Part of the opening paragraph of this article may sound just a bit familiar if you have been reading these forums:
The main difference is that similar complaints on these forums (from the self-described “donut hole” or “middle class who will not get financial aid”) often come from those with somewhat lower incomes, like $200,000 and up (around top 5%).
But otherwise, the rest of the article suggests why the top 1% (or 5%) do not “feel rich” – the top 0.5%, and especially the top 0.01%, are gaining wealth faster than the rest of the top 1% (or everyone else), so the rest of the top 1% feels like it is “falling behind”, especially when there is much more opportunity for downward mobility (for both themselves and their kids) than there is opportunity for upward mobility. Loss aversion and endowment effect may cause people to fear downward mobility more than is actually warranted based on the effect of the income loss (e.g. going from $200,000 to $150,000 may seem unthinkable to some), resulting in the angst to avoid downward mobility.
I’ve seen it argued that part of the problem is that Americans don’t really understand class and instead simply see it as wealth or income. Great links, and a very interesting topic.
I’ll bite. Don’t want to be obnoxious, but H & I are 1%ers. We feel very lucky, but don’ think of ourselves as “rich”
Maybe because it’s impolite to be rich. Maybe because our wealth is based on earnings and savings, not inheritance.
My parents were Depression children, WWII generation, and truly worked their up to Middle class. I did not want for anything growing up, but my parents were extremely frugal, never bought on credit, and saved, saved, saved. So that ideal is ingrained - thankfully. I see many people in my bracket who spend more than they earn. Yep. People who make 7 figures can blow it all on homes, private schools, etc.
@doschicos The bubble is true, especially if it happens gradually. I’ve been Middle to Upper Middle to, I guess, Upper Income and believe me, you can always find someone with more.
I work with a company that works exclusively with the rich and have done a lot of research into how better to market to the rich. What they found is no one, literally no one, considers themselves rich, there is always someone with more. The result of this is words such as affluent, rich, wealthy, etc. fall on deaf ears to their prospective customers. Words that get a more favorable response are successful, accomplished, etc. A subtle change but has been found to be more accurately how the rich self describe themselves.
@houndmom We are in a similar situation… my mom lived in ‘project’ housing for a while growing up and was truly poor. She and her siblings got by on frequent handouts from extended relatives when her father was unemployed. I grew up middle class, parents were very frugal so were able to save for large purchases but we didn’t have a lot of frills in things like clothing. Now we are in that 1% but not .1% or .01% and living in the SF Bay Area so most of our neighbors and friends fall into that bracket as well (which makes it feel more average or at least, ‘upper-middle class’).
There was an article on one of the news sites last week when Rice announced their new pricing scheme for middle-income folks and one comment I saw was something like, “I don’t know anyone who makes $50,000.” And the tone of it (which I know you can’t tell from writing but from her follow up comments) was that she didn’t know anyone who was that wealthy and why should Rice be discounting their price for people making over $50K/year? And I kind of wanted to jump in and mention that I don’t know anyone who makes under $150K (but really, I do because there are a lot of folks commuting in to take the minimum wage jobs or tripling up on small apartments)… but really, where I live, that doesn’t get you all that far for a single earner supporting a family.
Anyway, I guess I’m mostly rambling but my partial point is that you compare yourself to the people you are around and since cost of living varies so much regionally across the US, someone earning $200k in Lincoln, NE is going to feel more wealthy than someone living in San Jose, Ca.
One of the many things one sees and learns on driving around this country rather than flying is how our fellow Americans really live. People who stay in their own zip codes or who fly from one wealthy spot to another never see this.
I really only feel poor on CC ? in general, we are squarely middle class. For a frame of reference, we will qualify for the NY Excelsior scholarship, but it’s fairly close.
Reading the clothing threads or ones about housekeepers or where to cut back on extra expenses to save are like reading something from another planet.
And people working minimum wage jobs are making waaaaaaaay less than 150 a year.
Everyone lives in multiple bubbles at any given time: economic, social, political, work, geographic, academic, etc. Some of those categories may be in the same bubble.
I work with a lot of 1 percenters and above. In this specific field (law), those who earned their way to their success never consider themselves rich because after the crash the field changed so much that they always feel that their jobs could be taken away in a minute. And that has actually happened across the legal community to high-earning, successful partners. In this community, there is a lot of anxiety. Those who come from very wealthy backgrounds often don’t exhibit the same sense of anxiety.
With regard to the above, it’s not your income that makes you feel rich. It’s the income your assets can generate. Then while you do have to worry about a recession, you don’t have to worry about losing your job.
TatinG, that’s very true. But you have to be making “partner money” long enough to invest in such assets. The buy-in to many law firm partnerships is huge and the salary jump doesn’t happen quickly. Particularly at eat what you kill firms. They are definitely rich people, but they don’t feel like it and this is why.
In other words, you are saying that only the upper capitalist class (those who own assets that are enough to retire on more than comfortably without having to be frugal in any way or needing any government or other assistance like Medicare) will “feel rich”? I.e. those in the upper labor class (those with high incomes, but dependent on their continued ability to earn income from work) will not “feel rich”.
Of course, a goal for anyone in any labor class is to reach the capitalist class – being able to retire on one’s assets (retirement savings). In practice, many will retire in the dependent class (dependent on others, including government programs like Medicare and Social Security, and/or family), and many of those who reach the capitalist class in retirement will only reach the lower capitalist class (still worried about market downturns, may feel financial pressure to live more frugally than they are used to, etc.).
@ucbalumnus I’m curious to know what you would like to happen with this information. If you could suddenly make the 1% realize they are rich, what impact do you think that would have? Would that mean they would give more to charity? Just stop grousing so much? Stop even applying to Ivy League schools so they could clear a path for the truly middle class? Is getting the rich to realize they are rich going to actually change the unequal distribution of wealth in any significant way?
I agree with the above posters that, to a large extent, people see their reality through their own bubbles. I also think that there’s a big difference emotionally and psychologically between being middle class as a kid and becoming wealthy vs. being truly poor as a kid and becoming a wealthy adult. For middle class people, moving continually “up” seems to be a way of honoring their parents’ hard work. For those born poor, it’s a sign of their own success, and they remember what it’s like to not have enough food on the table. I think the latter group is much more conscious of the bubble that they live in.
I think you’re looking in the wrong direction. Wealthy is a measure defined by the number of people who earn less than we do. If your income is in the top 1% of US incomes, 99% earn less. How can you define that as anything other than wealthy?
@austinmshauri
Because once you are in the top 1%, you don’t see the other 99% anymore, you only see the ones who are inside the bubbles of your gated community/country club/private schools/exclusive resorts…