The upper 20% are ruining America

With all the focus on how the top 1% (or 0.1% or 0.01%) are enriching themselves mightily at the expense of everyone else, Richard Reeves says that we must not ignore the problem of a much larger class of people, those who are in the top 20% of income whom he calls the ‘upper middle class’, for whom trickle down economics does work. He says that they are the hoarders of the American dream who are denying access to it for everyone else.

“The upper middle class, the top fifth, broadly, and above, not only maintain their position very nicely, but perpetuate it over generations more effectively than in the United Kingdom,” said Richard Reeves, a Brookings Institution scholar and author of Dream Hoarders: How The American Upper Middle Class is Leaving Everyone in the Dust, Why That is a Problem, and What to Do About It.

Why does this matter? It doesn’t just confirm what most Americans feel—that they are relatively stuck economically, perhaps doing better than their parents, but sometimes not even that. It shows that bashing the super-rich, the 1 percent, is politically expedient rhetoric that diverts the focus from those in America, members of both major parties, whose interests are maintained by the political system, instead of sharing the wealth. Reeves’ book, Dream Hoarders, explains how the top 20 percent protects its status, essentially by segregating educational opportunity, their housing—which is federally subsidized through the tax deduction for home mortgage interest rates—career networking and other government-supported perks.

Why is this happening? It comes down to hoarding the best opportunities in education, housing, careers and government tax policies that reinforce that status. This is not about inheritance taxes, which is a rarified subject. It’s how 40 percent of the upper middle class live near the public schools that have the best test scores. It’s how zoning in those communities only allows housing at price points well above those affordable by people earning median incomes—the real middle class. It’s about how the mortgage deduction allows people to buy even pricier homes. It’s about going to top schools, colleges and universities, and sending your kids there, and creating networks that turn into select entry-level jobs, internships and careers. In short, Reeves says all the political verbiage about equal opportunity, meritocracy and fighting inequality is sullied.

But don’t think that the upper middle class are just like the rest of the middle class but with a little more money. They have lifestyles that in other times would be considered that of the rich, though they may not think of themselves that way and indeed se themselves as struggling to make ends meet just like everyone else. It is just that the ‘ends’ they are trying ‘meet’ are much further apart than for most people.

Reeves describes their reaction when president Obama and some Democrats suggested doing away with the college savings plan known as the 529 program.

“Don’t you dare touch my 529!” was the response upper-middle-class constituents told top Democrats, Reeves said, then laying out how these folks think: “Do you know how hard it is to make ends meet by the time I’ve saved for my kids’ college, paid their private school fees, paid my massive mortgage—thanks for the [mortgage deduction] tax break; still it’s lots of money—I’ve got a skiing holiday, school trip gets more expensive, I’m barely making even here…I’m working really hard. I’m part of the 99 percent.”

“No, you’re not,” Reeves said, underscoring how the upper middle class is different. The 529 tax break was a college savings plan where you don’t pay any capital gains on money set aside and invested here, he explained. Who has these college savings plans? he asked. Forty-seven percent of people earning $150,000 or more annually, he answered.

Reeves says that politicians in both parties have learned this lesson: “Don’t mess with the American upper middle-class” and so scrupulously avoid any measures that adversely affect them. This ties in with a study by Martin Gilens and Benjamin Page that showed that politicians only respond to the concerns of the top 10% of income earners. Gilens and Page later responded to critics of their pessimism about the state of American democracy.


  1. anat says

    There is a critique of Reeves here. The main idea is that the 80-95% have not improved their income, they have maintained it relative to the size of the economy.

    This is one of the ways increasing inequality at the extreme top end distorts our perceptions. The people in the 80-to-99-percent tier may well be supporting bad social policies, but economically they are mainly accomplishing the feat of not falling behind the top 1 percent as rapidly as everyone else. As the economy grows, they are just growing with it.

    Regarding the hoarding of opportunities away from lower-middle class people, the problem is that the pie isn’t growing with the population or the economy. The advantage of having a 4 year college degree hasn’t grown -- except for the 5% of students who attend elite colleges. So the increase in college attendance and graduation merely means there are more educated people in poverty.

    The upper-middle class is running as fast as it can to stay in place, and is doing so because they know that falling behind can be dangerous in the US economy. This is due to the lack of a comprehensive safety net. This is why Reeves’ proposal for upper-middle class parents to let go and accept that their kids might move downwards is not going to convince his supposed intended audience. You can’t expect people to accept the risk that their kids might end up poor in a country that treats its less well-off folks the way the US does.

    If you want to go after the upper-middle-class’s 401(k) deductions, you’re going to have to strengthen Social Security. If you want to go after employer provided health care, it matters greatly whether or not there will be Medicare for All or a serious “public option” as an alternative. And if you want to go after college savings accounts, you need to have broadly accessible free public colleges.

    People hold onto their 529s because the public system is being dismantled before their eyes. Such tax-shielded accounts are unfair, but they’re the only social insurance system people think they have.

  2. sonofrojblake says

    there are more educated people in poverty…. The upper-middle class is running as fast as it can to stay in place, and is doing so because they know that falling behind can be dangerous in the US economy

    You know what’s dangerous? Teaching a whole swathe of society that life can be better, then not letting them experience it. At least in the old-timey US the top end knew enough to keep the peasants ignorant. Now, they’re making it so the most attractive choice of career for the peasants is learning how to kill. If another Trump enters the White House in 2024 (and would you bet against Ivanka?) I give US representative democracy until about 2030 before a literal armed uprising.

  3. says

    The upper middle class consists of people who are concerned with class mobility, and people who are not (the latter are often libertarians). I don’t think the 20% are anywhere near as unified in their politics as the 5% or the 2% -- not by a long shot.

    It’s usually the bourgeois that kick off the revolutions, not the peasants. It happens when the bourgeois are cut out of the political process by the aristocracy. In US terms that looks like the 1% beginning to erect legislated barriers that prevent any dream of upward mobility. Some of us are already trying to ally with the 50% and help them where we can, but when the shit drops we’ll be the ones arming them and helping them articulate their demands.

    I give US representative democracy until about 2030 before a literal armed uprising.

    I hope it happens sooner than that, if it does. My eyes are getting bad fast and I may have trouble seeing through a scope when I’m 75. There were massive insurrections in the 60s, they’ve just been whitewashed. It’s coming. The first time some bunch of militarized cops gun down some protesters, the establishment is going to have to start throwing sops as fast as they can, or all hell will break loose.

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