Just Don’t Call Us “Rich”

Reuters Life! recently ran a story (perversely enough, I saw it on Yahoo! … can we stop with the exclamation points now?!!) titled, “More U.S. millionaires are middle-class.”

Interesting title eh? More interesting was a sentence in the first paragraph: “New research has found that more and more Americans worth at least $1 million want luxury goods such as yachts but otherwise lead family-focused, work-oriented lives.”

The Reuters story is regurgitating the results of research by “private wealth specialists” Lewis Schiff and Russ Alan Prince, for their upcoming book, “The Middle Class Millionaire: The Rise of the New Rich and How they are Changing America.”

After trotting out some statistics about the rich getting richer (and that’s what millionaires are, not middle-class), they add this: “But instead of entering the echelons of the elite, these new millionaires adhere to middle-class values, earning their money rather than inheriting it, working 70 hours a week, and choosing neighborhoods based on the quality of schools.”

Let’s pick apart what’s going on in this story, shall we?

1) The concept of “middle-class” is miraculously fungible, somehow applying to people worth over $1 million, and those households—not individuals—earning $48,000 a year (the US median).

However, nearly everyone in the U.S. is deluded into thinking they’re part of the middle-class, either middle-class, upper-middle-class, and lower-middle-class (if you don’t believe me, find someone to tell you they grew up working-class or grew up rich). Barbara Ehrenreich argues, persuasively I think, that there’s an all-pervasive set up assumptions in the U.S. that are middle-class assumptions, many of which are cemented during college (which is essentially the middle-class guild). Her book “Fear of Falling: The Inner Life of the Middle Class” is particularly good on this.

2) The Reuters story completely ignores what’s going on in the story, even when one of the authors identifies himself as a “private wealth specialist”—he’s studying the wealthy!

3) Instead, the story uncritically adopts the authors’ catch-phrase: “They found that 89 percent of middle-class millionaires believed anyone could attain wealth through hard work.” Note that tiresome repetition of the American myth, that wealth (oops, there’s that word again!) is attainable through hard work.

4) But the story isn’t even consistent about this. After some more “middle-class millionaires are better than you and me” factoids

“They are much more outgoing and involved in the community than the very affluent who tend to be more insular and react with fewer people,” Schiff said.

He said the four main characteristics of a millionaire were that they were hard working, networked, persistent even in the face of failure, and put themselves in the flow of money.

The paragraph argues:

“The authors argue this new group has a strong influence on spending, shaping the habits of their middle class counterparts and impacting certain product sectors ranging from yachting to jewelery to handbags.” (Anything wrong with that? Yep.)

Hold the handbag. Are they middle-class, or are they rich? If they’re rich, they buy yachts. If they’re middle-class, they don’t.

The story then quotes the president and CEO of marine lender KeyBank Luxury Yacht Lending, who says demand for 80-foot and up yachts is way up. “The new buyers really value leisure time as they have so little time,” he told Reuters. Um … WTF does lack of leisure time have to do with it?

The end of the story (thank God):

“When you’re very wealthy you look for exclusive expressions of affluence and when these are more available to a larger number of people they lose their exclusivity so they want something new and innovative,” said Schiff.

“This means the top one percent has to find a new way to express their affluence and we are seeing this most commonly through technology.”

Decoded, that means the rich have to keep finding ways to prove they’re NOT just like you and me. So yachting has nothing to do with leisure time. It’s an expression of affluence. In other words, as a concept (and probably as a book), “middle-class millionaire” is bullshit.

yacht.jpg

Join the middle class, and this too could be yours.

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3 thoughts on “Just Don’t Call Us “Rich”

  1. I’m not sure California fits with the whole equation. After all, many houses there are worth huge amounts, even ’50s tract houses in Silicon Valley, and Californians typically carry huge debt on their houses just to afford them.

    But if you have some free time, you might consider buying a yacht, if for no other reason than to have a talking point with your neighbors, yeah?

  2. John, my friend, you’ve given us lots to think about here. Let me address one of your points and see where that gets us:

    First, the meaning of “middle-class”: I agree this is a tricky concept. One can be “middle-class” because that’s how they were brought up. One can also be middle-class because they make an income that puts them somewhere in the middle.

    Which is right? Both. For our book, The Middle-Class Millionaire, we compared the results between two groups. Group #1 (“middle-class”)– a household income between $50,000 and $80,000 with a net worth of less than $1 million. Group #2 (“Middle-Class Millionaire”) — people with a net worth of $1 million to $10 million but who had never received more than $50,000 from their families, including the cost of higher education.

    When you asked our respondents which group they’d put themselves in, the results were mixed. Two thirds of our middle-class group called themselves “middle-class” while one third called themselves “upper middle-class.” On the other hand, nearly 80% of our Middle-Class Millionaire respondants called themselves “upper middle-class” while the rest called themselves “middle-class.” None of our Middle-Class Millionaires called themselves wealthy.

    If we had relied solely on people’s own labels for themselves we would have gotten very mixed results. A third of our middle-class sample (by income) would have lumped themselves in with the upper middle-class. 20% of our “wealthy” sample would have appeared in our “middle-class” results.

    George Bernard Shaw defined middle-class with this quote: “I have to live for others and not for myself; that’s middle-class morality.”

    In our book, we easily identified core middle-class values, such as a commitment to children’s education. We also identified core middle-class aspirations, such as “hard work can lead to financial success.” Where we saw differences were in behaviors. The Middle-Class Millionaire wants many of the same things as the middle-class but they go after them very differently.

    The Middle-Class Millionaire book we’ve written is about a demographic that, despite it’s “seven-figure” status, really springs from the loins of the middle-class. However, they’ve clearly done something different with their lives to accumulate substantial wealth (cumulatively more than $27 trillion in household assets–way more than the “super wealthy”)

    Watching the Middle-Class Millionaire is like watching a weather vane on a high roof. You can see what the rest of the middle-class will want if you just keep your head pointed up.

    Thanks for the time and analysis.

    Lewis Schiff
    Author, The Middle-Class Millionaire

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