Source:, accessed 8/21/2008 at 6:11 PM EST


Econ 223


Prototypes Used During the Course


          To make the Course more concrete, we follow seven prototypical families as they accumulate human and financial capital, work, spend and insure.  We developed the five primary prototypes based on a New York Times’ classification system developed in 2005 to frame a series of articles on class in the US.  The system determines a family’s class by considering education, income, occupation and wealth (New York Times, 2005).[1]  The five prototypes are also supplemented with profiles of a retired couple and a very wealthy dual-career couple.


The New York Times’ system sorts families into five classes (lower class, working class, middle class, upper middle class and upper class) based on the average ranking the family receives on: (1) the prestige of the main earner’s occupation, (2) the level of family income, (3) the level of education of the main earner and (4) the families net worth. Families with average ranking falling in the lowest 20 percent of possible rankings are classified as lower class. Families falling in the next 20 percent of possible rankings are classified as working class.[2]  Families falling in the middle of possible rankings (3rd 20 percent of possible rankings) are classified as middle class. Upper middle class families have scores falling in the next 20 percent and upper income families fall in the highest 20 percent.[3] 


The lower class family (family in the lowest 20th percentile of class ranking) is headed by Shamila a twenty-six year old, single mother living in Miami, Florida with a two year old daughter, Samantha, and an eight year old son, Ackeen.  She has been on and off welfare during the last eight years. During one welfare spell she completed her General Education Diploma (GED). She has worked in fast food restaurants, served as a nurse’s aid and worked in a child care center.[4] Her earnings have ranged from $0 to $22,000 per year. Currently she is earning $400 per week as a nurse’s aide. She has access to medical care through her employer. Her youngest child receives health coverage through Medicaid.[5]  Her eight year old has no medical coverage. Shamila lives with her mother. She would like to start a family child care home. Both Shamila and her mother have been putting aside money to help adapt her mother’s home for family child care. Running the home could provide her with more income and allow her to stay home to care for her disabled mother and her two children.  Shamila’s dream is to own and run a child care center.  Shamila does not own a car. She uses public transportation to get to work. 


The working class family is a two-parent family with three children. Both the mother and father graduated from high school, but have not attended college.  The father, Sean, who is 35, works as a security guard at an apartment complex in downtown Boston and the mother, Marie, is 33 and works part time as a beautician. She earns $10,000 to $15,000 per year. The father earns between $30,000 and $35,000 per year depending on overtime. Sean pays $400 per month for medical insurance for his family through his employer’s group health insurance.  Sean’s employer has a defined contribution pension plan (i.e., a 401(k) plan), but Sean does not participate. The children, Sean Jr., Kelley and Patrick, are 15, 13 and 11. The family has a car worth $5,000 and owns their furniture and appliances. They live in a triple decker in South Boston. They pay $1000 a month in rent. Shawn helps his landlord maintain his properties and receives a discount on his 3 bedroom apartment (going price $1300-$1500 per month). The family has $500 in a checking account and $2,000 in a savings account.


The middle class family is a 45-year old divorced father of two, Aleks, who supervises the computer room for a large corporation in Chicago.  He earns $60,000 per year and does some computer consulting on the side.  He generally earns $5,000-$10,000 per year from his consulting.  Aleks received technical training in computers after he graduated from high school, but did not attend college.  Aleks pays child support for his two sons, Sebastian and Thomas.  Sebastian is 18 and will graduate from high school this year.  He plans to attend the University of Illinois at Chicago Circle. Thomas will begin his junior year at the University of Illinois at Urbana-Champaign in the fall.  Alek’s has a car worth $10,000.  He also owns a condo for which he paid $150,000 ten years ago. He currently has an $113,000, 30 year, 6% fixed-rate mortgage on the condo.[6] The condo is currently worth $268,000.[7] Alek’s employer has a defined contribution pension plan (i.e., 401(k) plan) and a health insurance plan. The company pays for Aleks’ health insurance and allows Aleks to buy health coverage for his sons for $250 per month.  The company contributes 5% of Aleks’s salary to the company’s 401(k) plan.  In the past Aleks has matched his company’s contribution to the 401(k) plan, but is not currently doing so because of his sons’ college costs.  At present he has a $60,000 balance in the 401(k) plan.  He has $1,000 in a checking account and $5,000 in a savings account.  His ex-wife, Vera, is self supporting and has remarried.


The upper middle class family is a fifty-five year old single registered nurse, Ana Maria, who lives in Los Angeles. Ana earns $80,000 to $85,000 depending on the number of hours she works.  She works as a nursing supervisor at a large not-for-profit hospital in LA.  Ana began her nursing career after she received her associate’s degree in nursing from the local community college.  She has used the hospital’s “RN to BSN” program to complete her Bachelor of Science degree in nursing.  Ana helps her parents financially and is also helping to pay the college costs for one of her nieces, Natalia.  Ana has a car worth $15,000. She purchased a condo for $55,000 in 1979. The condo is currently worth $350,000.  She has paid off her loan for the car. She refinanced the condo to help pay for her niece’s, Natalia, undergraduate education at the University of Southern California (USC). Her current mortgage has a balance of $105,000. Natalia is in her first year at USC and has a half tuition scholarship. She is living at home, working 15 hours per week and taking out $5500 per year in student loans   Ana’s employer provides health insurance and offers its employees the choice of either a defined benefit or a defined contribution pension plan. Ana chose the defined benefit pension plan and has been part of the plan for 20 years. Ana has $5,000 in a checking account. She has placed the $60,000 for Natalia’s last three years in college in certificates of deposit (CDs) that will come due at the time tuition payments need to be made ($32,000 total-$16,000 after Natalia’s scholarship). She also has an additional $75,000 in a five year certificate of deposit.  


The upper class family is a two-parent family with two children, Jeffrey and Mary.  Jeffrey is 10 and Mary is 7.   Steven, the father who is 40, works for a major Houston oil company as a petroleum engineer and earns $97,500 per year. Steven’s company contributes 10% of Steven’s salary to the company’s defined contribution pension plan and Steven contributes 5% of his salary to the company’s optional 401(k) plan. His 401(k) plan is now worth $50,000 and he has a balance of $75,000 in his pension plan. The assets of both plans are invested in mutual funds and company stock. Steven’s company pays for his health insurance and Steven pays $250 per month to provide health coverage for the two children through the company’s health plan.  Pamela, his wife who is 36, is an elementary school teacher.  She earns $40,000 per year. She pays 6.4% of her salary to the Texas Retirement System’s defined contribution pension plan. She pays $50 per month to obtain health coverage for herself through the Texas system. The family has two cars.  One car is worth $30,000 and the other is worth $15,000.  They have a $10,000 auto loan outstanding.  The family has a single-family home in a Houston suburb which they purchased eight years ago. The home is currently worth $310,000. They have a $100,000 mortgage on the house. Steven and Pamela have $5,000 in a checking account and $20,000 in a money market fund.  They have $24,000 in stocks, bonds and mutual funds in a Traditional IRA and $16,000 in index mutual funds and bonds in a Roth IRA.  In 2001, Steven and Pamela went to see a financial planner since they were concerned about paying for Jeffrey and Mary’s college educations. The financial planner recommended that they contribute to a Roth IRA since Roth IRA contributions can be withdrawn to pay for college.


We round out the profiles with a wealthy dual-career couple, a retired couple and a recent college graduate.  The wealthy family is a dual-career, married couple with two children, Christopher (age 5), and Bethany (age 3).  The mother, Sarah (age 35), is an associate on the partnership track at a prestigious corporate law firm in New York City.  Her annual salary is $120,000, and her annual bonus ranges from $50,000 to $125,000, depending on firm profitability and individual performance.  Her husband, John (age 37), is a newly-promoted managing director at a major investment bank in New York.  His current salary is $250,000, and his annual bonus has ranged from $500,000 to $900,000, depending on his individual performance, and his department’s and firm’s profitability.  Sarah and John both commute from their home in Weston, Connecticut, which they purchased in 2000 for [$1.1 million] and currently is worth [$1.6 million] .   Their outstanding mortgage balance is around [$600,000].  In addition to graduating from college, Sarah has a law degree from Columbia University, and John has a MBA from  Harvard Business School.   Sarah and John employ a full-time, live-in au pair to help care for their children.  They own three cars (no car loans):   a 2000 Volvo v40 wagon (used primarily by the au pair) worth $9,400, John’s 2003 Porsche Boxter worth $27,300, and their train station car, a 1997 Honda Accord worth around $4,500.   John and Sarah have contributed $50,000 each to two tax-deferred college savings (“529”) accounts for their children, with the intent to grow total contributions to $150,000 each over the next few years.  They have over [$500,000] self-invested in various indexed funds, bonds and commodities.  Both John and Sarah have made the maximum-allowable annual contributions to their IRA funds since they began working; John’s currently is worth $31,000 and Sarah’s is worth $28,000.   They also have paid off their undergraduate and graduate school student loans.    John contributes the maximum-allowable annual amount to his firm’s (non-matching) 401(k) plan, which balance is now worth approximately $138,000.  Sarah’s law firm matches 50% of each employee’s contribution to the firm’s 401(k) plan, and Sarah has contributed the maximum-allowable amount every year.  Her 401(k) is worth $208,000 today.   Sarah’s firm pays for her health insurance coverage; she pays [$300] per month to provide health coverage for the entire family.


The retired family is a married couple, Erik (68) and Katlyn (65), with 2 grown children and 3 grandchildren (ages 15, 12 and 9).  Erik joined 3M Corporation after he graduated from college.  Katlyn married Erik before she finished college and has never worked.  Erik retired from 3M when he was 55.  He receives a pension of $48,000 a year from 3M, and also receives Social Security payments of $22,272 per year.  Erik and Katlyn receive income of about $22,000 per year from their investments.  Both Erik and Katlyn are on Medicare.  They have Medigap insurance that costs $3,600 per year.  The family has two cars (a 2004 Cadillac Deville worth $30,000 and a 2000 Chevy Monte Carlo worth $5,000).  When Erik retired, he and Katlyn traveled for a few years and then sold their home in Minneapolis and moved to Phoenix.  They purchased a new 3-bedroom home in a retirement/resort community which is now worth $250,000.  They paid in full for the house and have no mortgage.  Erik and Katlyn have $10,000 in a checking account and $40,000 in a money market fund. The couple has about $200,000 in equities ($100,000 of this in 3M stock) and $400,000 invested in bonds, REITs and CDs.  Erik has $120,000 in 3Ms 401K plan.  Erik purchased various mutual funds with his contributions.  These funds are now worth $95,000.   3M contributed company stock to Erik’s 401K plan. This stock is now worth $25,000.  Erik has assets worth $40,000 in a traditional IRA and $20,000 in a Roth IRA. He intends to begin distributions from the IRA and 401k when he is 70 ½ and distributions are required.

The single, young working prototype Bridget (29) is a CAD drafter (working towards earning her architecture license) at an architecture firm in Watertown, Massachusetts where she has worked for the three years following her education (college and a graduate degree).  Bridget earns almost $43,000 per year in salary, and also does some interior design consulting on the side that generates about $12,000.  Bridget’s firm pays for her medical coverage (a PPO with a $1,500 deductible).  In the three years she has been working, Bridget has contributed 10% of her salary to her employer’s 401(k) plan, and the firm has matched 50% of her contributions.  Bridget completed her Master of Science in Architecture Studies at the Massachusetts Institute of Technology, and is still has $36,500 of student loans outstanding.  In addition, she is financially assisting her parents who lost their savings in the dot com bust in 2000.  Currently, Bridget has $1,500 in a savings account and $3,000 in a checking account, and her 401(k) is worth approximately $19,000.    She also owns a car paid for by her parents (a 1999 Honda Civic worth $8,000), which she uses to commute to work from her rented ($950/month) one-bedroom apartment in Cambridge, MA.  Bridget currently carries balances on her credit card since she can not meet all her current expenses.  In the near-term, Bridget’s goal is to complete her registration exams that will allow her to practice architecture professionally, and to repay her student loans and credit card debt.  In the long-term, Bridget is thinking about going back to California, where she is originally from, where she would like to start her own architecture practice.

[1] The information on income, education and occupation were developed by Andrew Beveridge and Susan Weber, Department of Sociology Queens University, using 2000 & 2003 public use micro sample data from the Bureau of the Census. The wealth data was developed by Edward Wolff, Department of Economics New York University using the Federal Reserve Board’s 2001 Survey of Consumer Finance. See New York Times (2005) for details. 

[2]  To be more precise, families falling in the second quintile of the distribution of average scores (i.e., falling between the 20th percentile and the 40th percentile of the distribution) are classified as working class.

[3] To be more precise families falling in the fourth quintile of the distribution of average scores (i.e., falling between the 60th percentile and the 80th percentile of the distribution)  are classified as upper middle class and families above the 80th percentile of the distribution of average scores are classified as upper class.

[4] The earnings for various occupations were estimated on the basis of the National Compensation Survey of July 2003 (US Department of Labor, 2004).

[5] The child qualifies because family income is below 133% of the Federal Poverty Level ($20,800 in 2005 for Florida’s Medicaid program).

[6]  All mortgage calculations were made using the mortgage calculator provided by Commerce Clearing House on their website

[7] Current values for all properties were calculated using the House Price Calculator provided by the Office of Federal Housing Enterprise Oversight on their website

To make the Course more concrete, we follow seven prototypical families as they accumulate human and financial capital, work, spend and insure.  We developed the five primary prototypes based on a New York Times’ classification system developed in 2005 to frame a series of articles on class in the US.  The system determines a family’s class by considering education, income, occupation and wealth (New York Times, 2005).[1]  The five prototypes are also supplemented with profiles of a retired couple and a very wealthy dual-career couple. 

Home  Outline &Readings  Description  Assignments Requirements

© Ann Dryden Witte, 2006