Thursday, November 01, 2007

It's easy to adhere to middle-class values when you're actually middle-class

According to Reuters, the latest generation of millionaires has a different ethos than their predecessors. Says Reuters: "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."

The whole article seems to miss the incredibly obvious point that the newest generation of millionaires acts middle-class because they are actually middle-class. Inflation has dramatically redefined the value of a million dollars (remember Dr. Evil's demand from the first Austin Powers movie?), but it still occupies this unique place in the American popular consciousness that is no longer justified. Fact is, a cool mil just ain't what it used to be. Even if inflation hadn't totally neutered the concept of a million dollars, real estate values would have done the job. The absolute outrageousness of property values in major cities on both coasts means that all you would have needed to do to become a millionaire was buy a sensible single-family home in 1995. But invisible money with no liquidity, from a house a family couldn't afford to buy from itself, does not a "millionaire" make, at least not the way people envision the concept. Surprised that these millionaires pick neighborhoods by school quality? Maybe it's because they can't afford $25,000 of tuition at private school.

I realize that millions of American families have net worths well under $1 million and are still considered middle-class, I just think that "middle-class" needs to be understood broadly and contextually. Geography matters. Liquidity matters. And at this point, the only significance of the word "millionaire" is that it gets people to read your stupid article.

1 comment:

Andrea said...

Wow, wow. I could not disagree more. When the bottom limit of the highest income quintile (for households, not individuals) is $90K, and the bottom limit of the top FIVE PERCENT is $160K, then no, a million dollars does not leave you in the middle class. (I realize there's a income-wealth issue here, but I'm willing to bet the vast majority of those $1-10M folks in the article are indeed making $100K + a year.)

It may mean that your McMansion only has 4 bedrooms instead of 10, and you have a really nice car and fancy suits and handbags instead of bathing in champagne, but you're still rich. I mean, the article also talks about how yacht sales are up. (And people borrow against their home all the time! Can't do that if you're a mere renter.)