Welcome to the ‘upper-middle-class trap’: why $300,000 a year doesn’t feel like winning anymore

Over the last year, Nick Maggiulli has come to what he calls an unsettling realization: The upper-middle class is caught in a trap, and many of them don't even realize it.

The chief operating officer of Ritholtz Wealth Management has spent the better part of a year building the case in pieces on his blog, Of Dollars and Data —first arguing private school isn't worth the cost despite its price tag, then that premium travel experiences have grown crowded while remaining expensive in "The Death of the Amex Lounge." He previously talked to Fortune about his book, The Wealth Ladder , and his growing belief "something weird's going on" with the upper-middle class in the U.S. economy.

In an April essay, he pulled the threads together and gave the phenomenon a name: the "upper-middle-class trap," in which people earning roughly $200,000 to $400,000 a year are working more and relaxing less to buy products and services of declining quality.

His evidence includes new single-family homes shrinking in average size by 12% between 2014 and 2024, even as the price per square foot surged 74%, according to LendingTree data . A home near a public elementary school with a top GreatSchools rating costs 78.6% more than a comparable home in the surrounding county. Homebuyers who win bidding wars end up worse off: One study found their purchases produced 6.9% lower annualized returns than homes bought without competition. In higher education, the number of college applicants has jumped 78% since 2015 even as acceptance rates at elite schools have collapsed, driving tuition and private-school costs up roughly twice as fast as overall inflation.

The mechanism Maggiulli describes is a "financial arms race": Every individual decision is rational, but collectively the competition for the same scarce positional goods lowers everyone's quality of life while draining their bank accounts.

One accelerant, he argues, is nearly impossible to opt out of. Citing Brookings Institution data from November 2025, he notes AI usage rises from 9% among earners below $30,000 to 34% among those earning $100,000 or more. High earners, worried AI threatens their careers, are forced to adopt it just to defend their position—a " Red Queen " dynamic in which everyone runs faster just to stay in place.

"If AI doubled everyone's productivity overnight," he writes, "suddenly someone with half your skill would be able to compete with you just by using AI."

His prescribed exit is blunt: Stop competing for positional goods that don't materially improve your life. Send your kids to good public schools, fly economy, buy a smaller, affordable house. His test for any big purchase: "Am I buying this to improve my quality of life, or merely because other people are buying it?"