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Dream Hoarders — Why the top 20% is hurting everyone else.

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This book, written by Richard V Reeves, argues that the upper middle class, defined as those in the top income quintile (about $115,000/yr +), are hoarding all the good opportunities and successes in education, housing, health care, and careers.

 

WIth income inequality growing, the way the UMC is raising its children creates a glass floor of sorts, that most kids do not fall under. But it’s also creating a glass ceiling that rarely lets others in. In fact, he argues there is much less mobility in the UMC than other income quintiles. If you are born to the right parents with high education and high income, you are much more likely to stay that way. Even if you are not the brightest and not the most hardworking.

 

He argues that while the job market is much more meritocratic here than in other societies (he’s a British immigrant), childhood isn’t. The wealthy use things like exclusionary zoning (to keep themselves secluded in the best school districts), tax credits (mortgage and 529), legacy college admissions, and personal connections to ensure their children have been taught the skills, attributes, and credentials necessary to be top competitors in that meritocratic job market.  Middle class and definitely lower middle class/lower income kids don’t stand a chance.  UMC kids get the best schools, the best tutors, the best SAT classes, admission to the HYPS and other SLACs, the best internships, and then the best jobs.  They get the bigger vocabularies, better travel opportunities, and more enrichment opportunities like cello lessons and Mandarin classes.  Soosie mentioned Chelsea Clinton’s $600,000 salary.  Perfect example.

 

This inequality significantly reduces the upward flow of talent. One example he gives are fund managers. Those from lower income homes perform better than managers from UMC homes. Likely because they have to be much smarter to even make it in the door.  Trying to keep them out stifles our labor market and therefore our nation’s overall productivity.  If we can decrease this income inequality and provide better education and investment in children who are not UMC, we all benefit from a more robust economy.

 

He lists several ways to help provide more opportunities to middle class kids and lower income kids. Including incentives to get the best teachers teaching in low-performing schools. Apparently replacing a bad teacher with an average one increases those kids’ estimated lifetime income by $250,000.  Better birth control. More mixed income housing. Abolishing legacy admissions. And abolishing the 529 tax benefits for UMC.  

 

In the end, asking more from the UMC is actually good for our nation. For everyone. Many think taxing the rich their fair share goes only to help super low income people. But it should be helping out middle class kids, too. Who are nowhere near a level playing field when it comes to their first two decades of life, and what opportunities they result from that.

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