This article presents an overview of the upper class in the United States, which can roughly be described as less than the top 10 percent of the population in terms of net worth. This upper class has grown in terms of wealth since the 1980s due to at least three substantial trends that can be grouped together under the term financialization. It is difficult to identify a current and distinctly American social or class-based "aristocracy" as distinguished by elite financial status, but studies of the wealthy specifically in terms of social characteristics have become increasingly common among both academics and investigative journalists. Interpretations of the role of the upper class in society vary and include perspectives from Marxists to those who espouse a cyclical theory of elite politicians to functionalists.
Keywords Anomie; Affluenza; Conflict Theory; Functionalism; Easterlin's Paradox (or Prosperity Paradox); New Rich; Old Money; Power Structure Research; Plutocracy; Scitovsky Reversal Paradox
Sociologists’ views on how to define the upper class differ, but most agree that they represent between 1 and 5 percent of the wealthiest households. Until the 1980s, the wealthy and the upper-middle class could be distinguished by their respective sources of income: the wealthy often received their wealth from investments and/or inheritances, whereas members of the upper-middle class typically earned a salary. Both returns on investments and salary levels among the wealthy have increased significantly in recent years. Investment remains a key source of wealth, but in the United States today some salaried workers, particularly executive officers and hedge-fund investment managers, can earn multimillion-dollar salaries (Frank, 2007). Despite changes in American tax policies that benefit the upper class, the wealthy are paying a higher total dollar-amount in taxes than they were twenty or thirty years ago because they are making substantially more pre-tax income (Gross, 2007). In 2013, the top 1 percent of American earners paid 30 percent of the nation’s federal taxes; however, the wealthiest 1 percent of Americans control 39 percent of the country’s wealth. In contrast, though the upper-middle class pays a smaller dollar amount than the wealthy, a larger proportion of their earned income goes to taxes (Phillips, 2002, p. 132).
It is estimated that since 1980 the number of millionaires in the United States has doubled to more than five million, and the number of billionaires has increased more than twenty fold to about three hundred (Harvard Law Review, 2006; Carey, 2007). It is believed that in the technology sector, as many as sixty new millionaires emerged daily during the boom periods of the 1990s. According to data from the US Internal Revenue Service (IRS), income from stocks increased from $75 billion annually to $446 billion annually between 1980 and 1998 (Phillips, 2002). The top 1 percent of earners have received more than half of the income gains in United States since 1980s, while the assets of the richest Americans as compiled in the Forbes 400 have more than tripled (Phillips, 2002)
Other, indirect measurements also indicate that the upper class has been growing over the past decade. In the 1990s, there was a large increase in second-home mortgages, a new record level for real estate sales over $3 million, a high level of sales of homes that cost $10 million or more, and an 11 percent increase in the sales rates of luxury retailers (Bernasek, 2006). In 1998, the national per capita spending on luxuries was $30,000 (Harvard Law Review, 2006). It is believed that the majority of people in the United States spent a fraction of this amount, and that a small minority spent a much greater portion of it. The "acceleration point" for lavish spending tends to appear within households with a net worth of about $10 million or more; below that level, spending and savings patterns are often much more cautious (Herring, 2004).
In short, the post-1980 period was the largest period of individual wealth creation and economic expansion in American history. Total net worth doubled to $42 trillion and stock values quadrupled while home values increased by 50 percent in the 1990s. At the same time, though, bankruptcy rates increased fourfold. Personal income rates rose at only half the rate of consumer spending, and investment bankers identified substantial overconfidence in market performance and a correspondingly high level of expectation for returns on investments (Fitch, 2000). The global financial crisis of 2008 destroyed more than one-fifth (22 percent) of accumulated American wealth in just one year. The wealth loss of 2008 was unprecedented in post–World War II US history, greatly exceeding the previous record year of 9.14 percent lost wealth in 1974 during the oil shock. The recovery from the global financial crisis of 2008 saw a widening gap between the country’s socioeconomic classes. In 2012, the incomes of the top 1 percent of Americans rose nearly 20 percent, compared to a 1-percent increase for the remaining 99 percent of Americans. As of 2013, 95 percent of all income gains reported since 2009 had gone to the 1 percent. Also in 2012, the wealthiest Americans earned more than 19 percent of the country’s household income, the biggest share since 1928, when income inequality was stark.
Only about 3 percent of the wealthy are celebrities, and about 10 percent of the wealthy are considered "old money." Old-wealth families started falling off the Forbes 400 list of the most wealthy after the 1980s as they were replaced by those with far greater wealth. However, those older families have tended to at least double their net worth in the newly deregulated economic market (Phillips, 2002). The "new rich" are frequently lawyers, real estate developers, technology sector entrepreneurs, scientists who have successfully marketed their innovations, financial professionals, and small business owners who have taken advantage of private equity and venture capital to sell their businesses to larger ones (Uchitelle, 2007).
There are a number of pop-sociological studies of the lifestyles, behavioural patterns, and spending habits of the wealthy. These include studies of the impact of wealth on the behaviour of the ultra-rich, the way the rich actually live their lives behind closed doors, and the philanthropic activities of the wealthy.
The term anomie was first used by sociologists to describe the sense of normlessness felt by many people in modern society (Durkheim 1897). Emile Durkheim contended that without social support structures, such as those found in small villages, certain religious communities, and close-knit families, individuals would lose their sense of how to behave in society. Contemporary theorists in the fields of sociology, psychology, and economics have taken the study of anomie to its logical conclusion in what they term affluenza. This condition is characterized by feelings of inadequacy and insecurity in the subject's ability to attain the "American dream." Thus, traditional norms have been replaced by those of capitalist economics. This is most often manifested in lavish spending in an effort to "keep up with the Joneses." Afflluenza affects members of the upper class most commonly by causing them to, despite their wealth, experience feelings of dissatisfaction, inadequacy, and anxiety.
Upper-class affluenza is particularly noticeable among the suddenly wealthy (such as lottery winners), affluent adolescents, and those who inherit wealth. Lottery winners tend to revert to their former levels of happiness about two months after their windfalls (Levine, 2006b). They are likely to experience social or other adjustment problems about two years later due to, for example, a loss of motivation and the changes in lifestyle that accompany sudden wealth. Even more surprisingly, larger windfalls actually increase the winners' likelihood suffering from these problems. This situation, in which perceived self-worth does not correspond with financial worth, is termed "sudden wealth syndrome." Sudden wealth gained through stock market investments or an entrepreneurial endeavour can cause similar problems.
Madeline Levine (2006a; 2006b) found that upper-class affluenza also affects the children of the wealthy. While counseling affluent adolescents, she found that they tended to experience higher levels of anxiety and depression and were more prone to eating disorders and substance abuse than adolescents in the general population and even adolescents in low-income households. For instance, she found that rate of depression among affluent female adolescent was 22 percent, three times the national rate for adolescent females (Levine, 2006b). Self-mutilation, or "cutting," was also more prevalent in this group than in the general population. According to Levine, though they were aware of their privileged position, these adolescents derived no satisfaction from it. They also generally lacked creativity, spontaneity, enthusiasm, and even the ability to feel pleasure; generally, they were unable to provide a reason for their condition (Levine, 2006a). Levine attributed their problems to parental overinvolvement, arguing that because these adolescents' parents could and did intervene in their children's minor, everyday problems, the adolescents did not develop the resources, resilience, and self-reliance to solve their problems themselves. As a result, Levine said, these adolescents developed a "false self": they conformed to family and community standards rather than develop an individual identity through a trial-and-error process, introspection, or defiance of parental authority. As a result, their identity tended to become linked with grades and possessions, such as clothes and electronics, while independence, character, and "psychological resources" stagnated (Levine, 2006b).
Research has shown that while in developed nations and wealthy clearly report higher levels of personal satisfaction than the poor, increased national wealth tends not to result in greater overall levels of happiness. This circumstance is known as Easterlin's paradox (Wolfers, 2008). It states that having wealth above the sustenance level tends not to lead to substantially greater happiness. Moreover, "hedonistic adaptation" to a higher levels of comfort requires a person to maintain high level of comfort in order to prevent a decline in happiness (Frey & Stutzer, 2002; Levine, 2006b). An earlier version of Easterlin's paradox was developed by economist Tibor Scitovsky, who argued that human consumption ought to be measured qualitatively as well as quantitatively. Distinguishing between "joyless" consumption and "joyful" consumption, he claimed that humans can adapt to some types of consumption, making the pleasure derived from them fade, but not other types of consumption, which are continually pleasurable. Thus, spending money on items that promote beauty, novelty, or variety is more likely to result in happiness than spending on material comfort. Scitovsky was an early proponent of the idea that wealth can result in an overall loss of contentment. Scitovsky contended that luxurious material consumption causes a decline in the satisfaction one derives from occasional and partial gratifications of the desire for material comfort. An increase in income also tends to result in an...
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