Class in America

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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 and nonprofit 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. Stagnant real incomes for most Americans are of no concern for retired citizens. 

 

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. 

 

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. 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.

 

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.”

 

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.  

 

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 only works with large fiscal and trade deficits financed by foreigners holding dollars (buying American assets) and low interest rates on rapidly increasing national debt (the rentier's best friend). 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.

 

If the birth rate stays below replacement and there is no net immigration, the US population stops growing in 2031 at the latest. The size of the working and tax-paying population starts to shrink. But the number of retired people continues growing, maybe doubling in the next 25 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.)

 

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.

 

As that great comic strip character Pogo said: We Have Met the Enemy and He Is Us.

 

To be fair senior citizens can be source of innovation and economic development, especially in new drugs and better medical equipment. Also a potential source of demand for robotaxis. Humanoid robot companions, like in Japan. Senior citizens will become a political force for controlled immigration (nursing home employees, DoorDash drivers, groundskeepers on golf courses, maintenance on pickle ball courts, for example). Senior citizens are also a major source of demand for electric vehicles, such as 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.

 

 

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?

 

 

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