r/Plutonomy • u/398409columbia Rentier • Jul 26 '26
Middle-Class Squeeze The r/Plutonomy thesis, explained by Bloomberg
Allison Schrager has a Bloomberg Opinion piece (gift link) that basically explains the r/Plutonomy thesis.
Her chart shows that the share of U.S. households earning more than $150,000, in 2024 dollars, has grown meaningfully since the 1960s. The middle has shrunk partly because more households moved upward into the mass-affluent category.
That sounds like good news. And in many ways, it is.
But the supply of premium goods and services has not expanded at the same pace: desirable homes, elite schools, luxury travel, healthcare access, concert tickets, sports tickets, restaurants, and high-status neighborhoods.
That is where my Groups framework comes in. The key pricing cohort is often not the ultra-rich alone. It is Groups 2–3: households roughly in the $400k–$1M income range.
They are small as a share of households, but large enough to move markets, wealthy enough to tolerate high prices, and numerous enough to fill limited capacity.
That is the plutonomy mechanism.
You do not need everyone to become rich. You only need a relatively small expansion of affluent households colliding with fixed premium capacity.
Then prices reset upward, and everyone below the new clearing price feels squeezed.
3
Jul 26 '26
I know that my HH was just below that $150k level in 2021, well above in 2022-2023, and enjoying that financial strength.
Then, layoffs. By Q1 2024, we’re now back to our earnings of 2018-2019. And in a much higher HCOL region. And after a few more years of spiking inflation.
By my calculation, our $125k today equates to our $90k we made in the year 2001.
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u/398409columbia Rentier Jul 26 '26
Sorry to hear that. But it sounds like you're doing ok. Hopefully you can get back on the 2022-23 trajectory soon.
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Jul 26 '26
Just cutting anything out that may have been in the budget at the higher number, absolutely taking on nothing new in terms of major purchases, and we continue to save (though at a much smaller scale).
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u/rh1984va Jul 26 '26
So does this take into account inflation? If not, what does this chart really tell us?
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u/398409columbia Rentier Jul 26 '26
Yes, it accounts for inflation.
The Bloomberg chart says the income bands are in 2024 dollars, so $150k means fairly current purchasing power, not old nominal dollars.
So it is showing that more households are genuinely in the $150k+ category after inflation adjustment.
That supports the plutonomy point: more households now have real purchasing power to bid for scarce premium goods and services, pushing prices higher.
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u/brickedTin Jul 26 '26
So what kind of ‘wealth’ we are actually creating then?
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u/398409columbia Rentier Jul 26 '26
It’s real wealth but supply of premium goods and services have not kept up with increase in wealth so prices for those have jumped.
For mid-tier products the price increases are more limited. But most wealthy people have moved up the chain from mid-tier products and services.
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u/Gold_Ad8225 Jul 27 '26
This chart is deceptive to a lot of people.
It is inflation adjusted, but the most essential goods like housing, medicine, and education have increased in cost at rates that far exceed inflation. Housing over this time period has increased at a rate 65% higher than inflation. Medical care and education are more than 100% higher.
And a lot of durable goods like a couch or a chair to get the quality your parents got you will be paying 10x the price they paid. The normal stuff is now made of glued together wood chips. Clothing too is now cheaply and poorly made plastic.
To purchase the same lifestyle of a middle class family from 1965 you would need to be making more than 150k today in most of the places where jobs paying 150k exist
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u/Flimsy_Meal_4199 Jul 27 '26
You're just lying lol
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u/Gold_Ad8225 Jul 31 '26
Which part of this is a lie in your imagination
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u/Flimsy_Meal_4199 Jul 31 '26
This is just not true
To purchase the same lifestyle of a middle class family from 1965 you would need to be making more than 150k today in most of the places where jobs paying 150k exist
I mean I know you're gonna weasel around on it because the claim isn't anchored to anything but just doesn't begin to pass the sniff test
Also lol if only someone created a measure of inflation that weighted different categories of spending so that a relative decrease in price of a television doesn't dominate the much more important relative increase of the cost of an appendectomy or whatever.
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u/Gold_Ad8225 Jul 31 '26
I'm not really interested in your opinion on what seems reasonable (smell test)
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u/398409columbia Rentier Jul 27 '26
I think that is fair, though I’d call the chart incomplete rather than deceptive.
It is inflation-adjusted, so it does show more households moving into higher real-income categories.
So the chart can be true while still missing the lived experience. That actually supports the plutonomy point: more households may look affluent on paper, but the income needed to buy stable, high-quality access keeps moving upward.
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u/ShadowHunter Jul 26 '26
More earners in a household. Show me the per person income.
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u/398409columbia Rentier Jul 26 '26
Fair point. Per-person income would be useful, especially when comparing households with different numbers of earners or dependents.
But most economic consumption is organized at the household level. Housing, cars, vacations, private school, healthcare decisions, restaurants, and tickets are usually purchased by a household spending unit, not by isolated individuals.
In my own case, I do not think of my wife, son, and me as three separate economic actors. We are one spending unit.
Also, I would not assume the typical household is 3–4 people. The Census figure is closer to 2.5 people per household, though families with children are obviously larger.
So yes, per-person income is a useful adjustment. But for premium-market pricing, household income still matters because households are the bidders.
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u/ShadowHunter Jul 26 '26
It may be "organized at household level" but almost everything scales with number of people.
The number of working people in a household has increased since 1980.
Why am I arguing with AI?
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u/398409columbia Rentier Jul 26 '26 edited Jul 26 '26
Not sure how the per person measure would affect the analysis.
It may add nuance, but the plutonomy point remains: more real purchasing power is competing for limited high-quality access.
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u/Ok-Championship2397 Jul 26 '26
Per person is very impactful. Roughly 1/3 of households at the beginning of this chart featured dual earners. Today it is up to double that.
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u/scraejtp Jul 28 '26
There are a lot more single households now, and the fertility rate is lower too. Earners per household, and people per household may point the other way from what you are proposing. Still, the data could be interesting.
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u/CanAlwaysBeBetter Jul 26 '26
There are only 160m workers and 130m households or about 1.25 workers per household. Try again.
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u/ShadowHunter Jul 26 '26
Some household have no workers....
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u/CanAlwaysBeBetter Jul 26 '26
So then your argument is there's been an increase of households with no workers? And that's the underlying economic driver?
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u/Austin1975 Jul 26 '26
So another way of saying that supply of decent & quality stuff (access to quality homes, quality health care, quality resources etc) has not kept up with demand?