Richard V. Reeves — The dangerous separation of the American upper middle class

The American upper middle class is separating, slowly but surely, from the rest of society. This separation is most obvious in terms of income—where the top fifth have been prospering while the majority lags behind. But the separation is not just economic. Gaps are growing on a whole range of dimensions, including family structure, education, lifestyle, and geography. Indeed, these dimensions of advantage appear to be clustering more tightly together, each thereby amplifying the effect of the other.

In a new series of Social Mobility Memos, we will examine the state of the American upper middle class: its composition, degree of separation from the majority, and perpetuation over time and across generations. Some may wonder about the moral purpose of such an exercise. After all, what does it matter if those at the top are flourishing? To be sure, there is a danger here of indulging in the economics of envy. Whether the separation is a problem is a question on which sensible people can disagree. The first task, however, is to get a sense of what’s going on.

The need the author felt to be "balanced" by bringing in the politics of envy at the outset proves the point that inequality is out of hand. This will be the reaction of a significant portion of the readership and the author suggest that he subscribes to it as part of the problem but perhaps not the sole factor or dominant factor as some think.

The writer and scholar Reihan Salam has developed some downbeat views about the upper middle class. Writing in Slate, he despairs that “though many of the upper-middle-class individuals I’ve come to know are good, decent people, I’ve come to the conclusion that upper-middle-class Americans threaten to destroy everything that is best in our country.

Hyperbole, of course. But there is certainly cause for concern. Salam points to the successful rebellion against President Obama’s plans to curb 529 college savings plans, which essentially amount to a tax giveaway to the upper middle class. While the politics of the reform were badly bungled, it was indeed a reminder that the American upper middle class knows how to take care of itself. Efforts to increase redistribution, or loosen licensing laws, or free up housing markets, or reform school admissions can all run into the solid wall of rational, self-interested upper middle class resistance. This is when the separation of the upper middle class shifts from being a sociological curiosity to an economic and political problem.

In the long run, an even bigger threat might be posed by the perpetuation of upper middle class status over the generations. There is intergenerational ‘stickiness’ at the bottom of the income distribution; but there is at least as much at the other end, and some evidence that the U.S. shows particularly low rates of downward mobility from the top. When status becomes more strongly inherited, inequality hardens into stratification, open societies start to close up, and class distinctions sharpen.

Brookings
The dangerous separation of the American upper middle class
Richard V. Reeves. Senior Fellow

ht Mark Thoma at Economist's View