Is it still possible for low- and moderate-income workers and their families achieve the economic stability necessary to pursue the American Dream? Brookings Institution Fellow Richard Reeves recently joined Maureen Conway, the Institute’s vice president for policy programs and the executive director of the Institute’s Economic Opportunities Program, to discuss his new book, Dream Hoarders: How the American Upper Middle Class is Leaving Everyone Else in the Dust, Why That Is a Problem, and What to Do About It. As part of the Economic Opportunities Program’s Working In America event series, Reeves argued that the gap between the upper middle class and the rest of American society is widening because advantages are concentrated among the upper classes. For more information and to watch the full video, visit as.pn/dreamhoarders.
Maureen Conway: What did your research show you about class divides in the United States?
Richard Reeves: Class is a malleable concept. It’s not just about economics—it’s about education, it’s about family, it’s about all kinds of things. But focusing on income for a moment, in the United States, most people define themselves as “middle class,” which makes this a harder concept to grasp. That’s why I define “upper middle class” as the top 20 percent. Income looks broadly similar today for the bottom 80 percent as it did 30 or 40 years ago. In contrast, from 1980 onward, the income of the top 20 percent pulled away—perhaps not as much as the top 1 percent, but the line between the people who have been doing progressively better is much broader than the 1 percent.
MC: The moral underpinnings of the book are really an argument about fairness, but we’ve never really had a level playing field in our economy—particularly when we think about race.
RR: Although I have examined race as it relates to economic mobility in the past, I focused this book almost exclusively on class. We need to find a better way to have a conversation about both class and race and the ways that they overlap. I will say that some of the institutions perpetuating class inequality have their roots in racist policies. Exclusionary housing and zoning policies have had a massive and lasting impact on racial wealth disparities, for example. Legacy preferences, which I cite as an example of how the upper class perpetuates their privilege, nonetheless have their basis in bias. The Ivy Leagues introduced legacy preferences as a series of measures to limit the number of Jewish students. These types of policies have contributed to making the upper middle class overwhelmingly white today.
MC: Many in the top 20 percent profess to be in favor of encouraging upward mobility among low- and moderate-income workers. However, when you point out that if more people work their way to the top, then some people will have to move down, the idea of mobility often becomes less appealing.
RR: In America today, money impacts access to health care and education and so on. The cost of having less money is therefore high, leading many in the upper middle class to fear the fall. This fear has incentivized them to put a glass floor underneath their children. Unpaid internships, legacy preferences in college admissions, school zoning laws, and other systemic advantages have insulated the children of the top 20 percent, subsequently contributing to increased inequality.
For a healthier society, we’ll have to see movement in both directions. From a relative perspective, more absolute economic mobility would lead to more people doing well overall. Generally, that would lower the stakes around falling to another tier because, even if you fall, the gap between income brackets would be smaller. Moving down a quintile in the earnings bracket would not be as catastrophic, and it would leave more room for others to move up. Some downward mobility is necessary for upward mobility. Right now, the upper middle class’s glass floor is creating a glass ceiling for everyone else.