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Middle-Class Millionaires?

Written by Nickel - 38 Comments

According to a recent article from MarketWatch, a new economic class — the so-called “middle-class millionaires” — now accounts for nearly 10% of the U.S. population. Defined as being those with a net worth of between $1 million and $10 million, these individuals have some interesting characteristics. For example…

» The average middle-class millionaire works 70 hours per week.

» They are 5x more likely than the “average” worker to say they are always available for work.

» 89% believe that anyone can attain wealth through hard work.

» 62% believe that networking is the key to financial success.

» 90% say they’ve made a bad business move, and 3/4 say it was crucial to their success.

» They are 5x more likely to continue in the same business despite previous failures.

» 65% characterize their approach to negotiating as “doing whatever you need to do to win.”

» They need an average net worth of $24 million to feel wealthy, and $13.4 million to feel “rich.”

» Only 14% “trust the government” (compared to 50% for typical middle-class families).

Interestingly, nearly half believe a child’s academic achievement reflects their success as a parent, and 75% of these individuals chose their home’s location based on the school district. In contrast, only 16% of middle-class households are will to stake their parenting reputation on their kids’ performance in school. Similarly, more than half of middle-class households chose their home’s location because it was close to work.

Based on the above, the authors of the new book “The Middle Class Millionaire” argue that these individuals are re-shaping America in their own images, with the primary changes being in the areas of hard work, networking, persistence, and financial self-interest. Despite the apparent differences between middle class millionaires and the plain old middle class in these characteristics, the authors go on to argue that the trappings of the middle class millionaire lifestyle are beginning to trickle down resulting in “a whole new level of keeping up with the Joneses.”

What do you think? Do you see a new class emerging?

Or perhaps this is simply due to an ongoing divergence between existing classes, with the “old school” middle class moving ever closer to extinction?

Published on March 10th, 2008
Modified on March 11th, 2008 - 38 Comments
Filed under: Miscellany

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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38 Responses to “Middle-Class Millionaires?”

  1. 1
    thehungrydollar.com Says:

    “90% say they’ve made a bad business move, and 3/4 say it was crucial to their success.” I love this quote because every successful business owner I know has said the same thing. You learn from your mistakes and move on.

  2. 2
    Ryan S Says:

    I know some people who fit into this category. Unfortunately, the next generation coming from this class will likely not make as much as their parents, have significantly less by way of skills, and much less of a work ethic.

    From what you cite above, “workaholism” is a good one-word descriptor.

  3. 3
    KC Says:

    I just finished that book and it was an interesting read. I’m not sure I learned anything I didn’t already know. But there are certainly middle class millionaires, and they make up an influential part of our society and economy. But I believe they are highly concentrated in cities. When I visit my rural hometown I do not see this trend at all. But I see it heavily in my own city and in others.

    Likewise when my mother (who still lives in my rural hometown and who is considered well-off by most standards) always comments as we drive around my city “Who lives in these enormous houses? These homes are everywhere in this city. Does anyone live in a reasonably sized home?” We’re talking about an older part of town, not the McMansions in the suburbs. But what she fails to understand (because she doesn’t see it in her small hometown) is that there is a decent percentage of people (10% sounds right) that have inherited a lot of wealth and who have developed wealth in their lifetimes.

    I’m not sure what this say about our society except that it does lend itself to a gap between the “rich” and the “poor” – much like you saw in the 1920s or in the late 1800s Gilded Age. Personally I think its an economic cycle that we’ll go through just like all other cycles that societies see.

  4. 4
    FFB Says:

    This can just be a sign of the divergence. Yes we can still move up economically but it is becoming more and more difficult to do so. I think the traditional middle class may be disappearing.

  5. 5
    Fiscal Musings Says:

    It’s interesting how the term millionaire is thrown around these days. There will continue to be more and more millionaires as average salaries go up with inflation and because it takes more to maintain a certain standard of living. It may just be that what used to be called the upper middle class is now breaking the millionaire mark.

  6. 6
    Dividend growth investor Says:

    I guess the achievements of these middle class millionaires are what the “american dream” is. Nice article summary for us, busy bloggers :-)

  7. 7
    Kyle Says:

    Judging from these statistics, I’m not sure “middle-class millionaire” is something we should aspire to. Personally, I want to be wealthy so I don’t HAVE to work 70 hours per week and always be available for work. I know I will probably never reach the $20 million mark because I’ll quit when I reach $5 million. I believe wealth should be an means to an end, not the end itself.

  8. 8
    Ron@TheWisdomJournal Says:

    Well, I have the first two down pat.

    Still looking for the eighth one though…

  9. 9
    Troy Says:

    @Kyle: Well-said. I especially agree that ‘wealth should be a means to an end, not the end itself’.

    Am I supposed to aspire to work 70 hours per week? Should I always be available for work?

    NO THANKS! I do see a new-class emerging- the “paper-class”. I have a hunch that many of these “middle-class millionaires” are only that because they have stock options and other volatile investments. I’d like to see a follow-up survey in a 2 or 3 years when the full-impact of the housing crisis is being felt. From the looks of things, it’s just going to get worse. When it does, I’d rather have tangible assets.

    What worries me is that these millionaires need “…an average net worth of 24 million to feel wealthy…” WHAT?! I know that a million dollars doesn’t go as far as it used to, but seriously, 24 million?!! With smart investing and careful planning, a million or so ought to be plenty. :) I’m afraid we’re developing a culture of entitlement and belief that what’s important is “doing whatever you need to do to win.”

    I like money just as much as the next guy, but I’m not willing to give up time with my family to make a few more bucks. Maybe I’m weird, but having a fulfilling career, loving family, and a bed to sleep in are pretty nice. Life is sooo much more than having a bunch of stuff.

  10. 10
    Kathryn Says:

    I can see a new middle class emerging in this way, perhaps. But I also think that there’s a standard middle class that leans more in favor of principles that are opposite of this. These are people that want to be financially comfortable but who don’t want to sacrifice their free time, family time and creativity to do it. Because this group of people is just as active and growing as the new “middle class millionairres” I think it’s unlikely that we’re going to see the “old middle class” disappear. Instead, we’re going to see it continue to change as people place a different emphasis on what matters to them most.

  11. 11
    Llama Money Says:

    If the average middle class millionare works 70 hours per week, then I should be well on my way. I’ve been putting in 70-90 hour weeks for the past 4 years or so, and it’s getting exhausting. Joining that millionaire club sure would put a smile on my face though ;)

  12. 12
    KC Says:

    Actually the middle class millionaires the authors refer to a more than millionaires. The are more like “several million millionaires”. Mostly these people have found incredibly satisfying businesses that they enjoy working 70 hours or more a week at. I’ll give an example. I have a friend who has an MBA (from a local, small school). He tried various jobs managing K-Mart, hotels, etc.. But he found he could make more money driving a forklift. The company he drove a forklift for taught him to weld. His neighbor was an iron salesman and in their spare time they’d make stuff using his welding skills. Eventually they started a business making ornate iron work – railings, fences, etc. This guy is 38 – works 60 hours a week and has a business worth around 15 million dollars with little debt. Personally he has a half million dollar home and 2 $35k+ cars – all paid for. He’s a lucky guy and he’ll tell you that, but he loves his work – he said he doesn’t feel like he works long hours cause he’s working for himself. If you met him you’d never, I mean never, guess he was as successful as he is – he’s just a regular guy, no pretentions whatsoever. I knew him for a few years before I found out how successful he was. This is one of the types of people they are referring to in Middle Class Millionaires.

  13. 13
    Boring Market Says:

    I think these middle class millionaires are the same upper-middle class consumers who continue to purchase goods in any economic circumstance. I would even venture out to say that a recession would not change their spending habits.

  14. 14
    Nick Says:

    The topic is astonishing… “Middle class millionaires”. There is something very wrong with that statement.

    Either the middle class is not what it was, or the million dollars are not what they were. I think both are true. Yet there is something very ironic in that combination of words.

    Middle class was never about how much you had (wealth wise), it was about the quality of what you had and having it as much as you needed it, when you needed it. I don’t need million dollars, neither DB9, nor Mansion in Malibu… I’m happy with my Corola, and 3br/2bt house in a good school district. That is what middle class is all about.

    70h a week… that makes 10h a day, every single day… even Saturday and Sunday… are you sure in that or that is a typing mistake? could that be bi-weekly?

  15. 15
    kentuckyliz Says:

    Actually, middle class millionaires are going to be common because of career-long saving and investing in retirement accounts that you own (instead of pensions that you lose). And you don’t have to lead as unbalanced a life as those folks described here…nor with a greedy clenched fist. You can become wealthy and practice generosity along the way. Pre-ghost Scrooge didn’t seem all that enviable to me.

  16. 16
    Carolyn Mynatt Says:

    I think the “middle class millionaire” needs to review his finances and have a change of attitude. All may not be for them what it may seem. They want to be important and feel important. That will eventually get them into trouble.
    Carolyn

  17. 17
    Ria Rhodes Says:

    If the eventual outcome of working long hours is to the detriment of ones personal relationships and health, then you can have it. I retired many years ago from a food service career where long hours were the norm, and not being available for holiday family/friend events was typical. I have known many workaholics in my days, some did appear to balance the professional with the personal, but that was the exception, not the rule. There are consequences to our behaviors. Balance and moderation are good rules to live by.

  18. 18
    Lewis Schiff Says:

    Great comments everyone. I’m one of the authors of The Middle-Class Millionaire and I think you are all in the midst of a very thoughtful conversation. If you have any questions for me, please post them here and I’ll try to get back to them as soon as I’m able.
    –Lewis Schiff

  19. 19
    Troy Says:

    @Lewis Schiff: How many of these “middle-class millionaires” are millionaires solely on paper? How many of them have been granted stock options, and are financing their lifestyle using those options as collateral? To me, that’s not wealth – it’s the illusion of wealth. Many people who invested in Worldcom, Enron, et. al. probably felt wealthy… and look how that turned out.

    Net worth and wealth aren’t the same thing. My net worth includes my home, my cars, etc. – all the stuff I posess. Now, since I still owe someone for some of that stuff (home, a car), I don’t really feel wealthy.

    I have one more question. Do you think that the Silicon Valley area (and tech stocks, in general) skew the numbers above ‘reality’ for most of us?

  20. 20
    Jesse Says:

    to the poster above me: I would bet my house on silicon valley skewing the stats for the rest of the country. I would be curious to see what percentage of the middle class millionaires came from california – Id be willing to bet its massive portion

  21. 21
    nickel Says:

    Hey all, in case you’re not aware, I’m collecting questions for Lewis Schiff (one of the co-authors of The Middle-Class Millionaire.”

    Follow this link and post away. I’ll be collecting up the questions within a few days and sending them to Lewis. Once I receive his response, I’ll put together an interview-style post and publish it here.

  22. 22
    Troy Says:

    @Jesse: I want to see this study without Silicon Valley, New York, etc. all the big tech places. Before anybody says anything, I know you can’t remove them from the equation. However, being from the midwest, those places are like different countries. I’d guess it’s like the 80/20 rule- 20% of the middle-class millionaires make up 80% of the wealth. Or maybe better- 80% of the the millionaires come from California. Or New York.

  23. 23
    Carolyn Mynatt Says:

    The middle class is just that — the middle class. This thing about middle class millionaires is simply about people who have a little money and want to be up there with the “big guys”. It isn’t a problem right now, but with the economy the way it is it can be in the future.

    The Great Depression was full of middle class millionaires, who lost their life savings in the stock market when it crashed. People jumped out windows — how many of you remember that either from experience or history books. In 1989 we did it again. The market crashed. Do any of you remember that????

    I think you all need to remember what history can do to a country, a people, and a millionaire or billionaire.

    Markets crash and so do the people who hold stock in them. We are now in a recession and if the attitude of the young doesn’t soon change, we will be in a depression again, really really soon. Mark my words on it.

    Carolyn

  24. 24
    Carolyn Mynatt Says:

    One more thing. We need to be more involved with teaching our kids how to manage money. That is if we know how ourselves. So may of us don’t. If you don’t, you need to get to a class on bookkeeping, account, etc. as soon as possible. Teach yourselves and then teach your children.

    That could in turn save our “wealth”.

    Carolyn

  25. 25
    Carolyn Mynatt Says:

    Taxes???? Oh yeh! I wonder how many of these middle class millionaires are behind on their income taxes???? Remember taxes play an important part on recessions and depressions as well.

    Carolyn

  26. 26
    Carolyn Mynatt Says:

    Investments are fine if you make them wisely. However, most people do not invest wisely. They want the “get rich quick” investment, which actually does not exist.

    Somehow, I get the feeling that most people these days don’t know what they are talking about, let along what they are investing in.

    Carolyn

  27. 27
    Carolyn Mynatt Says:

    Here we go again. Credit cards???? Are they good or bad — you decide.

    Carolyn

    PS I think they are bad.

  28. 28
    Chris Says:

    I wonder what percentage were self employed (owned their own business) and what percent worked for someone?

  29. 29
    7million7years Says:

    I guess I am a ‘middle class millionaire’ … until now, I thought I was just ‘lucky’ :)

    @ Troy – cash in the bank … in this market, it’s all that counts ;)

    @ KC who says “I’m not sure I learned anything I didn’t already know” … then APPLY it Bud, and reap the benefits! You might be surprised to learn that bloggers generally write this stuff for YOUR benefit.

    The only thing that I would say about this post, besides confirming that it somewhat reflects my experience/s, is that looking at how ‘average’ millionaires got there is not necessarily the BEST or FASTEST way to get there … without the benefit of a “millionaire’s handbook”, we had to learn by trial and lots of error … reading these new books and blogs just might set you on a path to wealth and stop you from repeating those errors.

  30. 30
    Nick Says:

    @7Y7M – “cash in the bank … in this market, it’s all that counts”

    Cash is the king in any market, if you have it that is, yet I wouldn’t put it in the bank. The best part of cash is it’s traceless and surprice, ones in bank… forget about that benefit, and if the bank bankrupt insurance covers just part of your 7M. But you already know that as well as the part that federal government eagerly checks for peculiar transactions. Unless by bank, you mean safety deposit box.

    I hope you have good backing in case things go wrong ;) . As I said, middle class has never been about millions. Unless in a year or two, gas is 400 dollars a gallon and I work for 2K an hour. Then million dollars will be normal, I do remember having some old Turkish and Italian Liras at home.

  31. 31
    J.D. Says:

    Where’s Minimum Wage? I wonder what he has to say about all this. Oh wait. He’s trolling one of my posts…

  32. 32
    FlipMode Says:

    It is a pretty interesting post/topic. I know tons of these middle-class millionaires, in fact most people I know fit this description. I work in an industry that pays high salaries and virtually everyone here has at least $1MM by the time they’re 30 and at least $5MM by the time they’re 40, with the averages being much higher than these numbers. I think a lot of what has said is true, this class of people is growing rapidly and is shaping the market for mass-market high end goods. The truly rich have their own markets they deal in which most people aren’t even aware of. I think the biggest effect this class has had on society is they’ve redefined the middle class. Nowadays the middle class in my opinion and this is shared by many economists and policy analysts, is not the statistical middle but instead what it takes to live the traditional middle class lifestyle – is a minimum household networth of $150,000 in most places and at least $250,000 in places like NY, LA, SF, etc. They’ve marked the middle class in Manhattan as households that earn between $250,000 – $600,000 per year which isn’t as uncommon as many people think. In typical midwest suburbia it was marked as $150,000-$400,000 per year. Of course in some places it will be less, for example in West Viriginia I’m sure $80,000 will suffice.

  33. 33
    Nick Says:

    In a conversation today I mentioned the “Middle class millionaire” topic and received smile with a reply… “It’s an oxymoron”.

    Then I started thinking. Why a rich man would wish to be associated with the middle class? A man successful, having millions would deliberately push away the upper class and lower himself to the middle class? We are talking about people with several million dollars.

    And some thought came in my mind. I think the rich are trying to fool us in believing they are not rich, they are one of us, the broad majority that makes the middle class. But why?

    I think this is very dangerous turning point. Recalling that coffee cup that started the term “sue happy” in US, I think this going to lead to bad end, I’m not certain what that end will look like, yet my intuition tells me is not for good.

    By the way, can someone give a clear definition of a “middle class”?

    In US “middle class” is associated with “working class” (they both are paid wages) as otherwise logically there will be a “nonworking class” that has the benefits without the labor. Are we turning in a copy of British hierarchy? And what will follow?

    I start thinking this forum is getting way too… upper class for me.

    @FlipMode… You mentioned 3 city’s, US has 50+ states, and population of over 300M. What will be your example with North Dakota? 32K?

  34. 34
    Everyday Finance Says:

    You mean they worked for it and continue to sacrifice to reach their goals? Good article highlighting the American spirit. There is an evolving middle class for sure. A great book highlighting these emerging trends is Microtrends. Although written by a former Clintonite (and it shows), it’s an insightful look at interesting trends in the US, backed up by statistics and common sense logic. I’ll get around to posting a full review when complete, but I recommend it if you liked this article.

  35. 35
    Dividends4Life Says:

    Interesting read. Thanks for sharing it!

    Best Wishes,
    D4L

  36. 36
    kentuckyliz Says:

    “Class” refers to income, and “wealth” (as in millionaire) refers to asset accumulation.

    See the wikipedia entry for middle class, then click through the see also list for American middle class.

    http://en.wikipedia.org/wiki/Middle_class

    It is obvious that many lower-middle and upper-middle class people are capable of accumulating a mill or more in personal wealth.

    Another reason for asset accumulation–the huge transfer of wealth starting to happen as the Greatest Generation start leaving their assets to their heirs.

    My blog is called undercover millionaire because it’s about ordinary people living humbly and accumulating wealth. Not keeping up with the Joneses (who are in debt up to their eyeballs), but snickering under one’s breath because true wealth is not ostentatious. No one drives their wealthbuilding beater plastered with their latest investment statements. LOL

  37. 37
    shadowmole Says:

    I agree with working enough to provide and always be getting ahead (ie savings, retirement), but if I have to spend that much time away from family and the real things that make life worth living (family, friends, good times), then I’d rather be financially poor/life rich.

    Unless you don’t have family and friends and working that much is fulfilling for you. If that’s the case, well: good on you. Personally, I’d rather be a family man.

  38. 38
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