The new class consists of millionaires - approximately 8.4 million households, constituting about 7.6 percent of all American households - who did not inherit their money from a previous generation, still work hard at the office every week, are aggressive networkers, rank high on the persistence scale, accumulate financial savvy and can spend money freely on necessities and on some luxuries. They possess what the authors call "millionaire intelligence."
But, they caution:
the middle-class millionaires are not Bill Gates wealthy or Rockefeller cousin wealthy. Their net worth, as set by Prince and Schiff, ranges from $1 million to $10 million, including the equity in their home (and in some cases, presumably, second and third homes).
Rings true enough to us. Brings to mind the NYT piece a few months back about the insecure millionaire of the
As I say, I haven’t read the book (“not personally, no”), but I’m usually frustrated with this kind of data: the presenters almost never make clear what they are doing with “benefits”: are they including 401ks? Employer contributions to health care? Numbers liked this matter, and you don’t know what you’ve got until you know how they figure.
But just as a generalization, I’d say that wealth figures from a generation ago probably underreport, as compared with today. The reason is that I suspect the average worker had much more by way of “off the books” benefits then than now. Take pensions. In the old days, a fair number of employees had employer –sponsored, defined-benefit pensions. My take is that the value of the employer pension almost never shows up in accounting for wealth. These days the employer pension is mostly gone, to be replaced, if at all, by 401ks and such. These often don’t show up in the presentation either, but they do sometimes, certainly more often than their predecessor.
So also with health care: used to be a lot of this was covered before we ever got to the paycheck; less so now (perhaps I am just summarizing the argument of this guy)
On the other side of the equation, consider education. Thirty years ago, my students paid about 50 bucks a semester to go to this public law school. These days, it’s getting close to $20,000. For good or ill, it’s not a datum you catch in standard balance-sheet accounting.
Over the breakfast table, we indulged ourselves with a few minutes of mean-spirited gossip as to which among our nearest and dearest fit into this new category, and how well. From there, we moved on to the more depressing question of how they (we) will all feel when the great unraveling turns all our money into confetti.
1 comment:
Thanks for mentioning the book. All good points about the data. Keep in mind that the book segments the survey respondents into two groups: middle-class and "Middle-Class Millionaires."
The middle-class respondants had a household income of $50,000 to $80,000 and a net worth of less than $1 million -- that includes primary residence. It's worth noting that $50,000 is the median household income in America. And the number of households with an income between $50,000 and $80,000 represents 20% of households in America.
The Middle-Class Millionaire reports a net worth of more than $1 million and less than $10 million. That wealth is all self-made and includes primary residence but also includes debt.
So those specific points about how 401ks are counted and so forth are excellent points but are generally captured in our $1 million to $10 million bucket.
Thanks for your interest!
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