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There’s a certain type of financial confessional that has had a way of going
viral in the post-recession era. The University of Chicago law professor
complaining his family was barely keeping their heads above water on
$250,000 a year. This hypothetical family of three in San Francisco making
The Hoarding ofthe American Dream
In a new book, a Brookings scholar argues that the upper-middle
class has enriched itself and harmed economic mobility.
ANNIE LOWREY
JUN 16, 2017 | BUSINESS
Lucy Nicholson / Reuter
$200,000, enjoying vacations to Maui, and living hand-to-mouth. This real
New York couple making six figures and merely
“
scraping by.â€
In all of these viral posts, denizens of the upper-middle class were attempting
to make the case for their middle class-ness. Taxes are expensive. Cities are
expensive. Tuition is expensive. Children are expensive. Travel is expensive.
Tens of thousands of dollars a month evaporate like cold champagne spilled
on a hot lanai, they argue. And the 20 percent are not the one percent.
A great, short book by Richard V. Reeves of the Brookings Institution helps to
flesh out why these stories provoke such rage. In Dream Hoarders, released
this week, Reeves agrees that the 20 percent are not the one percent: The
higher you go up the income or wealth distribution, the bigger the gains made
in the past three or four decades. Still, the top quintile of earners—those
making more than roughly $112,000 a year—have been big beneficiaries of
the country
’s growth. To make matters worse, this group of Americans
engages in a variety of practices that don’t just help their families, but harm
the other 80 percent of Americans.
“I am not suggesting that the top one percent should be left alone. They need
to pay more tax, perhaps much more,
†Reeves writes. “But if we are serious
about narrowing the gap between
‘the rich’ and everybody else, we need a
broader conception of what it means to be rich.â€
The book traces the way that the upper-middle class has pulled away from the
middle class and the poor on five dimensions: income and wealth,
educational attainment, family structure, geography, and health and
longevity. The top 20 percent of earners might not have seen the kinds of
income gains made by the top one percent and America’s billionaires. Still,
their wage and investment increases have proven sizable. They dominate the
country
’s top colleges, sequester themselves in wealthy neighborhoods with
excellent public schools and public services, and enjoy healthy bodies and
long lives. “It would be an exaggeration to say that the upper-middle class is
full of gluten-avoiding, normal-BMI joggers who are only marginally more
likely to smoke a cigarette than to hit their children,
†Reeves writes. “But it
would be just that—an exaggeration, not a fiction.â€
They then pass those advantages onto their children, with parents placing a
“
glass floor†under their kids. They ensure they grow up in nice zip codes,
provide social connections that make a difference when entering the labor
force, help with internships, aid with tuition and home-buying, and schmooze
with college admissions officers. All the while, they support policies and
practices that protect their economic position and prevent poorer kids from
climbing the income ladder: legacy admissions, the preferential tax treatment
of investment income, 529 college savings plans, exclusionary zoning,
occupational licensing, and restrictions on the immigration of white-collar
professionals.
As a result, America is becoming a class-based society, more like fin-de-siècle
England than most would care to admit, Reeves argues. Higher income kids
stay up at the sticky top of the income distribution. Lower income kids stay
down at the bottom. The one percent have well and truly trounced the 99
percent, but the 20 percent have done their part to immiserate the 80
percent, as well—an arguably more relevant but less recognized class
distinction.
Why more relevant? In part because the 20 percent are so much bigger than
the one percent. If you are going to raise a considerable amount of new
income-tax revenue to finance social programs, as many Democrats want to
do, dinging the top one percent won’t cut it: They are a lot richer, but a lot
fewer in number. And if you are going to provide more opportunities in good
neighborhoods, public schools, colleges, internship programs, and labor
markets to lower-income families, it is the 20 percent that are going to have to
give something up.
Reeves offers a host of policy changes that might make a considerable
difference: better access to contraception, increasing building in cities and
suburbs, barring legacy admissions to colleges, curbing tax expenditures that
benefit families with big homes and capital gains. Still, given the scale of the
problem, I wondered whether other, bigger solutions might be necessary as
well: a universal child allowance to reduce the poverty rate among kids, as the
Century Foundation has proposed, say, or baby bonds to help eliminate the
black-white wealth gap fostered by decades of racist and exclusionary
government policy, as Darrick Hamilton has suggested. (So often, the uppermiddle class insulating and enriching itself at the expense of the working class
has meant white families doing so at the expense of black families—a point I
thought underplayed in Reeves’ telling.)
Yet, as Reeves notes,
“
sensible policy is not always easy politics.†Expanding
opportunity and improving fairness would require the upper-middle class to
vote for higher taxes, to let others move in, and to share in the wealth. Prying
Harvard admission letters and the mortgage interest deductions out of the
hands of bureaucrats in Bethesda, sales executives in Minnetonka, and
lawyers in Louisville is not going to be easy.
Members of the upper-middle class, as those viral stories show and Reeves
writes, love to think of themselves as members of the middle class, not as the
rich. They love to think of themselves as hard workers who played fair and
won what they deserved, rather than as people who were born on third and
think they hit a triple. They hate to hear that the government policies they
support as sensible might be torching social mobility and entrenching an
elite. That elite is them.
ABOUT THE AUTHOR
ANNIE LOWREY is a contributing editor at The Atlantic, covering economic
policy.
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