
America's upper middle class is growing - arcanus
http://www.wlwt.com/money/americas-upper-middle-class-is-thriving/40151566
======
whack
The statistics seem to be confirming exactly what Krugman said 5 years ago[1].
We're now living in an economy where a minority of highly skilled specialists
(programmers, doctors, bankers, lawyers) are in high demand and are doing
extremely well, and everyone else is finding out that their labor has become
commoditized. That their skills/talents can be easily replaced by the lowest
bidder, and given our technological progress, there isn't as much need for
"warm bodies" as there was 50 years ago.

We are, as scary as it seems, heading towards a two-tier society. One where
the upper middle class and rich are doing extremely well, and an underclass
that is living paycheck to paycheck.

From this perspective, the rise of extreme candidates like Trump is almost
understandable. The shrinking middle class, and the rising lower-middle-class,
are finding themselves under assault, and are reaching out for anyone who is
will to fight for them, against any scapegoat that can be blamed for this
assault. Mexicans, Muslims, China, Free Trade - all perfect targets.

Their complaints are real, but it's unfortunate that their anger is being
directed towards fictitious threats. Let's face the truth and start addressing
the underlying problem. We need to tax those who're benefiting tremendously
from the current economy, and use this money to strengthen the middle class
and help those who are falling behind. Raising the tax rates on the top 30%,
and introducing a universal basic income, is a much needed first step.

[1]:
[http://www.nytimes.com/2011/03/07/opinion/07krugman.html?_r=...](http://www.nytimes.com/2011/03/07/opinion/07krugman.html?_r=0)

~~~
794CD01
What exactly are you trying to achieve by calling a candidate as popular as
Trump "extreme"?

~~~
dragonwriter
> What exactly are you trying to achieve by calling a candidate as popular as
> Trump "extreme"?

Trump is the single most unpopular major party nominee for President in the
history of opinion polling, and was able to win largely because of the
structure of the Republican nomination process being designed (and refined
over several cycles) to lock-in the early advantage of a candidate able to
most effectively appeal to particular extreme activist constituencies early in
the process by creating large delegate majorities from small electoral
pluralities, a design which has particularly extreme effects when the field of
candidates early in the process is crowded as it was this year.

~~~
jazzyk
Racist? Yes. But in other aspects, he is actually not that extreme:

\- much less of a war-monger than Hillary, \- has been gay-friendly forever,
before it became politically expedient (see his press interviews from 2000).
\- he actually employed a lot of women in high-up positions

I am far from a Trump enthusiast, but calling him extreme is not entirely
accurate.

~~~
enraged_camel
>>he actually employed a lot of women in high-up positions

Yeah, about that... if you ever get the chance, you should look into how he
treated those women.

------
dang
Thomas Frank argues in his new book that the class distinction having the most
political effect in the U.S. right now is not that of the 1%, but that of the
professional class (roughly the same as what this study calls upper middle
class), which is doing quite well while others are not. The situation in other
western countries appears similar. I find this distinction thought-provoking
because it corresponds to what I personally observe (or at least believe I
do).

------
rm_-rf_slash
There's an old saying: "the best way to get rich is to help a rich person get
even richer."

If a small handful of people can create and sell a product that is profitable
and scales well enough, they will be rewarded.

However, the employees brought on after the company is profitable and/or has a
high valuation (>$100m) are simply seen as costs. They have to be on-boarded
and given the relatively low wage ceiling compared to the early employees,
they have ample reason to quit and move after a year or two, so they become a
turnover headache as well. Not to mention, the newbies are often the first to
go if a layoff is necessary.

So, in short, don't let yourself become expendable.

~~~
analognoise
The graveyard is full of the previously indispensable.

Everyone is expendable.

~~~
zghst
True, however everyone isn't equally expendable.

------
dragonwriter
> It's not surprising that the report shows a nation that is moving up the
> economic ladder. That's because the institute held fixed the income ranges
> needed to be in a class, adjusting only for inflation. Over time, wages have
> grown faster than inflation.

Except they haven't. [0] But family sizes _have_ gone down, and since the
methodology here defines "class" membership by a combination of income and
family size, shrinking family size looks like upward class mobility.

OTOH, sort of like the illusion of prosperity that was for a while maintained
by borrowing against inflated real-property valuations, this is another
illusion with a fairly hard limit.

[0] [http://www.pewresearch.org/fact-tank/2014/10/09/for-most-
wor...](http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-
wages-have-barely-budged-for-decades/)

~~~
ArkyBeagle
They have, and they haven't. Income in at least the US is two seperate Pareto
distributions added together. One has grown, the other has not. And two people
have "left" the middle and "joined" the upper distribution for every person
who "left" the middle and joined the lower one.

------
c3534l
So let me get this straight, the upper middle class increased by 16.5%
population.

Wealthy people increased by 1.7% op the total population.

Non-wealthy middle class shrunk by 6.6% of the population.

Poor people also shrunk, presumably by the remaining 11.6%.

So it sounds like everyone is doing well. Why is everyone angry and bitter
then in these comments? This sounds like great news to me. Don't we want there
to be more wealthy people and fewer poor people?

~~~
zghst
Somehow wealth is synonymous with evil, cheating oppressor these days...

~~~
FilterSweep
No - that depends on how that wealth is acquired, or more relevant to the past
decade, how it's _maintained_

~~~
antisthenes
In the case of land, wealth is also zero-sum, which imposes tremendous
externalities on people who have not been land owners historically and allows
the rent-extracting classes to widen the inequality gap (because the
tax/benefit ratio for land is incorrect)

------
bradleyjg
This appears to be the report on which the story is based:
[http://www.urban.org/research/publication/growing-size-
and-i...](http://www.urban.org/research/publication/growing-size-and-incomes-
upper-middle-class/view/full_report)

This WSJ article (paywall) has a fuller write-up and links some other related
research: [http://blogs.wsj.com/economics/2016/06/21/not-just-
the-1-the...](http://blogs.wsj.com/economics/2016/06/21/not-just-the-1-the-
upper-middle-class-is-larger-and-richer-than-ever/)

Marginal Revolution has a write up with an interesting graph that is credited
to the WSJ but I didn't see there:
[http://marginalrevolution.com/marginalrevolution/2016/06/the...](http://marginalrevolution.com/marginalrevolution/2016/06/the-
middle-class-is-shrinking-because-many-people-are-getting-richer.html)

In case you don't want to click through the definition of upper middle class
used is $100,000 - $350,000 for a family of three in today's dollars (adjusted
for inflation and family size as appropriate).

------
coenhyde
My theory is that the max output of the average worker has been eclipsed by an
order of magnitude by people who can communicate with the 21st century
machines. i.e programmers. Programmers are just modern day factory workers.
They are leveraging their natural ability to produce more with machines.
Unfortunately society hasn't realized that programming is a core skill, like
math and english.

Until everyone knows how to leverage their output with programming expect the
gap between the upper middle class and everyone below to grow.

If you're currently in the upper middle class and above and you are not
leveraging software either directly in your role or as an manager / owner,
then you're at risk of falling in class.

When the industrial revolution started, factory workers were paid very well,
relative to other workers (i.e agriculture). Once society realized that math /
english was a core skill required to live in the new world, factory workers as
a group grew and became the middle class. I expect the same thing to happen
with programmers if we as a society get our shit together and educate our
population correctly.

~~~
MollyR
Won't programmers just program something that just puts programmers out of
jobs. ex. Google Deepmind being trained to program itself
[https://www.newscientist.com/article/mg22429932-200-computer...](https://www.newscientist.com/article/mg22429932-200-computer-
with-human-like-learning-will-program-itself/)

Personally I think the speed of technological progress is just too much for a
multigenerational society to adapt with.

~~~
TheCowboy
I think programmers are best at automating aspects of their own work, which
makes sense because it's what they are most familiar with. Sometimes people
miss this because a lot of the "automation" doesn't seem like it, because it
still requires skills to deploy, but it multiplies the productivity of a
single programmer.

An obvious example is how much system administration has been automated or
replaced with scalable services. People used to get paid a lot just to
handcode HTML, now you have WordPress and many other frameworks.

But there is still enough demand out there for programming skills that the
market has largely been able to absorb the new comers, which is how it should
work. Innovation should free up people to do other things, but it's difficult
to arrive at those other things during sluggish growth periods.

I think the main problem is not the speed of technological progress, or
automation, but that the response to the global recession ranged from
inadequate to contrary to what economics teaches us. Because of how
politicized economic topics have become, it's difficult to avoid the current
state.

~~~
TheCoelacanth
Programmers so far have been a textbook case of Jevons paradox where
increasing the efficiency with which a resource can be used counter-
intuitively causes the price to increase.

Automating programing tasks results in programmers being more efficient
letting them accomplish the same tasks in less time. This makes it less
expensive to accomplish any given programming task which increases the demand
for programming tasks which increases the demand for programmers. This causes
the price of a programmer to increase even though it causes the price of
accomplishing a programming task to decrease.

------
arenaninja
I find this article misleading.

> ... the upper middle class ... controlled 52.1 percent of total income in
> 2014, up from 29.6 percent in 1979. But had their income growth kept pace
> with their population expansion, they'd only control 48 percent.

So their income grew from a population-adjusted 48% to 52.1%? That's
relatively minor, I wouldn't even call it thriving.

Also, don't the majority of actually rich people earn wealth via means other
than income?

EDIT: The HN title is "America's upper middle class is growing", the link has
the title "America's upper middle class is thriving". I'd agree that it's
growing, but thriving is a hard sell given what's highlighted in the article

~~~
AnimalMuppet
The class is thriving because so many more people are entering the class, not
because individual members of the class are doing so much better.

~~~
colomon
Chart which nicely shows this at
[http://marginalrevolution.com/marginalrevolution/2016/06/the...](http://marginalrevolution.com/marginalrevolution/2016/06/the-
middle-class-is-shrinking-because-many-people-are-getting-richer.html)

~~~
pastProlog
According to that chart's definitions, a San Francisco household where there
is one child and in which the husband makes $65k, and the wife makes $35k, is
upper middle class. This is not upper middle class as traditionally defined.

~~~
antisthenes
Their range for upper middle class of $100k to $350k doesn't make any sense.

That's a huge disparity of incomes and, based on the locale, it means an even
larger gap in discretionary income. In fact looking at the numbers without
looking at the discretionary income makes no sense whatsoever, as that is the
main factor of economic mobility in the first place.

~~~
AnimalMuppet
I _think_ that their approach is to define "upper middle class" as "double the
median household income". The problem is that they defined the median
household income nationally, not locally.

------
dudul
"It defines this group as having household income of between $100,000 and
$350,000 for a three-person family."

I can never take this type of article seriously. $100,000 represent a
different buying power in NYC, in Dencer or in Cleveland. Or can you use a
salary range like that completely independent of location?

~~~
bradleyjg
Rather than different buying power perhaps it represents different choices
about what to do with the same buying power.

------
MaysonL
How much of this change is simply the result of the rise in women joining the
work force? Given that something like the female labor force participation
rate is some 20% higher now than in the 70s, it seems likely to me that most
of the change reflects the rise in two-earner households and the decline in
family sizes.

------
zwieback
Nobody seems to be commenting on "the standard of living has gone up for
nearly all Americans". A basket-of-goods analysis seems a lot more interesting
than focussing on income or wealth statistics. I'm in favor of large-scale
redistribution but before we do that we need better metrics of who is in need.

------
astazangasta
This is all based on your definition of inflation and nothing else.

In the full report ([http://www.urban.org/research/publication/growing-size-
and-i...](http://www.urban.org/research/publication/growing-size-and-incomes-
upper-middle-class/view/full_report)) we can see that in Figure 1, all ranks
of income have increased their income since 1979 except those < 5%. At the
median we have ~ 30% gain in income.

This result is a product of the choice of an inflation measure called the
"personal consumption expenditure". Here
[http://www.advisorperspectives.com/dshort/charts/census/hous...](http://www.advisorperspectives.com/dshort/charts/census/household-
income-median-annual-real-growth-with-4-deflators.gif) you can see the
difference between median income as adjusted by PCE or by the more traditional
CPI.

With the former, we see a median income gain of almost 36%, and with the
latter a gain of only 7.5%. CPI adjustments also show that since 2000, median
income has actually fallen by 9% (see here
[http://www.advisorperspectives.com/commentaries/images/house...](http://www.advisorperspectives.com/commentaries/images/household-
income-monthly-median-growth-since-2000.gif)).

In other words, this result means nothing unless we believe that PCE is a
better measure of inflation than the CPI. What's the difference? As far as I
can tell (I've never studied this before), CPI measures only out-of-pocket
expenditures by households, whereas PCE measures services targeted towards
individuals as well.

Especially (from WP): "CPI measures only the out-of-pocket healthcare costs of
households where PCE includes healthcare purchased on behalf of households by
third parties, including employer-provided health insurance. In the United
States, employer health insurance is a large component and accounts for much
of the difference in weights."

In other words, what's being measured here is not that America's "upper middle
class is growing", what is ACTUALLY being measured here is the rampant growth
in health care costs, which means that more and more of American's income is
being lost to employer-provided healthcare.

This would be fine if we believed that health care outcomes were actually
improving at the rate that health care costs have been increasing (well ABOVE
the rate of inflation), but this is not, in fact, a reasonable assumption.

This is just saying, because you pay your doctor twice as much now as you did
in 1979, you are better off, and are now 'upper middle class'.

------
carsongross
Real income for even the top 5% has been flat since 2000:

[http://www.advisorperspectives.com/dshort/charts/census/hous...](http://www.advisorperspectives.com/dshort/charts/census/household-
incomes-growth-real-annotated.gif)

Yes, the upper middle class hasn't been hit as hard as the middle and the
lower classes (particularly in social ills like illegitimacy, which has gone
critical among lower and middle class whites, in particular) but it's idiotic
to say that the upper middle is thriving.

College costs, medical costs and housing costs are all skyrocketing, the
children of the upper middle class are entering an economically uncertain
world where what were previously solid paths to financial security are
suddenly precarious and intensely competitive.

And, believe it or not, some of us upper middle class folks actually care if
the rest of America is doing well, and don't feel like we are thriving when we
are watching reasonable, hard working middle and lower class folks sink into
poverty due to our feckless leaders.

~~~
bryanlarsen
That's not contradictory at all. The report says that the number of people
making more than twice the median income has increased, not that those in the
upper middle class are doing better.

~~~
nickbauman
So... is it a bad article title?

~~~
whamlastxmas
Looks like dang fixed it, "thriving" to "growing"

------
thescriptkiddie
Meanwhile, the middle middle class and lower middle class, as well as the
middle class as a whole, are not. And the top 1% take home 49.9% of all
income.

Also, this article has an auto-playing video that is loud as hell and FOLLOWS
YOU AROUND THE PAGE.

~~~
dang
Ok, we found a different URL for you and changed it from
[http://money.cnn.com/2016/06/21/news/economy/upper-middle-
cl...](http://money.cnn.com/2016/06/21/news/economy/upper-middle-
class/index.html). But please, no more all caps! (That's actually in
[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html))

~~~
bryanlarsen
Here's another from the same report:
[http://marginalrevolution.com/marginalrevolution/2016/06/the...](http://marginalrevolution.com/marginalrevolution/2016/06/the-
middle-class-is-shrinking-because-many-people-are-getting-richer.html)

