Nina Strohminger, a professor at the University of Pennsylvania’s Wharton Business School, went viral when she shared the results of a class poll (Twitter). 25% of her students thought that the average American salary was over six figures, with one student believing it to be $800,000. Many people were astonished at the ignorance of these elite students, many of whom are destined for high-powered corporate leadership roles. But the problem here is bigger than the confusion of one Wharton class: income, class, and wealth are tricky subjects that many of us have misconceptions about. That’s not only a challenge for understanding the kind of society we live in: it impedes racial justice.
• If you have the capacity, redistribute your resources to support those more marginalized. Donate to local food banks, mutual aid initiatives, and land trusts.
• Give money and resources directly to oppressed people in your community.
• Support the Undocumented Worker Fund, POOR Magazine, Los Angeles Black Worker Center, or local efforts by and for low and no-income BIPOC.
What Are Income, Class, and Wealth?
Income is how much money a person makes. Strohminger’s students thought the average American’s income was more than $100,000. In reality, it’s $53,383 — around $30,000 less than Wharton’s yearly tuition (Fortune). Household income is the combined income of everyone living in a home (Census).
Wealth, or net worth, is how much a person is worth financially. To find out a person’s wealth, first add up all their assets: property, possessions, and money in the bank. Then subtract their debts, like unpaid credit card debt or student loans (The Balance).
“Class” is used to describe a few different concepts. But one productive way to think about class, as opposed to income or wealth, is that it’s how someone makes money. You might live off of the salary you get for working at someone else’s company. If you’re the owner of that business, you instead live off a portion of the profits (University of Minnesota).
What Do Americans Believe?
John Steinbeck is often quoted as saying that poor Americans believe they’re only “temporarily embarrassed millionaires.” Half of Americans believe they will one day be rich, including two-thirds of millennials (Business Insider). In the meantime, almost everyone describes themselves as middle class (CNBC), including a majority of those whose family income is over $100,000 a year (Pew).
What’s the Truth?
Half of U.S. workers make less than $34,600 a year (SSA), and one in five families has negative wealth (MarketWatch). (The average income is higher because it’s skewed by a small percentage of Americans who make a great deal.) Over the past 50 years, the share of income going to lower and middle-income households fell, while the share going to upper-income households, who hold the vast majority of the nation’s wealth, rose dramatically (Pew).
If you’re part of the minority of Americans who have a college degree and make more than $35,000 a year, you’re doing better than most (Statista). But if your family isn’t already very wealthy, don’t hold your breath. Despite incorrect ideas about American meritocracy (Bloomberg), upward socioeconomic mobility is “far from the norm” (Pacific Standards).
Wealth transfers, nepotism, and educational inequality make this worse — two out of three Stanford University students come from the top 20%. Less than one in twenty comes from the bottom 20% (N.Y. Times).
What Does Race Have to Do With It?
There are huge, persistent racial disparities in income, class, and wealth. Black women make $0.63 for every $1.00 paid to white, non-Hispanic men (SHRM). At every level of education, Black workers are dramatically more likely than white workers to be unemployed (EPI). Though white men have more wealth on average than white women, both have many times the wealth of people of color of any gender (Brookings).
Why Does This Matter?
Misunderstanding income, class, and wealth has negative consequences for those seeking to advance racial justice.
People thinking about themselves as future millionaires have less incentive to fight inequality and the conditions negatively impacting their own lives or the lives of those around them.
Affluent people thinking about themselves as middle class, like everyone else, aren’t going to commit to the wealth transfers and material actions that real solidarity requires.
And if we don’t understand the racial gaps in income and wealth, we can fall into the trap of thinking of racial and economic justice as two distinct issues, rather than as two aspects of a racist, classist economic system that especially exploits and oppresses working-class and unemployed people of color.
Those are the folks with the most insight into the nature of our racial and economic system and what parts of it need to change. Whether out of self-interest or condescension, politicians, philanthropists, academics, and do-gooder volunteers often adopt a paternalistic approach, deciding what’s best for poor people or diagnosing where they’ve gone wrong (Everyday Feminism). That’s unacceptable; the solution to disempowerment and poverty is power and resources.
The Wharton class income fiasco should provide an opportunity for us all to have these important conversations with ourselves and those around us.
• According to 25% of students in one Wharton class, income of $100,000 a year is below average.
• Misconceptions about race, class, and wealth hamper attempts to secure racial equity.
• There is vast economic inequality in the U.S., particularly along racial lines.