Economic Whopper Of The Day

I’ve long since passed the point when anything that comes out of a congressman’s (or congresswoman’s) mouth surprises me, but this evening I saw something that made the hairs on the back of my neck stand-up straight. Regarding passage of an increase in the federal minimum wage to \$7.25, a committee chairman who allegedly understands this stuff uttered the following:

“This is a great day for America’s middle class,” said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee. “America’s workers have been waiting for a raise for a long time.”

Even the AP reporter could help but note that full-time wages at the new rate would amount to just over \$15,000 a year. I defy anyone to classify and income of \$15,000 a year as middle class when the poverty line for a single individual under 65 is between \$10,210 and \$10,488 [1, 2] a year.

The Congressional Research Service has a paper on the definition of “middle class” (PDF), which it turns out isn’t really defined anywhere.

There is no consensus definition of “middle class,” neither is there an official government definition. What constitutes the middle class is relative, subjective, and not easily defined. The mid-point in the distribution is the median and in 2005 median household income was \$46,326. How far above and below that amount the middle stretches remains the question. The Census Bureau publishes figures breaking the income distribution into quintiles, or fifths. The narrowest view of who might be considered middle class would include those in the middle quintile, those households with income between \$36,000 and \$57,660. A more generous definition might be based on the three middle quintiles, those households with incomes between \$19,178 and \$91,705. Surveys suggest that 1% to 3.3% of the population consider themselves to be upper class. Comparing those figures with the income distribution would put the dividing line between middle and upper class close to if not above \$250,000. Similarly, survey responses suggest that the lower end of the middle class might be close to \$40,000.

As the AP article points out he liberal-leaning Economic Policy Institute estimates that 5.6 million workers – or 4 percent of the work force – earn less than \$7.25. That’s nearly an identical figure to the Census Bureau’s classification of 3.4% of households with income of bottom quintile (1/5th) of less than \$19,178.

By any measure Miller is being dishonest in his characterization; no one truly in the “middle class” will notice any positive effect from this legislation. They stand a much better chance of footing the bill for the increase when dining at a restaurant or if they own a small business. Perhaps that’s why he’s trying to spin this as some sort of victory for “the middle class,” since the truth of the matter is that “the middle class” are by and large the ones who will be footing the bill…