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Rising riches: 1 in 5 in U.S. reaches affluence

By Hope Yen

Associated Press

POSTED:
LAST UPDATED: 04:56 a.m. HST, Dec 09, 2013


WASHINGTON » It's not just the wealthiest 1 percent.

Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America's economy and politics. This little-known group may pose the biggest barrier to reducing the nation's income inequality.

The growing numbers of the U.S. poor have been well documented, but survey data provided to The Associated Press detail the flip side of the record income gap — the rise of the "new rich."

Made up largely of older professionals, working married couples and more educated singles, the new rich are those with household income of $250,000 or more at some point during their working lives. That puts them, if sometimes temporarily, in the top 2 percent of earners.

Even outside periods of unusual wealth, members of this group generally hover in the $100,000-plus income range, keeping them in the top 20 percent of earners.

Companies increasingly are marketing to this rising demographic, fueling a surge of "mass luxury" products and services from premium Starbucks coffee and organic groceries to concierge medicine and VIP lanes at airports. Political parties are taking a renewed look at the up-for-grabs group, once solidly Republican.

They're not the traditional rich.

In a country where poverty is at a record high, today's new rich are notable for their sense of economic fragility. They've reached the top 2 percent, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged.

Last week, President Barack Obama asserted that growing inequality is "the defining challenge of our time," signaling that it will be a major theme for Democrats in next year's elections.

New research suggests that affluent Americans are more numerous than government data depict, encompassing 21 percent of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.

At the same time, an increasing polarization of low-wage work and high-skill jobs has left middle-income careers depleted.

"For many in this group, the American dream is not dead. They have reached affluence for parts of their lives and see it as very attainable, even if the dream has become more elusive for everyone else," says Mark Rank, a professor at Washington University in St. Louis, who calculated numbers on the affluent for a forthcoming book, "Chasing the American Dream," to be published by the Oxford University Press.

As the fastest-growing group based on take-home pay, the new rich tend to enjoy better schools, employment and gated communities, making it easier to pass on their privilege to their children.

Their success has implications for politics and policy.

The group is more liberal than lower-income groups on issues such as abortion and gay marriage, according to an analysis of General Social Survey data by the AP-NORC Center for Public Affairs Research. But when it comes to money, their views aren't so open. They're wary of any government role in closing the income gap.

In Gallup polling in October, 60 percent of people making $90,000 or more said average Americans already had "plenty of opportunity" to get ahead. Among those making less than $48,000, the share was 48 percent.

"In this country, you don't get anywhere without working hard," said James Lott, 28, a pharmacist in Renton, Wash., who adds to his six-figure salary by day-trading stocks. The son of Nigerian immigrants, Lott says he was able to get ahead by earning an advanced pharmacy degree. He makes nearly $200,000 a year.

After growing up on food stamps, Lott now splurges occasionally on nicer restaurants, Hugo Boss shoes and extended vacations to New Orleans, Atlanta and parts of Latin America. He believes government should play a role in helping the disadvantaged. But he says the poor should be encouraged to support themselves, explaining that his single mother rose out of hardship by starting a day-care business in their home.

"I definitely don't see myself as rich," says Lott, who is saving to purchase a downtown luxury condominium. That will be the case, he says, "the day I don't have to go to work every single day."

___

Sometimes referred to by marketers as the "mass affluent," the new rich make up roughly 25 million U.S. households and account for nearly 40 percent of total U.S. consumer spending.

While paychecks shrank for most Americans after the 2007-2009 recession, theirs held steady or edged higher. In 2012, the top 20 percent of U.S. households took home a record 51 percent of the nation's income. The median income of this group is more than $150,000.

Once concentrated in the old-money enclaves of the Northeast, the new rich are now spread across the U.S., mostly in bigger cities and their suburbs. They include Washington, D.C.; Boston, Los Angeles, New York, San Francisco and Seattle. By race, whites are three times more likely to reach affluence than nonwhites.

Paul F. Nunes, managing director at Accenture's Institute for High Performance and Research, calls this group "the new power brokers of consumption." Because they spend just 60 percent of their before-tax income, often setting the rest aside for retirement or investing, he says their capacity to spend more will be important to a U.S. economic recovery.

In Miami, developers are betting on a growing luxury market, building higher-end malls featuring Cartier, Armani and Louis Vuitton and hoping to expand on South Florida's Bal Harbour, a favored hideaway of the rich.

"It's not that I don't have money. It's more like I don't have time," said Deborah Sponder, 57, walking her dog Ava recently along Miami's blossoming Design District. She was headed to one of her two art galleries — this one between the Emilio Pucci and Cartier stores and close to the Louis Vuitton and Hermes storefronts.

But Sponder says she doesn't consider her income of $250,000 as upper class, noting that she is paying college tuition for her three children. "Between rent, schooling and everything — it comes in and goes out."

Economists say the group's influence will only grow as middle-class families below them struggle. Corporate profits and the stock market are hitting records while the median household income of $51,000 is at its lowest since 1995. That's a boon for upper-income people who are more likely to invest in stocks.

At the same time, some 54 percent of working-age Americans will experience near-poverty for portions of their lives, hurt by globalization and the loss of good-paying manufacturing jobs.

___

Both Democrats and Republicans are awakening to the political realities presented by this new demographic bubble.

Traditionally Republican, the group makes up more than 1 in 4 voters and is now more politically divided, better educated and less white and male than in the past, according to Election Day exit polls dating to the 1970s.

Sixty-nine percent of upper-income voters backed Republican Ronald Reagan and his supply-side economics of tax cuts in 1984. By 2008, Democrat Barack Obama had split their vote evenly, 49-49.

In 2012, Obama lost the group, with 54 percent backing Republican Mitt Romney. Still, Obama's performance among higher-income voters exceeded nearly every Democrat before him.

Some Democratic analysts have urged the party to tread more lightly on issues of income inequality, even after the recent election of New York City Mayor Bill de Blasio, who made the issue his top campaign priority.

In recent weeks, media attention has focused on growing liberal enthusiasm for Sen. Elizabeth Warren, D-Mass., whose push to hold banks and Wall Street accountable could stoke Occupy Wall Street-style populist anger against the rich.

"For the Democrats' part, traditional economic populism is poorly suited for affluent professionals," says Alan Abramowitz, an Emory University professor who specializes in political polarization.

The new rich includes Robert Kane, 39, of Colorado Springs, Colo.

A former stock broker who once owned three houses and voted steadfastly Republican, Kane says he was humbled after the 2008 financial meltdown, which he says exposed Wall Street's excesses. Now a senior vice president for a private equity firm specializing in the marijuana business, Kane says he's concerned about upward mobility for the poor and calls wealthy politicians such as Romney "out of touch."

But Kane, now a registered independent, draws the line when it comes to higher taxes.

"A dollar is best in your hand rather than the government's," he says.

___

Associated Press Director of Polling Jennifer Agiesta, News Survey Specialist Dennis Junius, and writers Suzette Laboy in Miami and Kristen Wyatt in Denver contributed to this report.







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soundofreason wrote:
".......working married couples and more educated singles," >>> So, single girls who want to play house/mommy and who can't keep their knees together long enough to not get knocked up so they can get some college are pretty much out.
on December 9,2013 | 04:41AM
RetiredWorking wrote:
sound, yes. Also single men who can't keep it in their pants, spreading their seed and paying for child support.
on December 9,2013 | 05:43AM
soundofreason wrote:
NOT paying child support ....and getting away with it....is more of the theme here.
on December 9,2013 | 05:48AM
RetiredWorking wrote:
sound, you're right.
on December 9,2013 | 08:39AM
RetiredWorking wrote:
Here's one simple formula to living well.. Study hard. Do well in school. Earn a college degree or learn a trade. Get a career job. Get your own place. THEN establish a serious relationship with someone with no kids and no bad habits. Be selective. To raise your standards of living, make sure your partner has a career or at least a job. Save $$ and enjoy being DINKS(dual income, no kids). Buy your first home. THEN have kids.
on December 9,2013 | 05:43AM
soundofreason wrote:
Sound advice. Problem is, too many young kids get together as a MEANS to get out of the parent's house.
on December 9,2013 | 05:49AM
RetiredWorking wrote:
sound, when they realize living together means sacrifice and sharing resources and responsibilities, they move back to their parents for a free ride. Often, they bring their gf and their babies.
on December 9,2013 | 08:43AM
palani wrote:
So the fallacy of "tax the rich" is exposed! The administration's constant vilification of the 1 percent must now be expanded to the 25 percent. Of course, this was obvious to any respectable economist all along, but the Obama drones have never been very good at math.
on December 9,2013 | 05:44AM
fbg wrote:
What is the percentage in other countries? This 20% may speak to this country offering the best opportunity (or not) to those in the lower income classes having a chance to succeed and excel.
on December 9,2013 | 05:51AM
inverse wrote:
This article is very MISLEADING. The title "1 in 5 reaches affluence" means 1 in 5 are "rich". Yet it is a FACT almost 43% households in the US do NOT pay federal taxes. Unless they are like the ex-boxer Alexio pulling some shenanigans with the IRS, that means more than 2 out of every 5 households, after taking legitimate deductions are at or below the federal poverty level. So the article is implying that 3 out of every 5 households in the entire US make over $100,000 per year and even making up to $250,000 per year? It is a FACT not that many people are that "rich" in the US. What is this story for, rehab P R for the Demos in the upcoming congressional elections and a way to divert attention from the disastrous Obamacare that are taking money out of the hands of most Americans who are NOT "rich" in the US?
on December 9,2013 | 06:13AM
HD36 wrote:
Yes, the article is totally misleading. It would make you believe that 20% are now rich, the weath gap is increasing, and it's time to tax...again. The fact that someone, at one time, ( no time span stated), made over $100,000 in income in their life, even though they may be working at Wal Mart, part-time, now, is counted in this 20% of "newly rich", I think is two fold: One to proclaim that the QE , $85 billion a month has succeeded in an economic recovery; And two, to point out growing income disparity to lay the foundation for jacking up the minimum wage and increasing taxes.
on December 9,2013 | 06:53AM
RetiredWorking wrote:
Here's one way to improve your comfortable lifestyle as a senior citizen: keep working, collect Social Security and delay retirement for as long as possible. Wife doesn't buy that, but I do. So that's ONE pension and deferred comp fund that'll never be collected by me. I'd rather have the paycheck for as long as I can do the job. Since I'm working twice as hard as my coworkers, no one will notice when I get real old (75 ) and "just do my job".
on December 9,2013 | 08:58AM
cojef wrote:
You just have good work ethics, nothing more nothing less. If there were more like you, we would not be in the mess we are now, with trillions in debt. I'm certain you do not spend more than you earn. Our Government thinks by printing money, it is prosperity???? You have been thought by your parents well. I been retired over 23 years without a job like you. I tried, but my demands of vacations did not suit well with prospective employers.
on December 9,2013 | 09:21AM
RetiredWorking wrote:
Thanks, cojef. Parents taught me the fear of living in the Depression era. There are many opportunities of employment available after retirement. Just don't be picky and expect to be overpaid. The key is SS benefits supplement. Add that to your paycheck and you can live more comfortably. Wife shops efficiently. I'm her valet and wait in the car. Ever since I started working 10 hours day/ 4 days weekly, taking leave is not a priority. I've got a 3-day weekend every week for the rest of my career. And my generous employer would allow me to take long vacations, but I'd rather be working. And everyone needs to save for bad times.
on December 9,2013 | 10:54AM
RetiredWorking wrote:
inverse, wouldn't that imply that since 2/5 are @ or below poverty level, then maybe 1/3 of the remainder reach affluence. That would still amount to 1/5 or 1 in 5. FWIW, I wonder how much people making $100K year save?
on December 9,2013 | 10:27AM
HD36 wrote:
"Nearly 1 in 5 in US made over $100k a year, at least once in their lifetime" Primarly due to the internet bubble, 1990-2000, The housing and finance bubble, 2000-2007, and the current QE, $85 billion a month, government bond bubble-yet to pop. All possible because the Fed controlled Greenspan, Bernacke, and soon ultra dove Yellen continue to monetize the debt and blow up bubble after bubble. Yes, alot of people get rich fast during the expansion, but alot more lose money during the pop.
on December 9,2013 | 07:07AM
cojef wrote:
It helps if a benefactor upon his death gives you $150,000 from his estate, for being a good listener for 20 years.
on December 9,2013 | 09:26AM
Denominator wrote:
this is not what obama wants to read!
on December 9,2013 | 11:01AM
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