This group controls far more income than the 1 percent
Move over, 1 percenters. There’s a new contender for the economic star of the past four decades: yuppies.
The fortunes of the upper middle class haven’t received as much attention from economists as the country’s top 1 percent of earners, perhaps because the burgeoning wealth of the richest Americans is so jaw-dropping. But the ranks of the upper middle class have swelled during the last four decades, thanks to an economy that increasingly rewards those with college degrees and who work in offices, health care or education, according to new research from Urban Institute labor economist StephenRose.
The middle class is sometimes considered a state of mind, given that the majority of Americans will describe themselves with the term regardless of income, but Rose describes the upper middle class as households with between $100,000 to $350,000 in annual income. These are the types of families who can afford large homes, high-end appliances, going out to eat and taking international vacations.
The upper middle class accounted for 12.9 percent of the U.S. population in 1979, but had swelled to 29.4 percent of the country by 2014, Rose found.
“I actually think a lot of the resentment is less to the 1 percent than the upper middle class,” Rose said. “The 1 percent is so out of reach, but everyone’s everyday lives are interacting with the upper middle class.”
This group now control more than half of America’s income, he found. Back in 1979, it held about 30 percent of the country’s income. Meanwhile, the top 1 percent saw their share of income jump from 0.4 percent in 1979 to 11 percent. While that’s a huge increase, it’s far from the majority control now enjoyed by the upper middle class.
So who are the upper middle class? They’re mostly college-educated, white and married, the research found. Six out of 10 rich and upper-middle-class Americans now have a bachelor’s or graduate degree, compared with just three out of 10 in 1979, the report noted.
Poor Americans earn up to $29,999 annually for a family of three, while lower-middle-class families earn between $30,000 to $49,999 per year. The middle class comprises households with annual incomes of between $50,000 to $99,999. These three economic groups lost ground during the past four decades, with each controlling less share of income now than they did in 1979.
The result is what Rose calls a “change in the center of gravity” in the American economy.
Back in 1979, the poor, lower middle class and middle class controlled 70 percent of the country’s incomes. That has since been turned on its head, with the upper middle class and top 1 percent of American earners now controlling 61 percent of all incomes. The bottom three groups now control just 39 percent of the country’s income.
The findings echo research from the Pew Research Center in May that detailed the shrinking of America’s middle class. That report found the middle class had contracted largely because more Americans had climbed up into the higher-income ranks, defined by Pew as earning at least $125,000 for a family of three.
That should be a positive because it indicates that more Americans are ascending the socio-economic ladder than are sliding down. But trend is weighted with questions such as how it affects everything from consumer spending to education, given that neighborhoods are increasingly segregated by income and the middle class — America’s economic engine — isn’t thriving the way it once was.
The findings, Rose says, are “bittersweet.”
“The middle class, who have reasonable jobs and are making reasonable pay, if you ask how they compare with their parents, they like their lives better,” he noted. “But they understand they don’t have that $100,000 kitchen. They feel talked down to by the elite, which isn’t just the 1 percent.”
In the post-war decades, Rose said, “The game wasn’t as stacked because there were very few kids who came from parents with college degrees and graduate degrees.”
Rose added, “The top 31 percent have moved a little further away from the bottom 69 percent, so it feels a little bad, and the people in the middle feel disrespected. They want to have that stuff, but they don’t know how.”