
What’s Behind the Ballooning Upper Middle Class? Education - adventured
http://www.bloomberg.com/news/articles/2016-07-14/what-s-behind-the-ballooning-upper-middle-class-education
======
mwsherman
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.

~~~
henrikschroder
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
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."

~~~
henrikschroder
Yes, I'm not from the US, and yes, I'm always astounded by americans who think
that your income bracket defines your class.

> 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."

Sounds perfectly reasonable to me. Where I'm from, the most important marker
for middle class is that you value education very highly, and that you don't
value physical labour above any kind of work.

Obviously, the people in your example at the low end of the pay scale would
most likely be lower middle class, and those at the upper would be upper
middle class. The major distinctions between those would be how to perform
social interactions and the size of their social networks, but they all agree
that life's goal is to send your kids through college.

(As opposed to being working class which means you do not value education
highly, and you value physical labour ("real work!") higher than any other
kind of work.)

~~~
WalterSear
The american definition of middle class is "there shows on TV that are about
people like me."

~~~
eli_gottlieb
That's impossible. Almost everyone in TV shows is far richer than the
overwhelming majority of Americans can ever become. Like, _Friends_ is so
famously about a group of people who live in large, expensive, well-furnished
apartments without ever having to do commensurate work that TVTropes coined
"Friends Rent-Control" to describe it. _The Simpsons_ is about a man who can
always support a family of five people and two pets on a blue-collar worker's
income even though he quits his job to pursue a non-remunerative life-dream in
one third of all the episode plots. And then he always gets the same job back!

TV labor-economics is a special category composed exclusively of hand-waving
that lets the writers portray cool stuff without having to actually use
nothing but the idle rich as characters.

~~~
wutbrodo
> The Simpsons is about a man who can always support a family of five people
> and two pets on a blue-collar worker's income

He's a nuclear safety inspector; does that count as blue-collar? I don't
really know much about the job frankly. I don't think it's implausible that it
may be quite enough to support a family, especially in a small town.

Not to defend the realism of the Simpsons wrt his job, but I'm pretty sure the
joke is that he manages to keep his well-paid, relatively important job.

~~~
jdminhbg
The actual real-life job might not be blue-collar, but as portrayed in _The
Simpsons_ , he walks into an interview having graduated high school and gets
the job, so is pretty solidly blue-collar.

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

[http://www.economist.com/news/briefing/21640316-children-
ric...](http://www.economist.com/news/briefing/21640316-children-rich-and-
powerful-are-increasingly-well-suited-earning-wealth-and-power)

"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."

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lqdc13
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...](http://www.demos.org/blog/12/2/15/why-education-does-not-fix-poverty)

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

[http://www.nytimes.com/2015/04/01/upshot/why-more-
education-...](http://www.nytimes.com/2015/04/01/upshot/why-more-education-
wont-fix-economic-inequality.html?_r=0)

------
DominikR
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.

~~~
pm90
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.

~~~
DominikR
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.

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

Occupational licensing is actually more prevalent in the US than in EU.

> This regulatory practice is known as “occupational licensing,” and it has
> spread to cover around 30 percent of the U.S. workforce, up from just 5
> percent in the 1950s.

[http://www.brookings.edu/blogs/up-
front/posts/2015/01/26-tim...](http://www.brookings.edu/blogs/up-
front/posts/2015/01/26-time-to-examine-occupational-licensing-practices-
kearney-hershbein-boddy)

There is an explicit comparison made in the full report:

> Occupational licensing is not unique to the United States. Based on
> information gathered in 2012 from the then twentyseven nations in the
> European Union (EU), between 9 and 24 percent of European workers are
> subject to occupational licensing, which translates to between 19 million
> and 51 million individuals. These estimates of the share of the workforce
> that is licensed, even at the higher end, are still lower than the estimated
> share in the United States, which is slightly under 30 percent (Koumenta et
> al. 2014).

> Similar to U.S. states, the extent of occupational licensing varies widely
> across countries in the EU: Bulgaria, Estonia, Finland, France, Ireland,
> Latvia, Lithuania, Malta, the Netherlands, Romania, and Sweden all have less
> than 15 percent of their workers covered by occupational licensing (Koumenta
> et al. 2014). Regulation is much more prevalent in other countries, however:
> at least 25 percent of the workforce in Denmark and Germany, for example, is
> regulated, and rates are also high in Italy and Spain.

[http://www.brookings.edu/~/media/research/files/papers/2015/...](http://www.brookings.edu/~/media/research/files/papers/2015/03/11-hamilton-
project-expanding-jobs/thp_kleinerdiscpaper_final.pdf)

~~~
DominikR
I mostly talk about creating businesses (your own web service for passive
income), not getting a job, which isn't really a good way to move upwards to
the highest levels in our societies.

But yes, occupational licensing is a barrier too.

Thanks for the data/links!

------
dmix
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...](https://www.washingtonpost.com/local/dc-enclaves-reap-rewards-of-
contracting-boom-as-federal-dollars-fuel-
wealth/2011/06/27/gIQAWQC5HJ_story.html)

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

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

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white-flame
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.

~~~
morgante
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.

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

~~~
Broken_Hippo
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.

~~~
adrianratnapala
The existence of such jobs is a smell of "class solidarity" amongs some kind
of upper-middle. "We don't care what you learned, as long as you went through
the right social initiation programme".

By contrast, in software there is at least he _potential_ to do things
differently. On Friday I was on the interview commitee for a candidate who we
accepted. Now I realize that I have _no idea_ what degree she has (if any).
Her CV was so full of past projects that I never got around to looking at her
education.

It would be different for a fresh graduate, but if such a CV mentioned a
vocational school or an online course, then that would be neither better nor
worse than a CS degree.

------
dbjacobs
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.

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11thEarlOfMar
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
Maybe it's thresholds that are not adding up. Or maybe not.

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

~~~
dexterdog
So it's like autism epidemic?

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dschiptsov
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.

------
ageek123
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...](http://blogs.wsj.com/economics/2016/06/21/not-just-the-1-the-
upper-middle-class-is-larger-and-richer-than-ever/) (The key finding is that
most of the people who have "left" the middle class have gone up, not down.)

------
eli_gottlieb
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.

------
morgante
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.

------
LiweiZ
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
> 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?

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beastcoast
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
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.

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paulpauper
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
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.

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

------
known
A job in WallStreet?

