Listen to Bernie Sanders and you will be convinced that the hated “one percent” own everything – and that everyone else on the planet is suffering. In reality, the upper-middle class is also bigger and richer than ever.
Since 1980, the number of upper-middle class households has more than doubled – far surpassing most economists’ predictions for the year 2016. Roughly 4.4% of American households are currently considered “upper-middle class,” with incomes between $150,000 and $199,000.
The housing bust of 2008 led to the idea that only a tiny percentage of elite Americans (the so-called “one percent”) had escaped the financial crisis unscathed. While the market crash did indeed drive a rift between the haves and the have-nots, the “successful” population was far larger than Sanders would have us believe. According to the Wall Street Journal, there is a significant income divide developing between the top 25%-30% of the American population and everyone else.
“Any discussion of inequality that is limited to the 1% misses a lot of the picture because it ignores the large inequality between the growing upper-middle class and the middle and lower-middle classes,” explains Stephen Rose of the Urban Institute.
America has no standard definitions for social classes, so Rose uses a system similar to how we calculate the poverty rate (allowing for family size and changes over time). Rose considers the upper-middle class to be any household earning between $100,000 and $350,000 (for a family of three). Using Census Bureau data, Rose found that the majority of individuals in this class are professionals in law, business, or medicine. In other words, they are not inheritors or chief executives like those in the “one percent.”
Rose’s new report, which shows substantial growth among the upper-middle class since 1979, does not fit comfortably with either the right or left’s political narratives. Rose’s assessment suggests that a large American minority is thriving, it also challenges the idea that upper- and lower-middle class voters are in the same boat.
The lower-middle class may have shrunk during Bush’s presidency, but it is growing under President Obama. The Pew Research Center found last month that the middle class is shrinking from both ends as the lower- and upper-middle classes grow. However the chart below seems to indicate the middle class is shrinking only from the the growth of the upper middle class.
Richard Reeves of the Brookings Institute warns that the “dangerous separation” between middle and upper-middle class families leads to social anxiety and resentment. For example, it is not CEOs and wealthy heirs driving the prices of college and rent sky-high, but the ever-expanding upper-middle class with enough money to foot the bill. This widespread feeling of resentment is one of the only reasons Sanders was able to earn so much support.
“It’s true the top 1% or top .1% have galloped away more quickly,” explains Rose, but ignoring the upper-middle class “gets in the way of an honest conversation about what’s happening with American inequality.
Editor’s note: There have always been classes and always stress between the classes. This is nothing new. However in most countries historically the ability for the poor to move up to middle class and then to upper class is difficult if not impossible. America is the land of opportunity with perhaps the most mobility between the classes. With due respect to Mr. Reeves his data is great but his interpretation is straight from the Obama socialist playbook.