What's left unsaid is much of
the upper middle class is prospering due to privileged positions that are
increasingly at risk of disruption.
What does it take to be upper
middle class? According to one analyst, the answer is: at least $100,000 a year
for a family of three. The Growing Size and Incomes of
the Upper Middle Class (Urban Institute).
The paper claims the upper
middle class has grown from 12.9% of the population in 1979 to 29.4% in
2014--in essence, the shrinkage of the "middle class" is not just
from households dropping down the ladder but millions of households climbing up
to the upper middle class.
While the evidence broadly
supports this secular shift--the concentration of income and wealth in the top
20% increases while the wealth and income of the bottom 80% stagnates--I think
the claim that 30% of all U.S. households are upper middle class grossly
overstates the reality, which is it's become increasingly costly
to even qualify as middle class, never mind upper middle class.
I've explored these topics in
depth over the past few years:
What Does It Take To Be Middle
Class? (December 5, 2013)
If we measure financial
characteristics of middle class status rather than income, we find $100,000 is
borderline middle class, not upper middle class.The
above essay lists the baseline of 10 minimum metrics of middle class status. In
high-cost regions, $100,000 barely qualifies a household as middle class; to be
upper middle class, households must earn closer to $200,000.
A household income of $190,000
is in the top 5% nationally. According to the Social
Security Administration data for 2013 (the latest data available), individuals
who earn $125,000 or more are in the top 5% of all earners. Two such workers
would earn $250,000 together. The 2.8 million households with incomes of
$250,000 or more are in the top 2.5%.
I think it is reasonable to
define the 12% of households earning between $125,000 (top 15%) and $350,000
(the cut-off for the top 1%) as upper middle class. This is around 14.5 million
households, out of a total of 121 million households.
This is a far cry from 30% of
all households qualifying as upper middle class.What
we're seeing is the inflation of "middle class" to "upper middle
class," just as a B grade is now an A, and jobs that don't require a
university degree now nominally require a bachelors degree or higher.
The increasingly desperate
effort to reach the upper middle class is evidenced by a slew of books and
articles on what it takes to succeed in an increasingly winners-take-all
economy, and on the anxieties of those trying to "make it":
note that most of the articles are published in magazines/media outlets that
appeal to the very upper middle class that's anxious about maintaining their tenuous
hold on prosperity:
The War on Stupid People:
American society increasingly mistakes intelligence for human worth (The
Atlantic)
The Limits of "Grit" (New
Yorker)
The Geography of Genius: A
Search for the World's Most Creative Places from Ancient Athens to Silicon
Valley (via Ron G.)
I've laid out my own
bootstrap blueprint in Get a Job, Build a Real Career
and Defy a Bewildering Economy (hint: don't cling to
credentials and privilege as your strategy--acquire skills and entrepreneurial
income streams).
What's left unsaid in all these
articles is much of the upper middle class is prospering due to privileged
positions that are increasingly at risk of disruption--a
topic I discussed in If You Want More Jobs and More
Job Stability, Disrupt More, Not Less (June 21, 2016) and How Many Law Schools Need to
Close? Plenty (June 20, 2016).
And just a reminder: of the
supposed 30% of households who are upper middle class, only the top 10% have significant
wealth-building assets: that tells us in no uncertain terms
that two-thirds of the supposedly upper middle class 30% are only middle class.
