Understanding Class In America

Avatar Koindanomics Magazine | July 4, 2019 43 Views 0 Likes 4 On 10 Ratings

43 Views 4 On 10 Ratings Rate it

As many people are drowning in debt up to their ears, they’re wondering what they did wrong. They followed the advice. They went to school so they could get a good job. Or, for others who didn’t like traditional schooling, they followed the advice and learned a trade that would supposedly make them enough money to earn a good quality of living. Maybe this is you. Maybe you went to school and acquired $100,000 in debt only to find that you can’t get hired for a job that pays even $30,000 per year. Maybe you’re an electrician and you and your buddies can’t find work for more than 10 hours per week.

There is no way around it. You have to earn money. You have to earn money to pay bills and to build the appropriate foundation to acquire wealth. Wouldn’t it be nice if someone had a crystal ball that could predict which careers would allow you to make bank versus barely make ends meet?

Well, you’re in luck. You don’t need some special power to predict the future. You only need to be armed with a framework based on data that social economists have been collecting for the last 60 years.

The reason we love economists is because they don’t focus on outliers; they focus on the masses. While media focuses on the minority of individuals who “beat the system,” economists focus on the systems that often beat a majority of people. They make sense of complex systems regarding finance and money and how we interact with it.

At Koindanomics Magazine, we take research and analysis by economists and other financial analysts and turn them into Frameworks, Formulas, and Functions (also known as systems to take action) that you can personally use to make better financial decisions. We pride ourselves in giving you tools that will aid you in critically thinking the most STRATEGIC way to build economic prosperity.

Rather than chase the trendiest advice about which career to chase, we’re going to teach you a framework to identify and navigate the economic class system that is entrenched in America to create and perpetuate economic segregation. Before you learn it, you have to promise us that you will remove two words from your vocabulary. Those words are “rich” and “poor.” You are no longer allowed to call yourself or anyone else “rich” or “poor.” Why? Because it is a nebulous term that allows you to be intellectually lazy. We want you to train yourself to talk about economic concepts with laser focus and pinpoint precision.

Let me give you an example of why using the words “rich” or “poor” tell you absolutely nothing about someone’s personal economy, including your own. If a doctor earns $400,000 every year, but spends $450,000 every year, is she rich or poor? What about a retail worker who earns $13,000 per year, but only spends $5,000 per year and makes 10% return on his investments? Is he rich or poor?

As mentioned before, these two words don’t tell us much about anything. Truthfully, they are vague words that have been historically associated with race. Remember when Nixon referred to welfare queens. Did you think of a white woman? Of course you didn’t. Although Nixon was referring to a woman who defrauded the government to the tune of hundreds of thousands of dollars who was codified in government databases as white, since rumors circulated that her unknown biological father was, in fact, black, it was highlighted that she was an indolent, lazy black woman who lived off of taxpayer dollars. This woman is famously known by Linda Taylor. She used over 80 names during her career of fraud and Linda Taylor identified with every race to perpetuate her fraud.

Since social economists are aware of how nebulous terminology is often used coded references to demographics of blacks designed to appeal to working class whites, economists encourage us to speak with neutral but precise economic descriptors that don’t allow you to make a conjecture about race. Economists teach us that the correct way to identify a person’s economic state is by identifying whether or not that person is:

  • Ruling class
  • Corporate class
  • Middle class
  • Working class
  • Underclass

Then once you have identified which class a person is in, then you identify within a particular economic class if that person is:

  • highly paid
  • moderately paid
  • lowly paid

By identifying the class, and then how well they are paid in comparison to their peers, our conditioning to associate the terminology with race, gender, sexual orientation, and disability status is neutralized.

Try this exercise for yourself. When you hear “Welfare Queen,” what kind of person you visualize? When you hear “lowly paid working class,” what kind of person do you visualize?

Now that you have learned the way to identify class with pinpoint precision, let’s actually discuss how class presents itself in the United States of America. In the United States, there are five economic groups called quintiles:

1. the bottom 20% of income earners; also referred to the underclass (Yes, this even includes drug dealers, even if they are big-time like Frank Lucas and Big Meech; they can’t file tax returns. In order to participate in most retirement structures, you need to show verifiable income.)

2. the bottom 40% of income earners = working class

3. the middle class

4. the top 40% of income earners; also referred to as the corporate class

5. the top 20% of income earners; also referred to the ruling class

Here’s a deeper explanation of the economic classes within the class system.

Ruling Class
the ruling class comprises individuals who work in at least TWO branches of government. This does not necessarily mean that they are in office or serve the public in that branch of government. It means that they have decision-making authority in those branches of government. It is not uncommon to see that politicians may earn their income in one branch of government, but have decision-making power in another branch. These individuals are often hidden from the general public’s eye. They write public policy and are usually interested in maximizing profit from establishing equity interest in private businesses, property, and real estate. They typically absolve themselves of paying high taxes and they have access to the highest quality medical care and education.

Corporate Class
these individuals are executives of major companies who have the financial strength to lobby for laws to be written in their favor. Think Jeff Bezos, Bill Gates, Mark Zuckerberg. These individuals have often reached a financial status that is powerful enough to give them an intimate relationship with members of the ruling class. Thus, they have the power to influence public policy by lobbying and forming special interest groups such as political action committees. These individuals are somewhat visible to the general public’s eye, but they are largely inaccessible to the public. Like the ruling class, they are usually interested in maximizing profit from establishing equity interest in private businesses, property, and real estate. They typically absolve themselves of paying high taxes through favorable international and domestic incorporation structures. Their incomes afford them access to the highest quality medical care and education.

Middle Class
this class confuses everyone the most. These are the individuals who perform high-level legal, financial, and medical professional services for all of the classes. This class would include lawyers since they perform high-level legal services. It would include CPAs and real estate developers since they perform high-level financial services. It would include surgeons and doctors since they perform high-level medical services. This economic class is the most visible to the public and what many would refer to as “rich.” Like the ruling class and corporate class, they are interested in private business ownership, equity, and lower taxation. Like the ruling class, their income affords them access to high-quality education; however, like the working class and underclass, they typically lack affordable access to quality medical care. Their incomes can typically sustain the general lack of affordability to receive medical services.

Working Class
any individual that performs labor or sells goods to members of the general public. This can include members who hold managerial and supervisory roles, but these roles are not executive roles. These roles typically involve managing or supporting front-line employees and/or independent contractors who have the most interactions with the general public. These managing/supervising roles do NOT call for interaction with the shareholders of the corporate entity for which these individuals work. These individuals may or may not influence public policy. More often than not, access to high-quality education proves to be financially burdensome. They lack affordable access to high-quality medical services; therefore, it is also financially burdensome.

Underclass
these are individuals who have been pushed out of the traditional job market. They include members of the “gig economy,” seasonal workers, independent contractors, self-employed individuals who sit near the inflation-adjusted poverty line, individuals who are underemployed, individuals who are unemployed, individuals who receive a fixed income due to disability, and those who cannot file tax returns because they derive a majority of their income from participating in activities that their governments have criminalized. They lack access to high-quality education. They also lack affordable access to high-quality medical services.

What Two Factors Determine Your Income?

Economists found that there are two factors that will determine how much money you are likely going to make.

1. If your career is rooted in a finance, technology, or engineering field, then you are likely to have higher income than others who are not in those fields. This pertains to individuals in every level of labor. Even CEOs of companies that focused on finance, technology, and engineering made significantly more money than CEOs of companies that did not focus on those areas. This trend has continued for the last 60 years and has no signs of stopping. In fact, fields rooted in finance, technology, and engineering are referred to as “Economic Class Jumpers.” Individuals who switch careers and go into these fields typically move into the middle class. To clarify, the income threshold to be considered a member of the middle class in America is $175,000.

2. The economic class of your DIRECT customer base will determine if you are going to be highly paid, moderately paid, or lowly paid relative to your peers.

The most vulnerable economic class to the economic class of their customer base is the middle class—individuals who render high-level legal, financial, and medical services. If members of the middle class render services to the ruling class or corporate class, they are typically highly paid. If they render services to other members of the middle class, they are typically moderately paid. If they render services to the working class or underclass, they are typically lowly paid.

Direct customers should not be confused with the economic class of the beneficiaries of goods and services. For example, you could be a psychologist. If you were a psychologist, you would likely be middle class because you perform high-level medical services.

You could provide these services to poor children on Medicaid. In this instance, the poor children on Medicaid are NOT your customers. The state’s Department of Health and Human Services is. That is the government. That is ruling class. You have a contract with them. In this example, you are a middle-class professional who serves the ruling class and the beneficiaries of your services are the children on Medicaid, members of the underclass.

By going through this framework, you can determine which careers will serve you best. Ask yourself the following questions:

1. Is this a career in an industry that an economist has proven to be an economic class jumper for the last 60 years? (Finance, Technology, Engineering)

2. Does this career put me in the ruling class, corporate class, middle class, working class, or underclass?

3. Considering my geographic location, gender, race, sexual orientation, and disability status, am I likely going to be lowly paid, moderately paid, or highly paid relative to my counterparts within my economic class? *If you are black and/or female working in the United States of America, you can expect to experience a 10%-12% penalty in pay if you stay in the United States.

4. Is my customer base in the ruling class, corporate class, middle class, working class, or underclass?

5. Considering the geographic location, gender, race, sexual orientation, and disability status of my customer base, are they lowly paid, moderately paid, or highly paid relative to their counterparts within their economic class?

Do you see how working through a framework like this allows you to make more educated decisions about your income rather than listening to someone tell you to become a mechanic because the “it’s stable” and the “money’s good?”

It’s your turn. Using this framework, play a game to see if you can determine who makes money and who doesn’t? Then check your answers by referring to the Bureau of Labor Statistics and reviewing income levels. In future articles, we will explore how race and gender affect this framework and what strategic measures you can take to protect yourself from being negatively affected.


43 Views 4 On 10 Ratings Rate it