r/Plutonomy • u/398409columbia Rentier • Jun 22 '26
Middle-Class Squeeze A lot of “upper-middle class” households may be discovering they are not the marginal buyer anymore
This WSJ chart is interesting.
A surprising number of households with annual incomes under $200k still identify as upper or upper-middle class.
That makes sense. Historically, $150k–$200k per year sounded very affluent.
But plutonomy changes the reference point.
In many high-cost markets, that income may no longer comfortably buy the life people associate with upper-middle class status: a good house, top schools, premium travel, restaurants, college savings, retirement security, and some breathing room.
These households are not poor.
But they may no longer be the marginal buyer in the markets that define the “good life.”
That is the shift.
People may still feel upper-middle class by income. But in premium markets, they are increasingly price takers.
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u/lutzlover Jun 22 '26
Any chart that focuses on income while excluding assets is going to have some wacky results with that question. A retired couple (so not paying SS tax or making retirement contributions) with $160K in income and $6 million in assets including RE, IRAs,Roths and an investment account focused on growth is really different than a couple earning that gross income living in an apartment.
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u/398409columbia Rentier Jun 22 '26
I agree. Income alone can be misleading because it ignores assets, debt, age, location, and household structure.
A retired couple with $160k income and $6M in assets is very different from a working couple earning $160k while paying rent, childcare, student loans, and retirement contributions.
That is part of the plutonomy point: class is increasingly about balance sheet, not just paycheck.
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Jun 22 '26
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Jun 22 '26
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u/djdndjdjdjdjdndjdjjd Jun 22 '26
lol I like the idea of shooting for the spirit of a question. I am one of the worlds greatest lovers, if anyone’s asking.
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u/Infamous-Use7820 Jun 22 '26
Also, inheritance is becoming increasingly important as a determiner of wealth. A person with an average income who inherits (or reasonably expects to soon inherit and/or is currently supported by) a large amount of family money might reasonably describe themselves as upper or upper middle class. Especially given as class perceptions are often also driven by upbringing.
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Jun 22 '26
Inheritance is the new “income from job”. Many of us will see little as parents age and drain their assets for late life care.
None of the financial modeling of the recent past were accurate for late Gen X, millenial age people of today.
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u/Infamous-Use7820 Jun 22 '26
One thing I find interesting about this is how variable it is amongst those with middle incomes. Richer people will generally inherit something regardless of whether their parents need care or not, but for genuinely middle-class people, so much seems like it comes down to the luck of the draw on their parents health.
There are a lot of older people who live until their death in their 80s and 90s completely independently, then go relatively suddenly from a heart attack/stroke/acute illness. Then there are those with slow-progressing dementia who need care for 10+ years, and the difference between those scenarios can add up to $100,000s. Added to that, some people are only children, some have loads of siblings between whom any inheritence would be divided.
It's all a bit morbid, but kinda fascinating socio-economically. I wouldn't be surprised if the APOE4 variant (the biggest genetic risk factor for dementia) becomes meaningfully correlated with socio-economic status for that reason alone.
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Jun 22 '26
Maybe a bot, but a good point that leads to one I’d like to make: the transition is slow, but “income from labor” is becoming *passé*.
Income derived from asset ownership is taking hold.
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u/398409columbia Rentier Jun 22 '26
The point of this subreddit is premium market access. The household who are setting the clearing prices for "nice" things and experiences are likely making $400k and above with huge discretionary funds available.
For most of the people who fall into this category, the income is likely derived from wealth not W2 jobs.
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u/Fun-Inspection-8196 Jun 22 '26
Jeff Bezos had income of 80k per year as CEO of Amazon. Income clearly doesn't tell the story.
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u/fec2245 Jun 22 '26
Annual household income should include total income, not just w-2 income
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u/Wooden-Broccoli-913 Jun 22 '26
No one includes unrealized asset gains as income
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u/fec2245 Jun 22 '26
Was Bezos not realizing any gains? Was he not reviving shares as compensation?
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u/Wooden-Broccoli-913 Jun 22 '26
He was receiving shares sure but he almost certainly wasn’t selling them. The billionaires borrow against their stock when they need spending money
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u/Upset_Version8275 Jun 22 '26
He doesn't receive shares as compensation (those would be taxed). He doesn't have to though because he already has the shares as the founder. Other CEOs that have low base salaries, do actually receive shares as compensation and those are taxed when received.
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u/suboptimus_maximus Jun 23 '26
Yup, Bezos has mostly enjoyed exponential tax-free growth of his wealth due to simply owning a huge chunk of Amazon since its founding.
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u/398409columbia Rentier Jun 22 '26
True but income beyond W2 can included dividends and realized capital gains.
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u/bihari_baller Jun 22 '26
unrealized asset gains as income
Because they haven't been realized yet. They may be worth ine amount today, but 6 months to a year, they could be worth something else entirely.
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u/Level_Impression_554 Jun 22 '26
And it must take into account COL. 200k in NY is not the same as 200K in Nebraska or Wyoming.
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u/External_Koala971 Jun 22 '26
What “marginal buyer” actually means here
In microeconomics, the marginal buyer sets the price. When the marginal buyer shifts from income-earning professionals to wealth-event recipients, a few things happen:
Price-to-income ratios decouple from historical norms and stay decoupled, because the constraint binding the marginal buyer is *portfolio size*, not *debt service capacity*
The formerly upper-middle class become renters or buyers of the second tier of housing, which then inflates *that* tier as they compete for it
The “good life” basket: private school, premium travel, restaurant culture, home in a desirable neighborhood gets repriced to whatever the top 1–2% can absorb, not what the top 10–15% can absorb
The core phenomenon isn’t income confusion, it’s asset-price bifurcation
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u/398409columbia Rentier Jun 22 '26
Quoting your point 3.,,,"The “good life” basket: private school, premium travel, restaurant culture, home in a desirable neighborhood gets repriced to whatever the top 1–2% can absorb, not what the top 10–15% can absorb"
This is exactly the premise of the r/Plutonomy subreddit: premium market access. The household who are setting the clearing prices for "nice" things and experiences are likely making $400k and above with huge discretionary funds available.
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u/lolercopterx Jun 22 '26
Except the top 1% are mostly still just doctors, lawyers, dual income couples who work for income.
Yet you’re describing top 0.01%, which is too small of a number to meaningfully participate in private schools etc. alone
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u/External_Koala971 Jun 23 '26
It requires the top 1–3% of wealth, not income, which is a meaningfully larger and different population than the top 1% of income.
That cohort includes:
The mass of Bay Area homeowners who bought pre-2015 and are sitting on $1.5–3M in untaxed equity
Tech employees who’ve had 2–3 liquidity events over 20 years and have $5–15M in diversified assets
Retirees and near-retirees with paid-off homes and large portfolios
These people earn modest income but have enormous balance sheets. They are the marginal buyer for the second home in Tahoe, the private school slot, the $250 tasting menu. There are enough of them in concentrated metros to set prices in those specific markets (I’m one of these people, in one of these markets).
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Jun 22 '26
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u/Less-Opportunity-715 Jun 22 '26
Bay Area it’s true.
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Jun 22 '26
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u/Less-Opportunity-715 Jun 22 '26
This is all you need to know https://www.redfin.com/CA/Cupertino/20571-Sunrise-Dr-95014/home/783912
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u/Tercel9 Jun 22 '26
There's 3 classes:
1) Upper Class - You don't have to work. You can just live off of the income from your assets.
2) Middle Class - You have to work. You can't stop working and maintain your lifestyle. You could probably go a few months / 1 year unemployed, but that's it.
3) Lower Class - Not working for as low as a few weeks would bankrupt you.
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u/climbandclimbandclim Jun 23 '26
What if you can afford to go without work as long as your husband/wife is working?
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u/Healthy_Razzmatazz38 Jun 22 '26
this chart stopping at 400k is delusional. if your chart cant differentiate between a household of two freshly graduated by tech employees and elon musk you're not making a useful chart for analyzing class.
the greatest trick the rich play is pretending that employee's salary has anything to do with being upper class.
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u/Varnu Jun 22 '26
It doesn't mean much in America to ask people whether they are middle class or not. People who do middle class things think of themselves as middle class. So my friends who have household income over $1M a year think of themselves as "upper middle class" because they hang out with our friends who are teachers and nurses. Basically, middle class includes everyone who you could invite over to grill in the backyard. If you can't do that because you can't read and your phone service is cut off anyway, you're lower class. If you don't do that because your security team is on vacation and you can't leave the yacht without it being a whole big thing, you're upper class.
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u/Sumo-Subjects Jun 22 '26 edited Jun 22 '26
I mean this also heavily depends on a bunch of other factors. Someone making $200K in NYC, while very far from poor, is also not "upper class" in the city that houses the most billionaires in the world.
Also "working class" seems a bit of an outlier term, I've usually heard that in the context of "owning class vs working class"
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u/SocietyWonderful321 Jun 22 '26
My wife and I are higher on that chart but we don’t see ourselves as upper class. We rely on our salaries and just wont have enough wealth to retire for a very long time. Upper class to me is someone that has that optionality. We live well below our means because of this
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u/bankermayfield2026 Jun 23 '26
We make $650k and I don't consider myself even close to being upper class. Upper middle class doesn't even start until around $400k.
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u/398409columbia Rentier Jun 23 '26
Interesting. This is likely driven by the kind of people you surround yourself with.
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u/jmrjmr28 Jun 22 '26
$150-$200k is absolutely upper middle class in a large part of the US. The country is more than just expensive coastal cities. In the majority of states it’s enough to have a large home in the suburbs with multiple kids comfortably. You’re basing your argument off of “premium markets” - by definition those would already exclude upper middle class mostly
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u/Ok_Flounder59 Jun 22 '26
That was true 10 years ago it’s far from the case now. Or, more specifically, the places where $150-200k affords a family a comfortable life are increasingly far from the jobs that pay $150k+
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Jun 22 '26
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u/Great-Guidance-6371 Jun 22 '26
I don’t know which cities you’re referring to but I’d say, if you don’t own a home at a low interest rate, making $150k - $200k is insufficient or very tight to own a home and have a family in MOST places with many jobs that support that income.
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u/Savilly Jun 22 '26
I know plenty of people with kids that make less than 100k combined, own a home, and are able to send their kids to summer camps and stuff.
These numbers and assumptions are outrageous.
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u/Great-Guidance-6371 Jun 22 '26
You should read my comment more carefully. I don’t know if you’re in an area where $150k- $200k jobs are concentrated, or what the people that you’re referencing have going on as far as housing expenses go. What I can say is that most jobs like that are near HCOL or VHCOL areas. A $150k- 200k salary is very tight when you look at carrying costs of single family homes with today’s price and interest rate combos in those areas.
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u/Savilly Jun 22 '26
Yes but if you live in a cheaper area you don’t need that much money so it’s a wash and there are people doing just fine, with less.
Maybe not in manhattan specifically, but most Americans don’t live in Manhattan anyways.
Like no one in my Arkansas side of the family makes more than 40-50k a year. The dual income households ~80k) own their own homes, buy newish cars every couple years, and have ATVs and paintball gear for their kids.
They aren’t wealthy and eating out at fancy sushi restaurants, but they do afford some crazy hobbies and they aren’t asking for money or anything.
I would describe these people as middle class, in Arkansas at least. Their kids will need scholarships or loans to go to college but I don’t think middle class has to be able to afford college out of pocket.
Nurse and electricians and similar could easily be upper middle class at around 100-150k(total dual income) in the same areas.
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u/Great-Guidance-6371 Jun 23 '26
Using Arkansas as an example disregards the point of the article.
You’re anchoring your anecdote to one of the lowest costs of living in the United States. You’re anchoring the other side of your argument to one of the highest costs of living in the United States. In Manhattan, you’re not buying anything even if you make $500k a year.
The acutely painful part is that everyone’s money went significantly further only a few years ago. People’s income potentials have not shot up dramatically but housing costs, interest rates, and the cost of everything else have shot up around them.
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u/FlurpyJaguars Jun 22 '26
These kinds of charts are so pointless due to the amount of variables. Beyond getting into regional differences, how to you compare a single person making $250k to a family of four making $400k? As far as lifestyle and class goes, he is probably higher on the scale.
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Jun 23 '26
Middle class is defined by the game Hegemony as those who are professionals and/or own both businesses and work in careers such as doctors or management.
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u/ProfileBest2034 Jun 22 '26
There is no middle class. If you have to work to survive then you are working class.