What’s Behind the Ballooning Upper Middle Class? Education

http://www.bloomberg.com/news/articles/2016-07-14/what-s-behind-the-ballooning-upper-middle-class-education

by adventured • 10 years ago

87 122 10 years ago

Clicking through to the full report, I find:

"Between 1979 and 2014 ... there were sizable declines in each of the lower three groups, with the poor and near-poor falling from 24.3 to 19.8 percent, the lower middle class from 23.9 to 17.1 percent, and the middle class from 38.8 to 32.0 percent."

My read of that is that since 1979, there has been a shift up for all income groups. There are fewer poor and near-poor, fewer middle class, and substantially more in the upper middle class.

Isn't this good news? Doesn't it fly in the face of the 'growing income divide'?

Something is not adding up...

dozzie• 10 years ago

Maybe it's thresholds that are not adding up. Or maybe not.

beastcoast• 10 years ago

I believe that is referring to share of total income, which means the rich are getting a bigger piece of the pie while the middle and lower classes are getting poorer or stagnating. In other words, inequality is increasing.

The article doesn't mention anything about How the classes are defined however.

learc83• 10 years ago

The article does talk about that but it's primarily addressing the growth in the upper middle class as a percent of the total population. From 13% to 30% in the last 40 years.

lqdc13• 10 years ago

Education doesn't help fix poverty or move people from lower middle class to upper middle class.

http://www.demos.org/blog/12/2/15/why-education-does-not-fix...

Edit: However, it will increase wages in absolute terms:

http://www.nytimes.com/2015/04/01/upshot/why-more-education-...

dmix2• 10 years ago

I always assumed it was a cross between the newish tech industry, usual finance industry salaries, fracking, and the ever expanding defense contractor industry that has been generating thousands of millionaires [1].

All of these require an education and most importantly living in the right places. These industries while booming are better at generating upper middle class with a lot of low wage jobs in between, rather than the healthy middle classes common in older industries like steel, mining, and other union jobs that fueled the 1950-70s middle class boom.

[1] https://www.washingtonpost.com/local/dc-enclaves-reap-reward...

percept• 10 years ago

I'd throw real estate in the mix (probably ahead of others), and think education has the least to do with it.

dmix2• 10 years ago

Good point, I'd also rank that #1 for upper middle class upward mobility.

merpnderp2• 10 years ago

Not all education is the same. If memory serves a recent Chronicle of Higher Ed study had gender studies bachelors making $14/hour with software engineers making $100k/year.

So maybe education is the most important factor if you only count in demand fields.

ddorian43• 10 years ago

What job can you get from "Gender Studies" beside teaching it ?

Broken_Hippo2• 10 years ago

There are scores of jobs in areas such as retail management that don't care what your degree was in, only that you have a degree from somewhere in something. In some, you'll get hired in as a fast-tracker to management with training and such, others you'll find opportunity with just a bit of retail experience (having a job through college can be enough). Sometimes the same is true for secretarial positions, and I'm guessing these sorts of qualifiers are everywhere.

merpnderp2• 10 years ago

Ironically the Chronicle for Higher Ed had the average pay for a Gender Studies professor at around $100k. Given the kind of debt kids with bachelors are leaving school with and their job prospects, it looks like gender studies is one of the worst parts of predatory higher education.

dbjacobs• 10 years ago

Given "uses absolute income thresholds adjusted for inflation", the result is not surprising. You would expect this result as long as you had real GDP growth (i.e., growth above inflation).

What this doesn't tell you is what percentage of that real GDP growth did the middle class get to participate in. And this is where the growing economic disparity is coming from.

mwsherman2• 10 years ago

The definitions of middle and rich in the report are pretty close to made up. In the latter case, the study literally uses "people who identify as rich".

The study appears to define "middle" as 90% of respondents, which is laughable. Everyone thinks of themselves as middle, no matter how far from the actual middle they are.

The obvious definition would be percentiles of income, or wealth, or other measurable advantage. This would put a lot of readers in an upper class, as which people really don’t like to think of themselves.

henrikschroder9• 10 years ago

No, if you belong to the working class or the upper class, you most definitely don't think of yourself as middle class.

Wealth and income aren't very good markers for class, there are plenty of working class members who make more money than many middle class members.

ceras• 10 years ago

Are you from outside the US? I've never heard this attitude in the US, but have heard it multiple times from people from other countries (often the UK).

Here in the US I've heard families earning from $30k to $200k, working jobs from manual labor to white collar, call themselves "middle class."

jwatte• 10 years ago

Car factory workers used to identify as "middle class;" probably still do at least of they are Union.

dragontamer5• 10 years ago

No, if you belong to the working class or the upper class, you most definitely don't think of yourself as middle class.

That's utter baloney.

I know people with $150,000 / year combined income who think of themselves as middle class, despite being in the upper 10% of income in this country.

superuser2• 10 years ago

There are meaningful qualitative and cultural differences between, say, late-career professionals with owned homes and 401ks sufficient to maintain standard of living in retirement vs. people who could maintain that lifestyle or better without even working.

That's kind of why we use the term upper middle class - to distinguish true average incomes from educated professionals (law/engineering/accounting/teaching/ middle management and formerly journalism) from landed aristocracy and CEOs of Fortune 100s.

orthoganol• 10 years ago

For what it's worth "Upper middle class" is a pretty widely used classification. I couldn't give a technical definition and don't even know if one exists, but as someone a little younger it's always seemed like a semi-cohesive group. People who are able to attend private schools and $160/4 year college programs, whose parents can float them a little if needed, who have a certain range of hobbies (e.g. yoga, skiing), who wear a certain range of fashion brands, who typically live in certain neighborhoods of cities. Some of those properties on their own don't define the group, take it as a whole. It's basically where your family is doing well and set you up with a lot of opportunities, but you're not extremely rich and you still have to work. It's most people I went to university with (which is a competitive, expensive one), and it's most people I know paying market rate rent here in SF.

rm9992• 10 years ago

I'm confused, I just read the report in the article and everything you're saying seems to be wrong. Are you referring to a different report than this one? http://www.urban.org/research/publication/growing-size-and-i...

The study appears to define "middle" as 90% of respondents

Where do they do this? I think they just defined the lower boundary as the federal poverty level of 30k and the upper bound as where "rich" starts. Seems totally reasonable to me.

In the latter case, the study literally uses "people who identify as rich".... The obvious definition would be percentiles of income

The study did use a percentile, it did not define rich people as "people who identify as rich". It looked at the approximate percentile of people who self-identify as rich (1-2%) and then found a round number (350k) that was in the range of that percentile (1.8%). This seems perfectly reasonable to me. And arguing about 1% vs 1.5% vs 2% is pointless because as I always say, arbitrary-in arbitrary-out; neither is more or less "correct" than the other.

Apologies if we're referring to different reports.

mwsherman2• 10 years ago

We’re referring to the same report and thanks for being rigorous on this. I certainly wouldn’t want to oversimplify.

Using self-identified rich to derive an income baseline for rich still means “rich” is self-identified, no? It still puts us in the 1-2% range.

I suggest that a measurable definition of rich should be those who are clearly above the vast majority of (say) incomes. Being richer than 80% or 90% of the population makes one closer to the top than the middle, so that seems like a better definition of “rich”. Agree that it is necessarily arbitrary, but I think such a definition is pretty conservative.

Regarding the 90%, it’s from this line:

about 9 out of 10 respondents identified as being in one of the three parts of the middle class

But re-reading, yes you’re right that the lower bound is not self-identified. But the author’s using the $30K number (from the poverty line) puts us at around the 5th percentile: https://en.wikipedia.org/wiki/Household_income_in_the_United...

…which effectively puts the “middle” classes at 90% of the population.

Again, thanks for the rigor and let me know if I have misread.

bradleyjg• 10 years ago

Having read your comment six hours after you made it and many that follow, I find it telling that in response to your complaint that the definitions of middle class and rich are made up in the article, you have a bunch of people coming in and making up definitions seemingly based on little more than their gut feelings of what the terms should mean.

If there's nothing approaching a consensus about what given words or phrases mean then perhaps they shouldn't be used.

HappyFunGuy2• 10 years ago

This is why we use numbers instead of words when describing easily measured things, like income in $. Easy to graph, easy to see. Words are no friend in issues of class.

forkandwait• 10 years ago

I think the best definition of class is "functional" -- what category of function do you have in the society. I see four big categories (from the top): own the society (nobility, big capitalists), administrate the society for the owners (lawyers, teachers, bureaucrats, computer programmers etc), move objects around (carpenters, forklift drivers, janitors), do criminal stuff for the society (prostitutes, drug dealers, hit men). There are different levels of skill within each, which can make a big difference in the life of the person.

LiweiZ• 10 years ago

The interesting point about measuring anything in many reports is less associated but more practical dimensions are often picked for writers to tell more engaging stories. Well, someone is able to have one model and different report APIs targeting different audience then.

akhilcacharya• 10 years ago

Even with the degree, students from low-income backgrounds get less of an income bump throughout their lives than those from wealthier backgrounds

Could this be because of the university attended?

ageek123• 10 years ago

An arguably better treatment of this topic from the WSJ a few weeks ago: http://blogs.wsj.com/economics/2016/06/21/not-just-the-1-the... (The key finding is that most of the people who have "left" the middle class have gone up, not down.)

DominikR3• 10 years ago

I see this a little bit different. There are always booming industries precisely because they aren't regulated a lot by the government which open up a venue for all kinds of people with all kinds of backgrounds to make their way to the top without a college education.

Then after some time governments start regulating that industry until only the ones with connections and degrees from good colleges have the chance to enter the industry.

This is the moment when this industry ceases to enable people based on merit (smart, working hard) to move up the social ladder.

Eventually this industry dies because of this process, because now it is not the strong willed, smartest and hardest working that make it to the top but instead it's a bunch of drones from colleges that all have the same thinking, manners and world views.

I believe this has already happened in the financial industry and I feel that in the next 1 or 2 decades this will also happen in the IT industry, which currently isn't heavily regulated.

I myself (immigrating from a Socialist country) made it in one of the richer EU countries to the top 0,5% of society without a college education (I dropped out) in the IT sector and I'm quite sure that I wouldn't have made it if this industry was heavily regulated.

I equate regulation to an entry cost to do business in some area. While regulation in itself isn't bad too many regulations can over time create an environment where only the ones that already have money can enter the playing field.

It's kind of like the rich and powerful see that there's an industry where a lot of profit can be made and the first thing they do is to immediately create entry barriers with regulations so only their own offspring can claim future profits in this industry.

pm902• 10 years ago

This is actually too broad a generalization to be useful at all. Regulations do hamper and get in the way of business by usually increasing costs. But there is usually a good reason for those regulations (e.g. we have mandatory airbags because they were deemed necessary for people's safety, despite adding to the cost of the vehicle).

I can see why you would have such a viewpoint though. What you describe is exactly what happens in many countries where corruption is more prevalent (e.g. India, Russia etc) with regulations being created precisely to keep out others.

DominikR3• 10 years ago

I mean different types of regulations many of which do not even exist in the US/UK but only in the EU.

Regulations that allow only persons with certain college degrees to create a business in some fields.

What would you say if in 10 years from now you can't create a small web business that provides you passive income if you don't have some certificate from your government that is only provided to those with a Master or PHD? (or whatever additional barriers they come up with)

For many this is a way to rise on the social ladder and I know that in the EU country I live in there are right now talks within the government of creating barriers for creating new businesses in the IT sector. (but I just know it because I know people that are directly involved in politics)

If this happens it would be especially sad because in the IT sector you generally don't need a lot of money to buy production factors. You only need to be smart and own a laptop. And this is especially great for poor people that nonetheless have the energy to go out and build something.

Who would profit from this? Big corporations like Siemens because then everyone that is interested in IT must go and work there as an employee and people who can afford to go to college for 4-6 years. Of course the people that could afford to get the degree would then be the bosses of all the others by default.

HappyFunGuy2• 10 years ago

Expanding the definition of what is Upper Middle Class is ballooning the Upper Middle Class.

dexterdog• 10 years ago

So it's like autism epidemic?

paulpauper• 10 years ago

If everyone becomes 'upper middle' then it's no longer middle. Statistically, there will always be a lower, a middle, and an upper quartile.

onion2k• 10 years ago

Only if the class system is based on statistics. It isn't. What class someone is in is defined by their values, beliefs, assets, etc. It's possible for everyone to be in one class.

Note that "lower class" isn't a thing. It's called "working class". That doesn't fit in your model.

douche5• 10 years ago

There's also a sub-working class, that is lower class, but doesn't or isn't able to work.

eli_gottlieb4• 10 years ago

It mostly just sounds like the income-to-population curve is shifting from a Gaussian to a power-law curve. The power-law curve is gonna have a longer tail, with the "upper-middle class" making up more of the population (integral of the probability density function), even while the density at any given point along that tail is much lower than the density used to be for the right one-to-two sigmas of the Gaussian.

Futurebot• 10 years ago

Also worth read is the Economist's article "An hereditary meritocracy":

http://www.economist.com/news/briefing/21640316-children-ric...

"Not only do graduate couples tend to value education; they also tend to have money to spend on it. And though the best predictor of an American child’s success in school has long been the parents’ educational level—a factor which graduates are already ahead on, by definition—money is an increasingly important factor. According to Sean Reardon of Stanford the past decades have seen a growing correlation between parental income and children’s test scores. Sort the students who took the SAT, a test for college applicants, in 2014 by parental income and the results get steadily better the further up the ladder you climb."

"And on top of spending on school, there is spending outside it: the gap between what rich and poor parents shell out for museum trips, music lessons, books and so on has been widening (see chart 2). In a world where lots of people do well on SATs, cultivating extra skills matters.

The opportunities for parental investment continue in higher education, which is ever more costly (see chart 3) but offers ever greater returns. Between 1979 and 2012 the income gap between the median family with college-educated parents and one with high-school educated parents grew four times greater than the headline-grabbing income gap between the top 1% of earners and the rest, according to David Autor of MIT, rising from $30,000 to $58,000."

white-flame• 10 years ago

Education is not "behind" it, as in causation. It's correlated. If you're "upper middle class", you can afford to send your kids to your/their pick of school, get them the right connections, raise them with financial and social sensibilities that will serve them well, distance yourself from negative influences, etc etc etc.

That special piece of paper is simply one of the common trinkets of that lifestyle. Stop assigning magic powers to it.

morgante2• 10 years ago

It goes beyond money though.

My parents technically earn below the federal poverty level. They definitely could not have afforded the expensive private education I received.

Yet from a young age it was always expected that I would attend college and a huge emphasis was put on education. Educational values endure across generations more effectively than wealth.

dschiptsov• 10 years ago

Yeah, if your parents are able to invest nearly a half-mil so you would have that paper which tells HR guys that your parents have invested neay a half-mil in you...

It is about pay-walled system of elite degrees - a status symbol brought by family money in the most cases.

BTW, there are many great teachers and courses in these elite schools (I personally love MIT and Yale online courses), so yes, there is also knowledge component in elite education.) But it is paper which makes the difference.

morgante2• 10 years ago

This definitely matches my experience.

My great grandparents were solidly upper class (they owned a large paper company). Since then, there has of course been wide variation in outcomes, from my mother making $10k/year to my aunt who owns a highly successful architecture firm.

Yet absolutely everyone in my extended family went to college. Values and norms persist longer than money.

known• 10 years ago

A job in WallStreet?

What’s Behind the Ballooning Upper Middle Class? Education

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