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.
Not Just the 1%: The Upper Middle Class Is Larger and Richer Than Ever (WSJ.com)
Why are the most advertised Gold and Silver coins NOT the best way to invest?
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:
How Many Slots Are Open in the Upper Middle Class? Not As Many As You Might Think(March 30, 2015)
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 a 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.
