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Over the last year, Nick Maggiulli has come to what he calls an unsettling realization: The upper-middle class is caught in a trap, and many of them don\u2019t even realize it. <\/p>\n
The chief operating officer of Ritholtz Wealth Management has spent the better part of a year building the case in pieces on his blog, Of Dollars and Data<\/em>\u2014first arguing private school isn\u2019t worth the cost despite its price tag, then that premium travel experiences have grown crowded while remaining expensive in \u201cThe Death of the Amex Lounge.\u201d He previously talked to Fortune<\/em> about his book, The Wealth Ladder<\/em>, and his growing belief \u201csomething weird\u2019s going on\u201d with the upper-middle class in the U.S. economy.<\/p>\n In an April essay, he pulled the threads together and gave the phenomenon a name: the \u201cupper-middle-class trap,\u201d in which people earning roughly $200,000 to $400,000 a year are working more and relaxing less to buy products and services of declining quality.<\/p>\n His evidence includes new single-family homes shrinking in average size by 12% between 2014 and 2024, even as the price per square foot surged 74%, according to LendingTree data. A home near a public elementary school with a top GreatSchools rating costs 78.6% more than a comparable home in the surrounding county. Homebuyers who win bidding wars end up worse off: One study found their purchases produced 6.9% lower annualized returns than homes bought without competition. In higher education, the number of college applicants has jumped 78% since 2015 even as acceptance rates at elite schools have collapsed, driving tuition and private-school costs up roughly twice as fast as overall inflation.<\/p>\n The mechanism Maggiulli describes is a \u201cfinancial arms race\u201d: Every individual decision is rational, but collectively the competition for the same scarce positional goods lowers everyone\u2019s quality of life while draining their bank accounts. <\/p>\n One accelerant, he argues, is nearly impossible to opt out of. Citing Brookings Institution data from November 2025, he notes AI usage rises from 9% among earners below $30,000 to 34% among those earning $100,000 or more. High earners, worried AI threatens their careers, are forced to adopt it just to defend their position\u2014a \u201cRed Queen\u201d dynamic in which everyone runs faster just to stay in place. <\/p>\n \u201cIf AI doubled everyone\u2019s productivity overnight,\u201d he writes, \u201csuddenly someone with half your skill would be able to compete with you just by using AI.\u201d<\/p>\n His prescribed exit is blunt: Stop competing for positional goods that don\u2019t materially improve your life. Send your kids to good public schools, fly economy, buy a smaller, affordable house. His test for any big purchase: \u201cAm I buying this to improve my quality of life, or merely because other people<\/em> are buying it?\u201d<\/p>\n Maggiulli\u2019s trap helps explain a number that\u2019s been circulating for the past year. The cost of achieving the American Dream surpassed $5 million in 2025, according to a comprehensive analysis by Investopedia\u2014the cumulative lifetime cost of eight pillars of middle-class aspiration, nearly $600,000 higher than the year before. Drawing on government data, industry statistics, and survey responses from more than 1,200 U.S. adults, the analysis broke the total into eight milestones: retirement at $1.6 million, homeownership at $957,594, new cars purchased every five years at $900,346, raising two children and paying for their college at $876,092, health care at $414,208, annual vacations at $180,621, pet ownership at $39,381, and a wedding at $38,200.<\/p>\n The average American with a bachelor\u2019s degree earns about $2.8 million over a career\u2014less than half of what\u2019s required to achieve that. Two college-educated earners are functionally a prerequisite for \u201cliving the dream.\u201d Homeownership remains the most commonly cited obstacle: 58% of respondents named high home prices as their top barrier, followed by rising living costs (51%) and elevated mortgage rates (47%)\u2014the exact positional-goods squeeze Maggiulli describes.<\/p>\n Maggiulli\u2019s framework has run headlong into a countervailing, income-based analysis. A January report from the American Enterprise Institute, authored by economists Stephen Rose and Scott Winship, argues the \u201chollowing out\u201d narrative underlying both Maggiulli\u2019s trap and Investopedia\u2019s price tag is only half-true. Their data: the share of American families earning between roughly $133,000 and $400,000\u2014their definition of the upper-middle class\u2014tripled from 10% in 1979 to 31% in 2024. For the first time in U.S. history, more families sit above the traditional middle-class income threshold than below it. Median family income, adjusted for inflation and family size, rose 52% between 1979 and 2024.<\/p>\n \u201cIt is simply inaccurate to characterize the \u2018shrinking\u2019 middle class as reflecting diminished economic security rather than material progress,\u201d Rose and Winship wrote.<\/p>\n Winship, in a statement to Fortune<\/em>, previously acknowledged the limits of an income-only lens: Two people with identical lifetime earnings can end up with very different wealth if one saves and the other spends\u2014a concession of a key Maggiulli argument. AEI is reportedly preparing a follow-up using wealth data, and preliminary results show a similar pattern: The middle class shrinks mainly because the upper-middle class booms.<\/p>\n Maggiulli\u2019s counter reframes the debate around wealth rather than income. The share of U.S. households with $1 million to $10 million in net worth more than doubled, from 7% in 1989 to 18% in 2022-23. <\/p>\n \u201cThere\u2019s a good portion of them that feel like they don\u2019t have enough,\u201d Maggiulli previously told Fortune<\/em>. \u201cThey feel like they\u2019re just getting by.\u201d A $1 million net worth placed someone in the top 5% of Americans in the late 1990s; today, that same number puts you in the top 20%.<\/p>\n When reached for comment for this article, Maggiulli noted the most recent data to answer these questions was the Federal Reserve\u2019s 2022 Survey of Consuer Finances, with 2025 data due to be released in a few months. <\/p>\n \u201cI believe that data will answer a lot of these questions more definitively,\u201d he said, but his read of the data shows that both arguments appear to be true\u2014the pie grew, along with misperceptions from social media about how that wealth feels. The dynamic is \u201cquite psychological in nature,\u201d he said, adding that data on collective psychology, of course, remains scarce by definition.\u201d<\/p>\n Chris Bradley, a senior partner at McKinsey and director of the McKinsey Global Institute, previously told Fortune<\/em> Americans have living through a kind of \u201csignal failure\u201d\u2014a society that has grown extraordinarily wealthy by historical standards but has lost the ability to recognize that prosperity, because the \u201cantenna\u201d people use to judge their own success is still tuned to an old frequency while the underlying economic reality has changed. A family earning $175,000, a household income that would have felt unambiguously prosperous in any prior decade, now spends its evenings absorbing content from people who vacation in the Maldives and treat business class as a hardship, until the top 10% starts to feel like the middle.<\/p>\n Bradley has been wrestling with a starker version of this same anxiety on his own LinkedIn, where in May he broke from his usual optimism to concede that \u201cthe young\u2019uns are probably right\u201d to have lost faith in generational progress. Citing Australian polling that found only one in five believe the next generation will be better off than the last, he wrote that a 30-year-old today \u201chas experienced less growth, hardly any productivity improvement, much more expensive housing, a bigger tax bill, and a much bigger government\u201d than his own cohort did at the same age\u2014concluding, \u201creal hope needs to be earned.\u201d<\/p>\n \u201cStructurally, it feels like quality is getting worse even as prices are rising,\u201d Maggiulli told Fortune<\/em>, citing general trends in travel, education, and housing, in particular. He added his thinking has evolved from a feeling something weird is happening in the economy more firmly toward an upper-middle class trap, and he agreed with Fortune<\/em>\u2018s question that it is similar to Yale Law professor Daniel Markovits\u2019 Meritocracy Trap<\/em>, which argued as far back as 2019 that upper middle class status in the 21st-century was less than the sum of its parts. <\/p>\n \u201cI enjoyed Markovits\u2019 Meritocracy Trap because it highlights how it can be tough to get ahead in the upper middle class,\u201d Maggiulli said, \u201cas compared to the upper class, who can buy their way into things.\u201d<\/p>\n Even the optimistic AEI numbers cut both ways: The combined income share of the upper-middle class and the wealthy rose from 28% of all family income in 1979 to 68% by 2024, and the top 1%\u2019s share doubled from 5% to 9%\u2014likely an undercount, Winship conceded, since the wealthiest Americans are underrepresented in Census data. Separate tax-data research by Gerald Auten and David Splinter puts the true top 1% income share closer to 17%. <\/p>\n The upshot, in Winship\u2019s own words: \u201cbroad prosperity, unequally shared.\u201d<\/p>\n For this story,\u00a0<\/em>Fortune\u00a0journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.<\/em><\/p>\n<\/div>\n #uppermiddleclass #trap #year #doesnt #feel #winning #anymore<\/p>\n","protected":false},"excerpt":{"rendered":" Over the last year, Nick Maggi… <\/p>\n","protected":false},"author":1,"featured_media":3302,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[5994,331,1968,3656,5993,81,1133,85],"class_list":["post-3301","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-anymore","tag-doesnt","tag-feel","tag-trap","tag-uppermiddleclass","tag-wealth","tag-winning","tag-year"],"yoast_head":"\nThe $5 million price tag<\/h2>\n