:04 I think I would use the term "highly" paid. Many in this economy are not of course, but on average relative to education, experience, etc. pay for many seems reasonable. There are a lot of highly paid lawyers that have lost their jobs recently. Lawyers dodged the bullet on the 2002 downturn but not on this one. I don't want to get into a lawyer bashing commentary on this thread because it doesn't make any sense and that's not the point of this article. What has happened is that government employees used to be paid below private sector wages and it was made up for in better benefits, more limited hours, etc. What has happened is private sector wages have declined and their benefits have been gutted so much. In terms of stats: San Francisco, CA has 27,000 employees and 9,497 of them make more than $100,000 a year and they have very generous benefits. It is hard to compare what the private sector equivalent of some of those jobs is because some of them would be law enforcement. In the prison system in California about a fifth of the guards make over $100,000 a year. I don't think that anyone doubts that employees do good work but when we see continual increases in salaries when the state is broke, it creates resentment. On a Federal level, I would say that while TSA employees are paid the worst (I think on average about $30,000 and starts at $18,000) they are certainly paid higher amounts than were being paid for private sector contractors which would likely pay $7 an hour for that job. I still think the larger point is that we clearly cannot afford the expense and so governments either need to cut salaries or cut positions. Nobody likes to hear that but we all need to live within our means. Reply 0 0

amp  - You have got to be kidding me!!!! |2010-08-11 10:58:38 Amy - I am with you! I am a local government employee - and this statement has me FUMING!!! Years ago when the economy way BOOMING, private sector employees rec'd BONUSES that were more than my SALARY! And that is the trade off! We give up competetive salaries, bonuses, and ridiculous extravagant offices and technology in exchange for job security and the benefit of retirement after 30 years with the same employer. NOW, in "these economic times" people who had no problem rec'ving 5 digit bonuses and 6 digit salaries are upset that we have this kind of "security." I wonder how secure those Dept of Defense employees are feeling right now? So I am just gonna say it - SHUT UP about the gov't employees making out like bandits - we live cheap not because we really have a choice - but out of the necessity to live. We live frugally and drive ten plus year old cars and worry if we have enough fuel to heat our homes and get to work. And yes, believe it or not - every single budget year, we worry if we are still going to have our jobs. So here's to all the gov't workers who have stuck to the job and stuck it out, inspite of it all! Reply 0 0

John605  - Cmon govt workers have cushy jobs |2010-08-11 12:42:31 Give me a break. The average govt employee works like a 7 hour day max. It is a heavily unionized job with very little accountability. Loads of dead weight. Good employees too but lots of crap and everyone knows it. Ask any good govt employee how much deadweight there is. Why can't we point out the obvious without fear that everyone will get offended. And this fairytale about 5 figure bonuses applies to a very very few private sector employees. Reply 0 1

Omiewon  - Can Understand the Point |2010-08-11 10:08:52 Amy, I appreciate your comments. I think right now there is a sentiment with private sector employees (and the unemployed) that government employees have it relatively good. Many private sector employees have taken pay cuts, have not seen a pay increase for several years, have seen their pensions annihilated, and are working longer hours. They look at a government that is bleeding cash and not reducing its cost one bit. So I can't speak for Ahmed, but I hear a definite resentment going on. This isn't just to Federal employees but also some highly paid State and Locals. A extreme case is the City of Manager making $800,000 a year in the City of Bell, California! If you look at the message boards of major sites like Yahoo/MSN, there are many people that can't understand why governments that are essentially bankrupt haven't cut salaries or positions. I think that many people respect the work that our government employees do but they have a hard time understanding why costs continue to spiral out of control. People see the bankrupting of a Nation and they aren't happy with it. Reply 0 0

frugal nomad  - I like the way they pay government workers |2010-08-11 15:50:33 I don't want anybody to get me wrong. I like the way government employees get compensated - especially the overall package that includes excellent health insurance and defined pension plans. The point of the article was a government compensation packages allow government employees to live middle class life styles and have the peace of mind that used to come with a middle class income - in the sense that you can maintain your middle class life style after you retire. That used to be the case for union workers in the manufacturing sector. They had pretty much equivalent wages, job security, health insurance and retirement plans. With the decimation of the manufacturing sector (only 11% now work in manufacturing), millions of workers have been uncerimoniously tossed out of the middle class. The middle class is shrinking and that's one of the points of the aricle. But the other point is that those who want to remain in the middle class need to watch their money and stretch their dollars. The bottom line is that to maintain a middle class life style into retirement years will require savings and being very savvy with your earnings and disciplined with your spending habits. As for the wages of government workers - they're not immune from wage stagnation. In many states, like California, they've been forced to work fewer hours. With current 1.4 trillion annual deficits, you can bet there will be more pressure to federal, state and municipal payrolls. Union workers used to think they were immune from aggregate economic dynamics. Nobody is immune. Reply 0 0

Omiewon  - USA Today Article on Bureau of Economic Research |2010-08-12 11:04:23 Amy, An article today in the USA Today gives lots of facts and figures on Federal pay. Obviously there are different views on the data, but an average pay and benefits of $123,000 is more than double the average private sector pay. Obviously there may be differences in skill, but its pretty hard to argue the lower pay across the board for the average government employee. Reply 0 0

amp  - Is this right?! |2010-08-12 12:37:48 I may not be reading you correctly, but if you are saying that gov't employees are making on average $123k and that that is double what private sector gets paid - I don't think we are comparing apples to apples here. If USA Today's figures include gov't management and elected official salaries, that would explain why the figures are so high. After an average of 12 years in our positions, my co-workers in my unit are professionals possessing MDs, JDs, and other asssorted graduate degrees - none are making 6 figures and yet we still strive day in and day out to meet the needs of the people we serve in our community. We may not be your "typical gov't workers" - but that's the point - you can't put any one group into a box and put a label on it and call it done. Reply 0 0

Omiewon |2010-08-12 13:09:07 The figures are Federal Employees averaged across all employees including the dollar value of their benefits. Of course, one might argue that the average Federal employee needs more education than the average worker and therefore should be compared to a subset of the general population, but the numbers are still very striking. Reply 0 0

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