Defining The Middle Class

Last week, when I wrote about Brazil's new middle class, I included figures that show that this group, largely the C class, is a much different middle class than an American or European one. With monthly salaries between R$1,000 and R$4,000, or US$631 and $2,526, income is just one facet that defines this new mass of consumers. In fact, identity is at the heart of the evolving socioeconomic spectrum in Brazil, as Brazilians try to redefine themselves within a rapidly changing country.

Defining who qualifies as middle class not only depends on the source, but even Brazilians themselves can't seem to decide. According to a recent survey by Data Popular, only a third of those who are considered in the C Class defined themselves as middle class; the other two-thirds defined themselves as "lower income or poor." While most low-income workers defined themselves as such, 55 percent the upper class defined themselves as middle class.

Traditionally, the middle class was something different entirely, and something closer to upper class than working class. There's entertaining insight to this traditional middle class online, with blogs like Class Média Sofre and The Classe Média Way of Life, that mock the tendencies and habits of this group of people. This socioeconomic class would be closer to the B class today: educated professionals who own their homes or rent relatively expensive real estate, who pay for private health care and education, take international vacations, buy name brand clothing, have a full-time maid, and maybe own or rent a second home in the mountains or at the beach. It's a group with disposible income, but one with a heavy tax burden. They tend to be sophisticated and worldly; they likely speak another language, at least on a basic level. The new middle class, on the other hand, has lower levels of education, and tend to be first-time homeowners. They may be taking their first trips abroad, and buying their first washing machines or flat screen TVs. They might send their children to public school, or if they can afford it, to less expensive private schools. They tend to be newer to technology and the internet, and they're far less likely to speak another language.

Given the cultural differences alone, the traditional middle class is very much at odds with the new middle class. As described in this July Financial Times article, the old middle class isn't necessarily overjoyed by the rise of new consumers.

"Unlike in India, where the old middle class benefited from the creation of new industries, such as information technology outsourcing, many in the Brazilian middle class complain of rising prices, taxes, congested infrastructure and increased competition for jobs."

In addition, according to one of the most comprehensive studies on the new middle class by Professor Marcelo Neri at the Fundação Getúlio Vargas, incomes have grown faster and by larger amounts for the least educated members of society, while in some cases salaries have actually decreased among the more educated. Coupled with inflation and a rising cost of living in cities, the traditional middle class can even see itself as at odds with the new middle class.

The traditional middle class sometimes looks down at what is now the new middle class, and some in the traditional middle class would consider themselves "culturally superior" to the new middle class: more American, tech-savvy, and literate than a more Brazilian pop-culture, newer to technology, and less well-read (or with little access to books). A traditional middle class teenager, for example, might look down on a new middle class teenager for liking sertanejo (Brazilian country music), rather than say, White Stripes, and Brazilians who have been on Facebook for years complain about the "Orkutization" of Facebook by the new middle class. It's the same dynamic you might find between urban yuppies in the U.S. and lower-income working class Americans living in rural areas, but more acute and on a deeper level, since the two groups co-exist and interact.

A key example of the divide between the traditional and new middle classes is clear in this recent article from Época Magazine, where a São Paulo marketing consultant claims to debunk the "myths and truths" of the new middle class. The traditional middle class can sometimes show disdain for Northeasterners, from the poorest region of Brazil. This type of attitude is implied - he claims the Northeast is where the "real" C Class lives, and goes on to explain that they have different consumption (and cultural) habits than the middle class in other parts of the country. But he also makes some good points about why it's important to understand the C class from a realistic perspective: "These guys were living in poverty until recently. They were going hungry, and now they have a plasma TV in the living room." And he also asserts that because of this diverse middle class, Brazil "is in search of a new identity."

Meanwhile, despite the cultural divide between the traditional and middle classes, one thing they have in common is the empowerment of women, a factor that is too infrequently credited for Brazil's economic growth. In this excellent article from National Geographic, Cynthia Gorney explains why fertility has dropped across the board in Brazil. It's not just smaller families that are helping women excel - with more educational opportunities and job prospects, they're flourishing. Women with previously little access to the formal job market are now entering in droves. As this BBC article about domestic workers explains:"Even with a basic education, job opportunities in supermarkets, telemarketing, cleaning companies, restaurants and offices beckon for women who would previously have worked as home helps for a middle-class family."

In a recent article for the Christian Science Monitor, friend of the blog Julia Michaels profiles a typical member of the new middle class: a woman who previously lived in a favela, received job training, and now earns US$1,000 a month working at an Ipanema spa. After getting help from her friends and family to "pad" her bank account, she was able to afford to buy her own home. She owns a computer and sends her two daughters to private school. It's really illustrative of the changes of the new C Class, and indicated that culture and identity will change as incomes rise and opportunities grow.

It's useful to have a realistic perspective on Brazilian social classes, since the media often provides a confusing view on what it's really like, especially with all of the excited and sometimes overblown talk of an economic miracle. The most recent example is this New York Times article from last weekend, heralding the influx of foreigners in Brazil, chasing the country's economic boom. It only glossed over the fact that many of these foreign workers are getting hired instead of Brazilians, either because of a lack of skilled local workers or because some firms prefer to import managers from the US and Europe. It also briefly mentioned that more educated Brazilians are returning to Brazil looking for jobs, a reverse brain drain, and are sometimes finding themselves competing with highly-paid foreigners with hefty relocation packages. It failed to mention altogether than the vast majority of the work visas issued are temporary, for between 90 days and 2 years, and less than 4,000 work visas were extended in 2011 (meanwhile, nearly 25,000 temporary visas were issued this year, over half of which were for a stay of one year or less). This means that while Brazilians coming home from abroad are coming for good, many foreigners coming to work aren't relocating permanently - at least not officially.

Finally, it's important to understand the financial limitations of both the new and traditional middle classes: namely, a high tax burden, inflation, and a rising cost of living, all of which reduce purchasing power and increase consumer debt. This week, UBS released its cost of living study, which showed that despite rising salaries, Brazilian purchasing power has actually declined. It is now as expensive to live in São Paulo as it is to live in New York, but salaries in São Paulo are 61 percent less than in New York. Similarly, the cost of living in Rio is amongst the highest in the hemisphere, but Rio salaries are 66 percent less than New York salaries. (Read the full report here)

So what does this mean for the middle class? The culture gap betweeen the traditional and new middle class will likely persist, but the new middle class is challenging perceptions about how increased access to higher salaries, skilled jobs, and increased consumption can change a person's standing in a country that has historically been highly stratified, and where social mobility wasn't always easy. It will be interesting to see how people self-identify in five years to define what the Brazilian middle class has become.

Comments

[Ernesto]

I'm VERY conflicted about the new middle class. One of those conflicts is that (seems to me) it's the group facing the most debt. They were poor, now they are not, so they spend and spend and spend and spend, just like Lula asked them to. I see banks offering loans, I see banks offering home financing, I see stores offering payment plans. These are ALL targeted at the new middle class. Will they be able to pay that debt and maintain their consumption habits as the prices continue to rise? As far as I can tell, the classe-media-alta ("old" middle class) is not dependent on those offers; they'd be able to spend regardless.

Everything you said in the previous article from debt to obesity, and everything you mention above, about the educational and cultural gap, is absolutely true, and not just in the south/southeast. I see it here in Recife too. I'd like to add one thing, though.

Where you live also makes a difference, at least here in Recife. If a woman who lives in a poor neighborhood (I'm thinking of Vila Santa Luzia in Recife and Rio Doce in Olinda, both of which I visit often) buys a new oven, new fridge, new washing machine, new TV, new bed, new sofa, adds a new bathroom to her home, and re-roofs her house, she feels great! She has a job, has money and is spending! She's "new middle class" and therefore Brazil can brag about the progress made in recent years. But her street is unpaved, and she lives one block away from a boca de fumo, and you can't get home after 22h unless you want to risk getting robbed, and when it rains her street floods, etc. I see a LOT of people like this here in the northeast: they have improved conditions WITHIN the doors of their home, but there's little progress in public safety, in the education and health care they receive, in infrastructure, etc. Therefore, they are STILL stuck in a "level" below the classe-media-alta.

[Eric]

The Época magazine marketing consultant is from Bahia, he probably knows more about the Northeast than the average paulistano business man. Anyway, he is all about money and consumption, that´s his job, telling big corporations how to grab people´s cash. As a "Manhattan" native, I think you see the Brazilian real middle and upper classes with some prejudice, although I get confused, since you criticize the new costumers when they use the credit landers, which are hated by upper classes. When I see a "new middle class" driving a car and buying a plasma TV I think is ridiculous because it is really ridiculous, its pretty reasonable. I would never buy a car and a plasma TV if my kids were becoming illiterate, had no health insurance and my house were falling appart, that if I had one. The original inhabitants of São Paulo knew what it was important and demand education and health of their politicians. Public schools and hospitals were as good as the private ones. They became rich decades AFTER learning a LOT of stuff, not due to some job tsunami demand for unskilled workers. São Paulo was an extremely poor state, Empire help was always denied, maybe that´s the real reason São Paulo is closer to some USA states, where everyone started with nothing, but education and health.
I´ve been to most of the Brazilian states since I was a kid, in the 1970´s, and my family spreaded all over the country. I always had this hope, that the rest of the country would make their colorful CULTURE flourish, their simple life style, not the demand for corporation junk consumption. Sure money is important, that´s why you shouldn't lose it buying things that wound make you look like an american caricature(overtaxed crap cars and gasoline, "drink and drive sertanejo parties", tang seriguela). It is ridiculous because it is really ridiculous, and if the real middle and upper classes are looking down to them, the rich have more reason now then ever before.
The government should help Brazilians to produce and export "made in Brazil" products, technology, medicine, food. Brazil should be more open to foreigners wanting to help us on that. Instead, we see the government behaving like a private company, always involved with big corporations interested in how much money class segments are able to provide. We are importing ambitious business "psychopaths", with $$ tattooed in their retinas. Small and local businesses are given no importance.Quality of life has nothing to do with disturbing consumption and imported cultures. See what just happened in England, all about stuff.
Finally, in my opinion, the real middle class look pretty stupid too, if they fell into the same consumption oriented life style.

[catherine]

Excellent article with essential information. I will check back again in the near future.

[Zackary Dugow]

This is a really interesting post! I’m throwing an amazing after party in celebration of Brazilian independence day out in NYC on September 4th 2011. Vitacoco water, whose spokespeople are Rihanna and Alex Rodriguez, is sponsoring the party as well as Veev. There’s going to be a two hour open bar with Veev cocktails, and the parties will be at the ultra upscale and luxurious Skyroom Rooftop and Dream Hotel Ava Rooftop. Email me at [email protected] if you’re interested in tickets. It’s going to be the wildest after parties in Manhattan!

Here's a link to the banner:

http://imageshack.us/f/827/brazilianindependenceda.jpg/

[RFS]

That was a very good post, RioGringa.

@Eric

The traditional middle-class is largely descended from the 'new middle class' that emerged during the early 70s, the 'Economic Miracle' times. It isn't by studying Shakespeare or Musset that people climb the social ladder, Eric.* For people to become wealthier it is necessary that the economy generates job demand - for not even the more talented people can thrive if the environment isn't conducive to improvement. São Paulo, for example, is the wealthiest state in the country, not because some petty bourgeois people knew the value in educating their kids, but instead because it was mainly to São Paulo that the developmentalist governments from the 30s to the 80s directed their investments in newer industries. (It's funny how Paulistas like to say otherwise, that they have become better off because of their virtues as a people...) Apart from that, I agree with you on some issues. It is a fact, for example, that credit demand is strongest among the poorest. But it will surprise you that the most indebted people in Brazil aren't the Northerners or the Northeasterners, but instead Southerner households.

_____

* Let's be frank; RioGringa was being kind in calling the "traditional middle class" sophisticated. The average upper middle class person is big a reader of anything, though he can look interesting because he has access to international pop culture.

[Eric]

@RFS

The poor industry development in other states forced their leaders to a more "promiscuous" relationship with their governors, mutual dependency, bureaucratization and concentration of power.When they had to "extract" what each state had to give, didn´t have enough to share with the people.

I totally disagree that São Paulo is appart from Brazil. We have here all the bureaucracy, infrastructure and corruption problems found in the rest of Brazil. And I´m not the kind of man who believe the US, Europe etc... are near perfection too.

But what made paulistas wealthier than the rest is pretty clear to me. Cattle, Chinese Tea, Coffee farmers became wealthy, were able to educate and/or graduate their kids, and since they had an industrialist oriented education, they were able to create industry using their ancestors and All investors money they could get(when coffee prices declined, making that a not so good business). It´s even the history of my family, great-granddad farmer(born in 1870), granddad engineer(born in 1896, graduated in Columbia University, NY). My dad(born in 1933) got the "Economic Miracle" you mention. Also the 1950´s were special, but he was too young. Paulistas like to tell this story because otherwise they will be lying.

In 1970-1980´s the situation, in my opinion, was quite different. Cheap cement, extreme trade barriers, huge inflation(educated people knew very well how to take advantage of that, poor people starved), low labour costs, limited access to information and media etc...

I don´t know your age, but I´ve seen what an eventual crisis do to this country.

Countries with reasonable infrastructure, housing, education and health system have less to build, therefore they can keep the basic services running during crisis.

An economy based in immediate consumption only and no infrastructure investments is like raising a big, bad and fat monster, you must feed him nonstop, otherwise he gets mad and will hurt the weakest pretty hard.

[Pedro Mundim]

Se você quer definir uma classe média em base a critérios econométricos - tipo, pertencem à classe média as famílias com renda maior que X, pertencem à classe alta as famílias com renda superior a Y etc. etc. - sempre terminará em infindáveis discussões. A meu ver, a classe média só pode ser definida por critérios psicológicos: pertencem á classe média aqueles indivíduos que consideram satisfatório o seu padrão de vida, e portanto desejam reproduzi-lo em seus descendentes. Por este motivo, esses indivíduos incorporam uma série de costumes, crenças e valores que consideram o caminho para a sua inserção e manutenção naquele padrão de vida "satisfatório". A classe média é um ponto de chegada - aqueles que a atingem desejam permanecer nela, e tornam-se conservadores, visando a reprodução ad infinitum daquele modo de vida. A conclusão a que eu chego é que a classe média, seja ela 5% ou 90% da população de um país, é sempre a detentora e mantenedora dos valores e tradições daquele país. Eu discuto esse tema com mais detalhe em meu artigo A Classe Média Universal (http://www.pedromundim.net/ClasseMedia.htm).

A aparição de uma "nova classe média" no Brasil é mera conseqüência da estabilização da economia após 1994, o que permitiu a várias porções da população fazer compras a crédito com juros aceitáveis e prazos longos, coisa que era totalmente impossível nos tempos da inflação alta. Naqueles tempos, se você quisesse comprar, por exemplo, uma geladeira, ou você pagava à vista (no máximo em três vezes com juros altíssimos) ou simplesmente não comprava. A velha classe média ainda podia adquirir ítens como um sofá, uma TV ou uma geladeira pagando à vista, mas isso estava fora de questão para a classe pobre. Quando os pobres puderam adquirir esses bens a crédito, então esse grupo "ascendeu" à classe média. Mas é duvidoso que eles tenham mudado seu modo de vida e seus costumes tão rapidamente quanto puderam preencher uma ficha de crediário nas Casas Bahia.

[Rogério Penna]

if you look for middle class at Wikipedia, there is hardly a definition of middle class, even in US and England, by economic factors.