The American Income Caste System

Let's consider that $68,703 is the median for household earnings.

The start of middle-class income-earning would be $46,031. The end of middle-class income-earning would be $137,406. Again, this is considering the median for all households is $68,703. Low-income would be below $46,031 which is 67% of the median. High-income would be above $137,406 which is the median doubled. The federal poverty level is at $21,960 income earned and below. To be high income would be between $137,406 to $518,399. That places a household that earns $518,400 and above as rich.

With the details above, we can discern where you stand based on five categories for earners in the United States. Those five-category classes being:

• Poverty
• Low
• Middle
• High
• Rich

What I want to address is the low and poverty-level earnings of the United States. How it affects the outlook of the people earning below the middle-class. Why financial literacy is important to discuss and a look at our American income caste system.

Poverty and Low Earners

People living in poverty deal with numerous trials that they need to overcome. Nutritional options for poverty-stricken households are scarce. Healthcare access is minuscule compared to the other classes. Schools have a lack of resources which affects the education of the household. Housing options are limited to non-existent for poverty level earners. Being in poverty leads to many predatory actions being done to you or done by you to satiate the hunger driven from being on the bottom of the caste system. The Black Market is more of a viable option for you because you are more willing to do outrageous actions to get by at worst or get out of your situation at best.

You are being looked at more as expendable compared to other classes and are undesirable to many. You are seen as not worthy by your peers. The pressure of living is inflated immensely due to being in poverty. Mental health is also an issue with rates of suicide, drug addiction, depression, gambling addiction, and eating disorders are higher than their counterparts. A lot of times, poverty-stricken people get harassed to get a job.

Low-income earners are doing better financially than people living in poverty. However, low-income earners are dealing with problems that keep them working jobs that have them in a constant state of worry. You make enough to survive, but not enough to strive. Low-income earners have to deal with the same issues that plague poverty earners with the illusion of being better. That illusionary state may be mentally worse because low-income earners will look down on their peers in poverty, not realizing that they are just one mistake away from being in the same position. Low-income earners are more likely to have a bank account but are saving little to nothing while living paycheck to paycheck. A lot of these issues can be fixed by budgeting and writing a plan. Low-income earners need to use their free time to learn skills that get them promoted to higher earnings. Skill-building falls flat because poverty, low, and middle-income earning households waste time on distracting activities. The skills needed vary and are based on your occupation.

Lower Earning Factors.

In the following, I will go over a couple of factors that either work for or against low-income households. Some of the content will be my opinion based on observations of different income levels.

#1. Income Stability

The first factor that comes to mind is income stability. Most low and poverty-stricken families are holding none to two streams of income. For the families that have two income streams being the best outcome. For families that have no income being the worst outcome in this instance. Both need work on the building wealth side of the situation. A lot of people are living paycheck to paycheck. A lot of people that get fired are financially struggling for quite some time. Some will get another job, while others deal with the hardship to find one that will hire them.

Let's look at the ones who can keep their employment status. You have employers that are in charge of scheduling. If you're in employment with a flexible schedule business, then you are at the mercy of your employer. If your employer does not need you, then your employer can minimize the days and hours worked each week on a flexible schedule plan. Flexible schedule work weeks are hard to plan around because the variable that works against you is your employer. You do have your set day-offs off, but you are competing with individuals with open availability.

You cost yourself the time you can't replace by spending the majority of it at work. You are stressing both your body and mind to a dangerous level to get by. Working multiple jobs isn't the issue. Working jobs to only have a few dollars profit is an issue. You have to get your skills up to provide more value in the world. It isn't impossible to learn a new skill under these conditions. It is hard to learn new skills under the pressure of multiple jobs.

#2.Access to Better Health.

I hit on the topic of stress in the last paragraph. Let's focus on the health aspect of this equation. If a health issue hits you while you are in low or poverty levels of income, it will be hard to near impossible to bounce back. That is assuming you don't have health insurance to cover the cost. You have to pay, even though we have Obama-Care and other health programs to use for this instance. You are still paying for a majority of those programs. I have had plenty of talks with people who have medicare. The statement by the majority of people that I always hear from those benefiting from these programs is it doesn't cover anything. Low and poverty-income earners need to play in this world on defense to stay safe. They do this as well as struggling to maintain a balance to get by.

Mental Health is the next point to discuss. You may not get hurt physically, but you may break down mentally due to the pressure of life. The same mental health issues happen across all income levels. The pressure of earning to survive is a huge factor in mental health. It is as well a factor in why many do not seek help for mental illness. Many people do not have the time because of how they work. Many do have the time but do not seek help because of the stigma within their environment. The stigma of socially being labeled crazy among other people is so powerful. People would rather pay for prescriptions when having a dialogue is the cure. I also have to mention that there are people who respect therapy but can't afford the cost to seek professional help.

#3 Programs of Opportunities

The benefits of lower-income households are programs design to assist people struggling. The following programs are available to low-income and impoverish families for assistance needed to survive.

• SNAP, which stands for "Supplemental Nutrition Assistance Program" is designed to help people struggling to get food with assistance for grocery shopping.
• SSI, which stands for "Supplement Security Income" is a program that provides monthly payments to people with limited income and resources.
• EITC, which stands for "Earned Income Tax Credit" is a refundable tax credit for low to moderate-income working individuals and couples.
• Housing Assistance helps low-income families to get into affordable private or government-owned rental housing.
• Federal Pell Grant ran by "The Department of Education" to promote postsecondary education for students from low-income households.
• Medicaid is another program used as public health insurance for low-income individuals and families.

There are more programs that you can look up. The programs that I listed above seem to be the most beneficial for low-income families.

#4 Skills of Necessity

I know I keep harping on skills in this subject, but I feel that they are important. What I haven't hit on with skills are those learned out of necessity. Low-income households may benefit from this because they have to be creative with how certain situations are handled. They mind their own business and prioritize their family or their needs first. They don't try to impress others because of the financial and mental cost required to keep up with the Jones's. Low-income households know how to network with multiple people and have strong bonds with the environment in which they reside. Low-income households are usually great with DIY projects because they are, in some cases, forced to learn new material on short notice to get by.

Our Income-based Caste System

Earlier I brought attention to the five categories of earners. I want to further add in additional sub-categories for these earners now. We have upper-middle-class and lower-middle-class earners. We have poverty earners and below poverty earners. In my breakdown of the middle class, I mentioned a starting point and endpoint based on the median income. The lower-middle-class would be between $46,031 - $68,703. This is factoring in the starting point for the middle class from the median household income provided. The upper-middle-class would be between $68,703 - $137,406. This is factoring in the median household income from the ending point of the middle-class. Below poverty would be any amount between $0 - $12,880. The poverty income would be anywhere between $12,880 - $21,960. With the sub-categories addressed, let's look at the income caste system now.

• Below Poverty $0 - $12,880
• Poverty $12,880 - $21,960
• Low-Income $21,960 - $46,031
• Lower-Middle-Class $46,031 - $68,703
• Upper-Middle-Class $68,703 - $137,406
• High-Income $137,406 - $518,400
• Rich $518,400 and above

This version of the income-based American caste system was found by looking at the following sources.

• Searching up the federal poverty level for a household of 1-3 people.
• Using the median provided from the Census Bureau study from 2019.
• Finding the base form of the middle class by calculated 67% of the median provided and double the median household income provided. Based on a 2015 definition of the middle class by Pew Research.
• Pinpointing the lower-middle-class income level by using the calculation for 67% of the median household income.
• Pinpointing the upper=middle-class income level by using the results of the calculation for double the median household income.
• Pinpointing the high-income earner by using the doubled amount of the median household with the highest income tax marginal rates starting point from the IRS.
• Classifying the rich based on the starting point for the highest income tax marginal rates starting point of $518,400 for single and $622,050 for married couples filing jointly

This is how I came to this conclusion on the values for each category. I understand that there are other factors to consider when discussing income levels. However, I felt that this was a simple way to break it down.

Next, I want to talk about financial literacy and why it is important.

Financial Focus

I've only touched on a small portion of why we all should be thinking financially. Thinking about your economical success for the future can open up doors that you may not have thought possible.

This is why I wrote about different streams of income in my entry, Passive Income 2021. This is why I wrote about putting money aside in my entry,High Yield Savings Account. This is why I wrote about making a plan for your money in my entry, Budgeting. We should all look at our finance and focus on solving problem areas in our lives that are taking away from their future success.

We live in the pursuit of a luxury lifestyle in America. Sometimes that pursuit can be our downfall when we try to live a life that is not according to our income bracket. We take on debt to live, debt for debt, and debt for luxury. We struggle to survive because we run away from the discussion of money. We should instead be running towards financial discussions and determine the flaws that are holding us back. What we are currently doing in mass is running towards the comfort spot. We should either take advantage of or seek opportunities that can work towards our benefit.

One reason I look at finance is due to the correlation between finance and depression. Financial stress is a common global issue. It can lead to various mental health issues, with the worst being suicide. Some of the factors in financial stress are as followed.

• A large amount of debt
• Losing a Job
• A reduction of hours at your job
• Spending irresponsibly

These financial stress factors mixed with other underlying issue's result in unhealthy habits.

I believe that schools should teach their students financial literacy. It's not that schools don't have these options in their curriculum, but many schools don't have this as a requirement. We currently have 21 out of 50 states that require a personal finance course for graduating high school. Finance should be discussed in the household as well. I'm not saying that you should discuss this every day. A discussion on any subject every day can be a turn-off for most people. However, setting aside time to discuss personal finance at home can be beneficial for the household. It can also keep you focused on your priorities. Let's look at wealth building through a formula.

Scott Galloway's Algebra of Wealth

Scott Galloway is a Professor of Marketing at the New York University Stern School of Business. He has a formula that he uses to break down how to succeed financially called "The Algebra of Wealth". His formula for wealth is as followed.

W = f + (s * t * d)

The "W" stands for the sum of the algebra for wealth. The "f" is for your focus on your passion. The "s" stands for stoicism and how you handle situations that are out of your control. The "t" stands for the amount of time in the market, with the focus being long-term. The "d" stands for diversification as a defensive tactic to assure that other options keep you safe when the other options don't pan out.

If you like this equation and would like Scott Galloway's explanation for his Algebra of Wealth, check out his Youtube channel The Prof G Show.

Conclusion

The categories for earning levels are what I've found to be evident about our income-based caste system. There are a variety of factors that you can look into about our income-based caste system. You can use the information from above to see where you stand in this tier list of annual earners. You may find that there may be something you need to improve on based on your earnings. Evaluating how to improve can be difficult, but possible when you put in the effort. At best, you're in a rich household earning $518,400 and above what puts you at the top with the 1% of annual earners. At worst, you are in a poverty-stricken household that rests around the bottom 10% of the American population. You would have to make a significant sacrifice to reach higher earning levels. It will take time, but with consistency, you should see the results you desire.

Disclaimer

I am a finance enthusiast. Not to be confused with a finance professional. I love everything about finance, but I could not in good conscience give you information claiming it to be an expert's opinion. I highly recommend doing your research and talking to a professional to get the best results for your journey.

I hope this was helpful.