The New Affluent, Why America’s Upper Middle Class Is the Real Driver of Economic Anxiety
Millionaires are now Public Enemy No. 1 in America. Polls show that a majority of voters across party lines believe the gap between rich and poor is a big problem, and that the rich have too much power. The rhetoric is heated, the targets are familiar—billionaires like Elon Musk and Mark Zuckerberg are cast as villains in a rigged system.
But as economist Allison Schrager argues in a provocative column, this focus on the ultra-wealthy misses the mark. If anyone is to blame for the anxieties and frustrations of the modern American economy, it is not the billionaires. It is the upper middle class. In other words, if you are reading this—or, come to think of it, writing it—you. Us. We are the problem.
This is not an argument against empathy or a dismissal of genuine economic hardship. It is an attempt to understand a structural shift that has transformed the American economy over the past half-century: the rise of a mass affluent class. This development is, in many ways, a success story. But success brings its own challenges. The economy has not fully adjusted to the new income distribution, and the resulting mismatch between affluent demand and limited supply is driving up prices for everything from housing to concert tickets, creating frustration even among those who are objectively well-off.
The Changing Shape of the Income Distribution
To understand Schrager’s argument, one must first understand how the distribution of income has changed. In the 1960s and 1970s, the United States had a robust middle class, and the national income distribution looked like a classic bell curve. Most households clustered around the median, with relatively few at the extremes.
Over the following decades, that shape changed. The middle class has been hollowed out, but not—crucially—because people got poorer. It hollowed out because many families moved up the income ladder, joining the ranks of the affluent. The curve flattened as more households out-earned the median.
What does “affluent” mean in this context? It depends on where you live, but Schrager defines it roughly as households earning between $150,000 and $300,000 annually, or even $400,000 in expensive coastal cities. These are not the super-rich. They are doctors, lawyers, engineers, mid-level executives, successful small business owners—people who, by historical standards, are doing very well.
Above them is a much smaller cohort—the top 1%, and especially the top 0.01%—who have pulled away even further. But Schrager’s point is that the vast majority of the increase in upper-end affluence has occurred in this “mass affluent” layer, not among the billionaires.
The Mismatch: Too Much Money Chasing Too Few Goods
This is mostly a positive development. More Americans are prosperous, fewer are poor. But it feels like a crisis because the economy has not fully adjusted to this new income distribution. Too many affluent people are chasing a limited number of high-end goods and services that feel like necessities.
Consider housing. A popular narrative blames lack of supply for the dramatic increase in home prices—up 70% since the 1980s. Supply is certainly an issue. But research also shows that the increase in the number of affluent buyers, whose wealth has grown faster than the housing stock, is a major factor. One study found that much of the increase in housing costs in cities between 2000 and 2020 can be explained simply by income growth. Higher incomes also explain why homes are bigger and have more amenities.
The same dynamic applies to other goods and services. Concert tickets for top artists like Taylor Swift can cost $1,000 or more. It’s easy to blame algorithms and the secondary market, but those prices exist because millions of families are willing and able to pay them for a limited number of seats. The market is responding to demand.
Private schools, or homes in areas with good public schools, have also seen prices soar. Even health care costs are affected: higher incomes mean more demand for innovative treatments and top specialists, driving up prices.
The Frustration of the Affluent
The consequences of this mismatch are felt differently by different groups. For those who are not part of the mass affluent class, the situation is genuinely difficult. More and more of the economy is geared toward goods and services out of their price range. They are outbid on homes, priced out of desirable neighborhoods, and excluded from experiences that have become unaffordable luxuries.
But Schrager’s focus is on a group that gets less sympathy: the affluent themselves, frustrated when their expectations don’t match reality. A family with an income of $200,000 may feel that they should be able to afford a great home in a good school district, send their kids to private school, and take nice vacations. In many parts of the country, however, they cannot. Their income, while high by national standards, is not high enough to secure the lifestyle they associate with that income level.
This frustration is real, even if it is not the same as genuine poverty. It stems from a mismatch between expectations and reality—a sense that the social contract has been broken, that hard work and success no longer guarantee the markers of a comfortable life.
The Political Consequences: Populism and Its Dangers
This frustration has political consequences. When the mass affluent feel squeezed, they become receptive to populist messages that promise to fix the system. Populism offers simple solutions: price controls, punitive taxes on the very rich, industrial policy to protect domestic industries.
These solutions, Schrager argues, are likely to make the problem worse. Price controls create shortages. Punitive taxes can reduce innovation and drive capital elsewhere. Industrial policy can lead to inefficient allocation of resources. The cure may be worse than the disease.
Moreover, focusing anger on billionaires is a distraction. However one feels about the ultra-wealthy, they are not the ones competing with ordinary families for homes in desirable neighborhoods or tickets to popular events. As Schrager wryly notes, “At the very least, you’re not competing with them for concert tickets.”
The Path Forward: Adjustment and Adaptation
How will this mismatch resolve itself? Schrager sees two possibilities.
The first is that the market will find ways to offer more high-end goods and services at lower cost. Technology could play a role here. For example, online education could make elite instruction more accessible. Telemedicine could expand access to top health care providers. Virtual concerts could offer experiences that were previously available only in person. In this scenario, the trappings of elitism become less elite, and the mass affluent find that their incomes can once again buy the lifestyle they expect.
The second possibility is that the market will not adjust, and people will have to adjust their expectations. This might mean moving to a cheaper area, taking less expensive vacations, or cooking more at home. It means accepting that an income of $200,000 no longer buys what it once did, and recalibrating one’s sense of what constitutes a comfortable life.
Neither outcome is guaranteed. Economies evolve, and when they change quickly, the allocation of resources can be thrown out of equilibrium. Sometimes the government steps in, sometimes the market adjusts. The danger is that frustrated voters will demand policies that sound good but have perverse consequences, locking in the very problems they seek to solve.
Conclusion: A Success Story with Uncomfortable Side Effects
Schrager’s column is a bracing corrective to simplistic narratives about inequality. The rise of the mass affluent is, in many ways, a success story. More Americans are prosperous than ever before. But success brings its own challenges. The economy has not kept pace with the new income distribution, creating a mismatch between affluent demand and limited supply that drives up prices and fuels frustration.
The solution is not to demonize billionaires or embrace populist panaceas. It is to recognize the structural nature of the problem and to seek market-based or policy solutions that increase supply, reduce costs, and help people adjust their expectations. In the meantime, a little perspective might help. The family struggling to afford a home in a good school district is facing a real problem. But they are not the victims of a rigged system; they are the beneficiaries of a system that has made many people prosperous, and now must adapt to the consequences of that prosperity.
Q&A: Unpacking the Upper Middle Class Argument
Q1: What is the central argument of Allison Schrager’s column?
A: Schrager argues that the widespread anxiety and frustration about the American economy is not primarily caused by billionaires or a rigged system, but by the rise of a mass affluent upper middle class. Over recent decades, many families have moved up the income ladder, creating a new class of affluent households earning between $150,000 and $400,000. This is a positive development overall, but the economy has not fully adjusted. Too many affluent people are chasing a limited supply of high-end goods and services (housing, elite education, health care, concert tickets), driving up prices and creating frustration even among the well-off. This frustration, in turn, fuels populist politics that could make the problem worse.
Q2: How has the income distribution changed since the 1960s and 70s?
A: In the 1960s and 70s, the US income distribution resembled a bell curve, with a robust middle class clustered around the median. Since then, the middle class has hollowed out, but not primarily because people became poorer. Instead, many families moved up into higher income brackets. The curve has flattened as more households out-earn the median. This has created a large “mass affluent” class, alongside a much smaller cohort of the super-rich (top 1% and 0.01%). The shape of inequality has changed, with more people at the top end.
Q3: Why is the upper middle class blamed for economic problems like high housing costs?
A: The argument is that high housing costs are not just a supply problem; they are also a demand problem. The number of affluent households with the resources to bid on desirable homes has grown faster than the housing stock. Research suggests that much of the increase in urban housing costs between 2000 and 2020 can be explained by income growth. More affluent buyers are competing for a limited number of homes in good school districts, driving up prices. This prices out those who are not affluent and also frustrates affluent buyers who find that even their high incomes are not enough to secure the homes they want.
Q4: What are the political consequences of this upper middle class frustration?
A: Frustrated affluent voters become receptive to populist messages that promise simple solutions: price controls, punitive taxes on the very rich, and industrial policy to protect domestic industries. Schrager argues that these solutions are likely to backfire. Price controls create shortages, punitive taxes can stifle innovation, and industrial policy can lead to inefficient resource allocation. Populism, in this view, is a dangerous response to a problem that requires more nuanced, market-based or policy adjustments. It also misdirects anger toward billionaires, who are not the ones competing with ordinary families for homes and concert tickets.
Q5: How might the mismatch between affluent demand and supply resolve itself?
A: Schrager outlines two main possibilities. First, the market could adjust by finding ways to offer more high-end goods and services at lower cost, perhaps through technology (e.g., online education, telemedicine, virtual concerts). This would make the trappings of elitism less elite and more accessible. Second, if the market does not adjust, people will have to adjust their expectations—moving to cheaper areas, taking less expensive vacations, cooking at home more. This means accepting that a given income no longer buys the lifestyle it once did. Neither outcome is guaranteed, and the path forward will depend on economic evolution and policy choices.
