Age and Class in America

Age and Class in America

         

 

As an economist, I define class in economic terms. In the past, income and income inequality were usually the main determinants. Now it is a combination of income and wealth (actual and potential).

 

There are four classes in America:

 

1) seniors with assets (wealth) and their inheriting kids. Demographically, the fastest growing class.

         Total U.S. household net worth reached a record $166.7 trillion in the first quarter of 2026, according to the Federal Reserve's Financial Accounts of the United States. This reflects the total value of all assets (like real estate, equities, and bank deposits) minus all liabilities (like mortgages and debt) across the nation.

            The top 10% of households own 70% of the wealth.

 

Who are these households? They overlap with senior citizens:

 

            Senior citizens (those aged 55 and older) hold approximately 74% of all wealth in the United States, according to data from the Federal Reserve.   

 

• Baby Boomers (Ages 62–80): Boomers control the lion's share of this wealth, accounting for about 51% of the nation's total net worth.
• Ages 55–64: Households in this pre-retirement demographic hold roughly 23% of national wealth.

 

Rising corporate profits leading to rising stock prices, partly due to the market power of big companies, is good for the wealth of this group. The stagnant real incomes of most Americans are of no concern for retired citizens. 

 

Have you noticed that senior citizen discounts have disappeared? No reason to charge lower prices to America’s wealthiest class.

 

2) successful entrepreneurs/small business owners (future members of the first class). The key here is a skill that can’t be automated and preferably related to home construction or maintenance (plumbers, electricians, etc). Or owning a franchise that limits direct competition (auto dealerships, beer distribution, fast food stores). Or owning a company that develops or applies AI. 

The surest way to have a high income, being in the top 1%, and wealth is to own a business that is protected from direct competition. This often means a territory, brand or franchise that limits direct competition. About 10,000 car dealerships have at least one owner in the top 0.1% of income. Tens of thousands of franchisees are millionaires; MacDonald's alone is estimated to have created 14,000 in America.

As a former consultant to small businesses, I never met a successful entrepreneur who took an economics course extolling the virtues of competition.

Many of the skilled people I’ve talked to who have fixed my housing problems inherited the business from their fathers.

Old joke. A doctor hires a plumber to fix problems. When he comes home, the plumber presents him with the bill. “My god,” the doctor exclaims, “you make more money per hour than I do.”  “Yes, I know.” says the plumber, “I used to be a doctor.”

But doctors, dentists and pharmacists are also in the high income group. Again, partly by limiting competition through limiting supply. This time through long and expensive education, professional credentials and licensing, and protection from competition by state regulation.

 

3) employees currently earning high salaries hoping AI doesn’t replace them soon and are lucky enough to make it to first class. With stock options, big 401s and pensions. Generally older employees (50-64).

 

4) other. 

 

The figure for US wealth does not include the capitalized value of the business income of this group, like it does the market value of stock in public corporations. Successful businesses can be inherited or sold to generate financial wealth.

 

Class as seen in airplane seating - first class, business class, steerage.

         Not seen. The truly wealthy avoid all the hassle by owning private jets or can afford private jet service. No TSA lines or taking off shoes for these folks.

Not surprisingly, profits of major airlines depend more and more on first class and business travelers. That’s where the income is.

 

     Airlines are increasingly pivoting their revenue strategies toward luxury and premium     cabins, heavily leaning on first-class and business-class seats to drive profitability. By sacrificing economy space to install lavish, high-margin premium seating, carriers are catering to leisure travelers seeking elevated experiences. (Wall Street Journal, May 9, 2025. On YouTube.) 

 

This may explain Trump's appeal, which is different for the different classes. The median age of voters in America is 52. More importantly, the median age of primary voters—who pick the roughly 90% of House members whose seats cannot plausibly be won by the other party—is 65.

 

Senior citizens are less concerned about long-term problems like global warming, the environment, rising national debt, and loss of jobs because of AI. They are mostly concerned with preserving Social Security and Medicare, and housing values. About 2/3 of senior citizens own their home without a mortgage, a major source of wealth. That is why they oppose affordable housing near them. Go to any local hearing on affordable housing and I will bet you my lottery ticket most of the public who shows up will be senior citizens.

 

Owners of small businesses and franchises are not concerned with foreign competition or the trade deficit. If they sell foreign cars, Mexican beer, or clothes in small, local retail stores, then imports are the source of their income and wealth. 

 

The young may complain about rising home prices but not the old. Or kids lucky enough to inherit the equity in houses or to have rich parents who can help with a down payment.

The Economist does a weekly tracking poll of approval/disapproval of the president. The latest reading (July 29, 2026) shows that the groups who least disapprove of President Trump are 65+ (age), male (gender), white (race) and high school graduate or less (education). When asked what was the most important issue in America, only 1% of Republicans answered either climate change and the environment or education or civil liberties or civil rights. Only 6% of Republicans answered healthcare. They seem satisfied with Medicare and are not concerned about the millions of fellow Americans who just lost their Medicaid or Obamacare.

When President Trump was elected to his second term, a group of staff members put together a presentation on long-term projections of the national debt and interest payments. After five minutes, President closed the meeting with "Not my problem. I'm won't be here." No worry about blowback from his supporters.  

 

It might also explain why the Democrats (and centrists parties in Europe) have no programs that appeal to any of the first three classes. Except more public health.

 

Of course the whole economic system with large fiscal and trade deficits only works if it is financed by rich Americans buying government debt and foreigners buying American assets. Interest rates on the rapidly increasing national debt have to be kept artificially low by the Fed, which will be increasing hard to do. If debt-based aggregate demand ever stops growing (mostly consumption but maybe government if lowering yearly deficits ever occurs), the system crashes and the rentier class will switch to Chinese government bonds.

 

While a VAT tax is the least bad option to reduce yearly budget deficits, older Americans, who are primarily consumers, will oppose it since it taxes consumption. And since the children of senior citizens aren't giving them grandchildren, more senior citizens see no reason to increase public spending on child care or public education.

 

If the birth rate stays below replacement and there is no net immigration, the US population grows slowly after 2031. Growth is mostly due to longer life expectancies of senior citizens. The size of the working and tax-paying population shrinks. But the number of retired people continues growing, maybe doubling over the next 30 years. The Social Security trust fund runs out in 2032, which means some combination of higher taxes or larger deficits (lower benefits). Only a fool who didn’t want to be elected to national office would advocate 20% lower benefits. (See voting patterns above.) Unless there are major reforms in Social Security, the $500 billion yearly shortfall in Social Security financing will be paid out of more borrowing to cover Social Security benefits, leading to an even larger yearly budget deficit.

 

There are proposals to deal with America’s long-term problems. But they would need a consensus about the common good. Donald Trump and the Trump Party (former Republican Party) has demonstrated that ignoring the long-term problems and adjustments, appealing to emotions and fear, and demonizing large groups of Americans and foreigners is a winning political strategy. With an old, and aging, electorate opposing change that threatens their rentier income and wealth, talking about the common good seems politically suicidal. Until the system collapses and there are revolutionary changes. When this happens, there will probably be demagogues finding scapegoats to blame.

 

Senior citizens are in favor of social welfare for … senior citizens. But senior citizens will eventually support expanded government spending to protect beach-front retirement property.

 

To be fair, senior citizens can be source of potential demand for innovation and economic development, especially new drugs and better medical equipment. Also a potential source of demand for robotaxis. And humanoid robot companions, like in Japan. Senior citizens will become a political force for increasing controlled immigration based on temporary work permits (nursing home employees, DoorDash drivers, groundskeepers on golf courses, maintenance workers on pickle ball courts, for example). Senior citizens are already a major source of demand for electric vehicles - golf carts. Most of this will be paid for by rising Social Security and Medicare benefits, pensions, higher interest rates on the national debt, and higher stock prices of companies providing these goods and services.

High income and wealthy groups have special tax laws to avoid paying higher taxes. The vast majority of wealthy senior citizens also avoid paying inheritance taxes. The tax laws and loopholes has created another group of high-income workers - tax accountants and estate lawyers.

But can democracy survive? Is democracy compatible with gerontocracy? 

Yes, as long as the local and global workforces pay taxes to support wealthy senior citizens in wealthy countries. But they will be paying higher taxes because of the increase in senior citizens and the decrease in the size of workforces due to below replacement birth rates and AI eliminating jobs. And who do you suppose will own most of the stock in AI-related companies?

FURTHER COMMENT

One author has described America as a "velvet rope economy." The rich fly in private jets at private terminals (no pesky TSA), have exclusive lounges at baseball parks, concierge doctors, private assistants to deal with the bureaucratic world that drives the rest of us crazy, even private firefighters. They have an E-Z Pass for all obstacles in life. The rich don't mix with us common folks. And they live longer.

How do you feel when you get on a plane and have to walk through the first-class section to get to steerage? No wonder most Americans are angry and resentful. And then they elect the perfect representative of the privileged, wealthy senior citizen class. Go figure. 

Although there is still some economic mobility, more people seem to feel like serfs in a feudal society.