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Opinion The $400K conundrum: Why America’s urban rich don’t feel that way

Parker Brothers Monopoly "Chance" card (Photo: Washington Post staff).
5 min

Periodically, some commentator suggests that in many American cities, someone with a very comfortable income is actually barely getting by. It is a venerable genre, but the first such instance I can remember came from law professor Todd Henderson back in 2010. The most recent is from Bret Stephens, a columnist at the New York Times.

Last week, in a conversation with colleague Gail Collins, Stephens argued that a couple with a combined income of $400,000 a year doesn’t necessarily have a lifestyle we’d describe as “rich”: “They’re scrimping to send their kids to college, driving a Camry, if they have a car at all, and wondering why eggs have gotten so damned expensive.”

“Granted,” said Collins, which was the most fascinating part of this exchange.

The left side of the internet dragged Henderson mercilessly for days after his remarks 12 years ago. But here was a left-leaning New York Times columnist essentially conceding the point. As for the internet, I saw exactly one right-leaning economist gently joshing Stephens for his remarks. How have liberals gotten so comfortable with the idea that $400,000 a year — more than what 98 percent of the population makes — is really just a middle-class income?

A recent essay by Ross Douthat, Stephens and Collins’s colleague at the Times, offers one answer: These people are rich by any measure, and they are spending their money on things only rich people can afford, such as living in the best school districts and in or near amenity-rich megacities. However, they are rich in a peculiarly modern way: in the context of a meritocracy where elites are supposed to re-earn their position anew each day.

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Compared with the old establishment that survived on inherited wealth and social position, they are insecure, and many worry that their offspring will be downwardly mobile, which leads them to spend virtually all of their outsize disposable incomes on preparing the children to become star performers in the next round of competition.

(For this is primarily a problem of parents; you almost never hear a childless couple making $400,000 a year claim to really be just ordinary middle-class folks.)

One way to cope with this insecurity is to try to lean into it, strive to accumulate so-called generational wealth, so your children never have to wake up at 4 a.m. wondering where the next tuition check will come from. Another is to look for a political solution, which might be one reason the highly educated have migrated toward the Democratic Party.

Unfortunately, generational wealth is an impossible dream for even most highly educated people for the very reason that it’s so attractive: the competition for scarce slots at a limited number of highly selective colleges (and the schools that feed into them) that function as the gatekeepers to the 2 percent, or the 3 percent, or the 10 percent. This zero-sum bidding war will consume any amount of extra money a normal professional can earn, because there is always something else you could be doing to give your kid a better shot at a good school and a good life — another tutor, another consultant, another enrichment program.

Through the magic of market competition, the price of that exclusive access will always be set at the maximum the least-affluent members of the class can just barely afford to pay for private school tuition or a well-located house. Moreover, because the upper income distribution resembles a pyramid with a wide bottom and a narrow top, most of the people in this class will be closer in situation to the desperate strivers — those who have zeroed out their 401(k)s, crammed the kids into too-small houses and borrowed all they could from family — than they are to the lucky few near the pinnacle who can write huge checks without blinking.

Small wonder that they feel strapped, and not really surprising that people in this group have become increasingly friendly to the party that has historically promised to buffer us from the punishing demands of the market economy. The problem with this particular political solution is that government cannot give them what they crave: a low-effort way to ensure that their kids never fall out of their world.

There’s no shame in wanting this. What self-respecting mammals don’t want their children to have it at least as good as they did? At the median household income, that’s even a semi-plausible demand, because here all government needs to provide is median-grade public goods. But it cannot give everyone above-average doctors, schools, job satisfaction and earning potential — and in a democracy, it cannot promise to reserve those things for the children of those who already have them.

Thus, the unsolvable dilemma of the broke 2-percenter. If you would be satisfied knowing that your child had a secure but unremarkable life managing a Walmart in some exurb, the government could probably guarantee that. And, with a solid six-figure income, you could probably prepare them for that world without any government assistance. But then, if you could be satisfied with a solid ordinary life, you probably wouldn’t have spent decades working overtime and delaying gratification in order to make it into the 2 percent.