By Lina Irawan 
Maggiulli’s journey to this realization began with observations articulated in earlier blog posts, where he dissected the economic calculus behind aspirational spending. He first argued that private school, despite its exorbitant price tag, often fails to deliver commensurate value, questioning its true worth in a competitive educational landscape. Subsequently, in a piece provocatively titled "The Death of the Amex Lounge," he highlighted how premium travel experiences, once symbols of exclusivity and comfort, have become increasingly crowded and diluted, even as their costs remain elevated. These preliminary analyses laid the groundwork for his broader thesis, which he had hinted at in previous discussions with Fortune while promoting his book, The Wealth Ladder, expressing a growing conviction that "something weird’s going on" within the U.S. economy’s upper-middle strata.
The "upper-middle-class trap" is, at its core, a "financial arms race" driven by the relentless pursuit of what economists call "positional goods." These are goods or services whose value is derived not from their intrinsic utility, but from their scarcity and the social status they confer. Each individual decision to acquire such a good — a larger house in a prestigious school district, an elite college education, a luxury car, or an exclusive vacation — may seem rational in isolation, a logical step in securing a better life or future for oneself and one’s family. However, when aggregated across an entire demographic striving for the same limited resources, this competition becomes self-defeating. It inflates prices, diminishes quality, and ultimately lowers everyone’s quality of life while simultaneously draining their financial reserves.
Maggiulli backs his argument with compelling data points that illustrate this spiraling competition. In the housing market, a cornerstone of the American Dream, new single-family homes have paradoxically shrunk in average size by 12% between 2014 and 2024, according to LendingTree data. During the same decade, the price per square foot for these smaller homes surged by an astonishing 74%. Location, particularly proximity to quality education, exacerbates this effect; a home situated near a public elementary school boasting a top GreatSchools rating costs an eye-watering 78.6% more than a comparable property in the surrounding county, as reported by Realtor.com. The competition extends to the buying process itself, where winning a bidding war, often perceived as a victory, frequently leads to poorer long-term financial outcomes. One study revealed that purchases secured through competitive bidding produced 6.9% lower annualized returns compared to homes acquired without such intense competition, suggesting buyers overpay in their eagerness to secure a desirable asset.
The educational arena tells a similar story of escalating costs and intensified competition. The number of college applicants has soared by 78% since 2015, creating an unprecedented bottleneck, particularly at elite institutions where acceptance rates have plummeted. This heightened demand, coupled with limited supply, has fueled tuition and private-school costs, which have risen at approximately twice the rate of overall inflation, placing immense financial strain on families seeking a perceived advantage for their children.
Beyond traditional positional goods, Maggiulli identifies a new, insidious accelerant that is nearly impossible for high earners to opt out of: the adoption of artificial intelligence. Citing Brookings Institution data from November 2025, he highlights a stark disparity in AI usage, rising from a mere 9% among earners below $30,000 to a significant 34% among those earning $100,000 or more. This isn’t necessarily about gaining a competitive edge, but rather about a defensive maneuver, a "Red Queen" dynamic where one must run faster and faster just to stay in the same place. High earners, acutely aware of the potential for AI to automate and disrupt their careers, feel compelled to integrate these technologies into their professional lives simply to defend their current position and relevance. Maggiulli vividly illustrates this with a thought experiment: "If AI doubled everyone’s productivity overnight, suddenly someone with half your skill would be able to compete with you just by using AI." This creates a perpetual treadmill of upskilling and adoption, adding another layer of stress and expenditure without necessarily yielding a proportionate increase in security or well-being.
Maggiulli’s prescribed exit from this trap is remarkably blunt and counter-intuitive to conventional aspirations: cease competing for positional goods that do not genuinely enhance your quality of life. His advice champions a return to foundational values: send your children to good public schools, prioritize economy class for travel, and opt for a smaller, more affordable house. The litmus test he proposes for any significant purchase is simple yet profound: "Am I buying this to improve my quality of life, or merely because other people are buying it?" This distinction encourages a shift from status-driven consumption to value-driven living, fostering financial freedom and psychological peace over external validation.
The "upper-middle-class trap" also provides a compelling explanation for a startling statistic that has captured public attention over the past year: the cost of achieving the American Dream. According to a comprehensive analysis by Investopedia in 2025, this aspirational benchmark has surpassed an astounding $5 million, a cumulative lifetime cost encompassing eight pillars traditionally associated with middle-class success. This figure, nearly $600,000 higher than the previous year, was derived from government data, industry statistics, and responses from over 1,200 U.S. adults. The breakdown is sobering: retirement at $1.6 million, homeownership at $957,594, purchasing new cars every five years at $900,346, raising two children and funding their college education at $876,092, healthcare at $414,208, annual vacations at $180,621, pet ownership at $39,381, and a wedding at $38,200.
Against this backdrop, the average American with a bachelor’s degree earns approximately $2.8 million over their entire career – less than half of what is now deemed necessary to "live the dream." This financial chasm effectively makes two college-educated earners a functional prerequisite for achieving this idealized lifestyle. Homeownership consistently emerges as the most commonly cited obstacle, with 58% of respondents naming high home prices as their top barrier, followed closely by rising living costs (51%) and elevated mortgage rates (47%). This triad of challenges perfectly encapsulates the "positional-goods squeeze" that Maggiulli describes, where the most fundamental components of the American Dream have become intensely competitive and financially prohibitive.
However, Maggiulli’s framework has encountered a robust, countervailing analysis rooted in income data. A January report from the American Enterprise Institute (AEI), authored by economists Stephen Rose and Scott Winship, challenges the prevailing "hollowing out" narrative that underpins both Maggiulli’s trap and Investopedia’s daunting price tag. Rose and Winship contend that the story is only half-true. Their data indicates that the share of American families earning between roughly $133,000 and $400,000—their definition of the upper-middle class—has tripled, soaring from 10% in 1979 to 31% in 2024. For the first time in U.S. history, a greater proportion of families now sit above the traditional middle-class income threshold than below it. Furthermore, median family income, meticulously adjusted for inflation and family size, rose by a substantial 52% between 1979 and 2024. "It is simply inaccurate to characterize the ‘shrinking’ middle class as reflecting diminished economic security rather than material progress," Rose and Winship assert, painting a picture of upward mobility rather than stagnation.
Winship, in a previous statement to Fortune, acknowledged the inherent limitations of an income-only lens, conceding that two individuals with identical lifetime earnings can arrive at vastly different wealth outcomes depending on their saving and spending habits – a critical point that subtly bolsters a key aspect of Maggiulli’s argument. The AEI is reportedly preparing a follow-up study incorporating wealth data, with preliminary results reportedly showing a similar pattern: the middle class appears to shrink primarily because a significant portion of its members have ascended into the upper-middle class.
Maggiulli’s counter-argument deftly reframes the entire debate around wealth rather than mere income. He points out that the share of U.S. households with a net worth between $1 million and $10 million more than doubled, climbing from 7% in 1989 to 18% in 2022-23. Despite this objective increase in wealth, Maggiulli previously told Fortune, "There’s a good portion of them that feel like they don’t have enough. They feel like they’re just getting by." This sentiment underscores a crucial psychological dimension: what constituted significant wealth in one era no longer holds the same gravitas. A $1 million net worth, which placed an individual in the top 5% of Americans in the late 1990s, now merely positions them in the top 20%, illustrating a shifting benchmark of prosperity.
When contacted for this article, Maggiulli noted that the most recent comprehensive data to fully answer these complex questions remains the Federal Reserve’s 2022 Survey of Consumer Finances, with the eagerly anticipated 2025 data release due in a few months. "I believe that data will answer a lot of these questions more definitively," he said. His current interpretation of available data, however, suggests that both seemingly contradictory arguments may hold truth simultaneously: the economic pie has indeed grown, but this progress is shadowed by widespread misperceptions fueled by social media, distorting how that wealth is perceived and felt. The dynamic is "quite psychological in nature," he explained, adding that robust data on collective psychology, by its very definition, remains scarce.
Chris Bradley, a senior partner at McKinsey and director of the McKinsey Global Institute, previously articulated to Fortune a concept he calls "signal failure." He suggests that American society, having achieved extraordinary wealth by historical standards, has somehow lost the ability to recognize its own prosperity. The "antenna" people use to judge their success, he argues, is still tuned to an outdated frequency, while the underlying economic reality has fundamentally changed. A family earning $175,000 annually, an income that would have been unambiguously prosperous in any prior decade, now spends its evenings consuming content from influencers who vacation in the Maldives and portray business class travel as a mere hardship. This relentless exposure to curated affluence effectively shifts the goalposts, making the top 10% of earners feel as though they are merely in the middle.
Bradley himself has recently grappled with a starker iteration of this anxiety on his LinkedIn profile. In a departure from his usual optimism in May, he conceded that "the young’uns are probably right" to have lost faith in the promise of generational progress. Citing Australian polling revealing that only one in five people believe the next generation will be better off than the last, Bradley reflected on the economic reality facing a 30-year-old today: "has experienced less growth, hardly any productivity improvement, much more expensive housing, a bigger tax bill, and a much bigger government" compared to his own cohort at the same age. He concluded with a sobering thought: "real hope needs to be earned."
"Structurally, it feels like quality is getting worse even as prices are rising," Maggiulli told Fortune, citing general trends observed across travel, education, and housing. He affirmed that his initial sense of "something weird" happening in the economy has evolved into a firmer conviction in the existence of an "upper-middle-class trap." He also agreed with Fortune‘s observation that his thesis bears a strong resemblance to Yale Law professor Daniel Markovits’ 2019 book, The Meritocracy Trap, which argued that upper-middle-class status in the 21st century yields less than the sum of its parts. "I enjoyed Markovits’ Meritocracy Trap because it highlights how it can be tough to get ahead in the upper middle class," Maggiulli said, "as compared to the upper class, who can buy their way into things."
Even the seemingly optimistic AEI numbers, when scrutinized, reveal the persistent undercurrent of unequal prosperity. The combined income share of the upper-middle class and the wealthy soared from 28% of all family income in 1979 to a staggering 68% by 2024. Within this, the top 1%’s share of income doubled from 5% to 9%, a figure Winship conceded is likely an undercount due to the underrepresentation of the wealthiest Americans in Census data. Separate research based on tax data by Gerald Auten and David Splinter places the true top 1% income share closer to 17%. The ultimate upshot, in Winship’s own concise words, is a condition of "broad prosperity, unequally shared."
The tension between objective economic progress and the subjective experience of stagnation or even decline is central to understanding the modern American condition. While wealth and income metrics may point to overall societal advancement, the pervasive feeling of being "caught in a trap" for many in the upper-middle class underscores a deeper psychological and structural challenge. This is a society where the traditional markers of success have become exponentially more expensive, competitive, and less satisfying, leading to a relentless pursuit of positional goods that ultimately diminish collective well-being. Maggiulli’s work, alongside the insights of others like Markovits and Bradley, serves as a vital call to examine not just what we earn or own, but how we define and experience prosperity in an increasingly complex and competitive world.
