How Many Slots Are Open in the Upper Middle Class? Not As Many As You Might Think

Not only are there not that many slots in the upper middle class, the number of open slots is considerably lower.

If America is the Land of Opportunity, why are so many parents worried that their princeling/princess might not get into the “right” pre-school, i.e. the first rung on the ladder to the Ivy League-issued “ticket to the upper middle class”? The obsessive focus on getting your kids into the “right” pre-school, kindergarten and prep school to grease the path to the Ivy League suggests there aren’t as many slots open as we’re led to believe.

Let’s set aside the endless debate over what qualifies a household to be “middle class.” Most people define themselves as middle class, with little regard for their income. Let’s cut to the chase and ask: how many young people aspire to joining this ill-defined middle class? Does this mean a rising standard of living and security? Not any more.

If you want those things, you must aspire to join the upper middle class.

So the more fruitful question is: what qualifies as upper-middle class?Here’s a handy line in the sand: Stanford University covers the tuition for all incoming undergraduates whose household income is less than $125,000.

According to the U.S. Census Bureau data (here displayed on Wikipedia), $125,000 is right about the 85% line–only the top 15% households make $125,000 and up annually: Household income in the United States.

For context, median household income in the U.S. is around $52,000 annually.

A few years ago, I calculated What Does It Take To Be Middle Class? (December 5, 2013) and came up with an absolute minimum of $111,000 for two self-employed wage earners, as this includes the cost of healthcare insurance and the employer’s share of Social Security and Medicare taxes. This was bare-bones.

Since employees of the government or Corporate America receive healthcare and retirement benefits (matching contributions to employee 401K plans, etc.), these can be subtracted from the $111,000. But this didn’t allow for vacations or any of the finer things in life, so if we are talking about a truly comfortable household income, around $105,000 for state/corporate employed people sounds right and $125,000 for self-employed people is more or less the minimum required.

(Obviously, money goes further in the Midwest and not very far on the Left and Right coasts.)

Stanford’s cutoff of $125,000 isn’t as outlandish as it might seem at first glance.See where your household income fits in the spectrum with this online tool: What Is Your U.S. Income Percentile Ranking? (This confirms that an income of $125,000 puts the household in the top 15%.)

Meanwhile, wages for every category of worker, from the highly educated to the high school graduate, have been declining:

How many slots are there in this upper middle class? A household income of $190,000 is in the top 5% nationally. According to the Social Security Administration data for 2013 (the latest data available), Wage Statistics for 2013, individuals who earn $125,000 or more are in the top 5% of all earners. Two such workers would earn $250,00 together. The 2.8 million households with incomes of $250,000 or more are in the top 2.5%. If we define the top few percent as upper middle class, then who qualifies as wealthy? Only the top 1%?

I think it is reasonable to define the 10% of households earning between $125,000 (top 15%) and $190,000 (top 5%) as upper middle class. This is around 12 million households, out of a total of 121 million households.

Most of those jobs are already held by people with years of experience and abundant social and human capital. Yes, there are plenty of wastrels living off trust funds and free-riders doing as little as possible in their guaranteed government jobs, but by and large the people earning these incomes are working hard and will do whatever it takes to maintain their current incomes for the sake of their kids and their own security.

This explains the frantic drive to be one of the 2,100 students accepted by Stanford out of 42,000 applicants. These low admission numbers reflect the admission realities in the upper crust of Ivy league universities, both public and private.

The assumption is the few open slots in the upper middle class (or dare we hope, the 1%) will disproportionately go to those who have the credentials that signal they have the social breeding and brains to fit the corporate culture and they’re willing to work hard and make their bosses lots of money.

Meanwhile, the top 5% of households in San Francisco earn a whopping $423,000 annually. (

This is enough to put those households in the top 1% of California residents, roughly $433,000 annually: 10 States Where You Need The Most Money to Be In the 1 Percent

If you’re curious what jobs those living in top 1% households have, check out this chart: Explore the occupations and industries of the nation’s wealthiest households (NY Times).

4,575 writers (out of 92,000 nationally) are in top 1% households. Where do I sign up? Another 10,134 writers in “other industries” (out of 465,000 people claiming this employment category) are also in top 1% households. 15,000 retail clerks also live in top 1% households.

Perhaps the trick is not to make a lot of money writing or selling accessories, but to marry a top-level attorney, doctor, business owner, dot-com millionaire, lobbyist or trust funder?

(You can look up what qualifies as a 1% household income in this link, which has a chart of all 50 states and Washington D.C.)

Not only are there not that many slots in the upper middle class, the number of open slots is considerably lower. No wonder so many parents are desperate for an insider’s pathway for their offspring.

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  • Dr Smileyface

    This article is so old paradigm it’s painful to read.

  • Mar 31, 2015 TDV Interviews: Jim Rogers on the Currency Wars and Coming Collapse

    The first in the new The Dollar Vigilante (TDV) interview series, Jeff interviews famous author and investor Jim Rogers, topics include: money printing, rising tide of liquidity, its going to end badly, all major countries debasing their currency, people flocking to US dollar seeking safe haven, US dollar not a safe haven, debt has risen dramatically since 2008, the Euro was badly implemented, expatriation, the future is Asia, FATCA, this is a time for caution…

  • Big Bear

    It is possible to propose a more rigorous definition of the American “middle class”:

    Many discussions of wealth and economic class in America focus on the
    distribution of income, which creates a distorted and deceptive view. If we
    are interested in examining the distribution of wealth, obviously the thing
    to look at is wealth, not income. Examination of the distribution of wealth
    in the United States clarifies the status and numbers of America’s
    highly-advertised “middle class.”

    The distribution of wealth in the United States has been essentially stable
    in its broad outlines since around 1890. About 60% of Americans own almost
    nothing besides our personal possessions — shoes, clothing, kitchenware,
    some furniture, maybe a vehicle (unless a loan company holds title). Nearly
    40% of us do not own our own homes and a third or more of us dwell in
    mortgaged homes. (Equity in a primary residence is not wealth: it is not a
    liquid asset; you cannot spend your shelter without replacing it any more
    than you can spend your shoes and your pants. Many devious economic
    statistics today deliberately distort the true distibution of wealth in
    America by pretending otherwise.)

    On the other hand, while 60% of us own no significant wealth at all, 3%
    among us own 60% of all the wealth in America and another 7% among us own nearly 20%
    more of the total.

    This leaves 30% of the population and 20% of the wealth remaining, but this
    doesn’t really represent the “middle class”. The wealthiest third of this
    group — (10% of us, the 80th-90th percentiles) possess 10% of the wealth.
    This group, 10% of Americans, may be properly and reasonably be called the
    famous American “MIDDLE CLASS” — they possess a middling average share, an
    equitable share of the wealth of America. ONE PERSON IN TEN.

    Between this genuine “middle class” and the poor who possess no liquid
    assets whatsoever — the remaining 20% divide (unevenly, as always) the
    remaining 10% of wealth: they possess on average one half of an equitable

    By contrast the 7% above the genuine “middle class” (the 91st to 97th
    percentiles) — call them the “professional class” or the “administrative
    class” — who possess (unevenly) nearly 20% of the wealth in America — own on average three
    times their equitable share in America.

    But to understand the essential features of the distribution of wealth in America
    we need to look more closely at the very top of the heap, the tiny tip of
    the pyramid. At its pinnacle, one American in ten thousand (0.01%) owns
    13% of America — 1300 times an equitable share. Moreover, this wealth is
    invested in the core financial, industrial, merchantile, utility, and
    commercial institutions of America, where it represents a controlling
    interest, possessing vastly more leverage, more control, more power, than
    the 13% of wealth spread among the many millions of the lower middle class. This
    is our Ruling Class.

    Another nine Americans in ten thousand (0.09%) own 12% of all the wealth in
    America, over 100 times their equitable share. They are Big Money.

    The remaining nine-tenths of America’s wealthiest 1% own nearly another 25%
    of America — approaching 30 times their equitable share — our “Wealthy” Class,
    the merely rich.

    And remaining 2% (the 98th-99th percentiles) own another 10% — about five
    times their equitable portion. They are “Well Off.” Together with their betters, collectively
    these 3% of Americans own well over half of our country.

    In broad outline these features have characterized the American economy
    since the 1890s and make plain the basis for the increasingly oligarchic
    character of American society and government over recent generations.

    These statistics were initially established by the US Census — the first
    and only time it was allowed to investigate the question — in the 1890s. They were
    confirmed by the Congression Commission on Industrial Relations in 1915, and
    by a Federal Trade Commission study in 1926. Since then our oligarchy has
    prevented “our” government from publishing these damning statistics but
    intrepid (and rare, and very poorly publicized) economists have taken up the
    investigation from time to time. Their investigations show, up to the present day,
    that, with minor variations, this situation has been stable for over 120 years.

    By contrast, in 1865 the wealthiest 2% of Americans possessed 5% of the
    wealth. This was originial, traditional American economy, the America of
    the “American Dream,” before the rise of “corporate personhood” and the
    triumph of the dominion of NYC finance between 1873 and 1900 — lead by
    August Belmont (born August Schoenberg, in what is now Poland), agent of the Rothschild
    banks in America from before the Civil War through the 1880s (really) and
    Chairman of Democratic Party in the 1860s and 70s (really) and, later, JP Morgan (1880s-1910),
    his son, and their successors. Who rule America today.

    • jadan

      A comment much superior to the article itself. Thanks!

  • Someone here at Washington’s Blog should attach this in the column on the main home page for all to view before entering. Just a thought!

    Although this format is a somewhat busy, I really like the comprehensive nature of this Debt Clock.