Nick Maggiulli, COO of Ritholtz Wealth Management, has identified what he calls the 'upper-middle-class trap,' affecting Americans earning between $200,000 and $400,000 annually. Over the past year, Maggiulli has detailed how this group works harder and relaxes less while purchasing lower-quality goods and services, despite rising incomes, according to fortune.com.
Maggiulli’s analysis, shared through his blog Of Dollars and Data and his book The Wealth Ladder, highlights trends such as shrinking new single-family homes—down 12% in size from 2014 to 2024—while prices per square foot surged 74%, per LendingTree data. He also points to housing near top-rated public schools costing nearly 79% more than comparable county homes, and buyers winning bidding wars often seeing 6.9% lower annualized returns on their purchases, fortune.com reported.
This phenomenon underscores challenges for the upper-middle class amid rising costs and diminishing value, reflecting broader economic pressures. The trap illustrates how higher earnings do not necessarily translate into improved living standards, with premium services like private schooling and travel experiences becoming more expensive and crowded, as Maggiulli’s research shows, according to fortune.com.
Maggiulli’s findings were compiled over the past year and published in April, providing a comprehensive view of the economic squeeze on the upper-middle class in the U.S., as detailed on fortune.com.