Three Americas
A Story of Economic Trifurcation
Greetings.
It’s hard to believe it was 2004 - a few lifetimes ago from the rearview of 2026 - that John Edwards, then a Democratic presidential candidate, mounted his “Two Americas” campaign, an idea first introduced in public discourse by Dr. Martin Luther King, Jr.
“We live in Two Americas,” Edwards said again and again on the trail. “One for the wealthy and powerful and one for everyone else.”
Though his bid was unsuccessful, his framing of the country’s fundamental economic challenge stuck with us. It was an indictment of the contract intrinsic to the nation’s founding: that even when disparities exist in a capitalist republic, a basic level of opportunity is the right of all inhabitants. Further, that the expectation of a decent, stable life could fairly be the result. Edwards looks like a politician before his time.
Even he did not foresee the serious erosion of opportunity and stability that has since become entrenched in America.
Current economic statistics - those that show steady consumption, resilient spending, reasonable wage growth and balanced if slow hiring - belie reality for most Americans. The truth is: the vast majority are no longer financially stable nor do they see a viable means to better their circumstances.
This newfound despair is the result of a confluence of factors building since the turn of the century. Costs have outpaced wages, and growth has been confined to select industries - health care and of late AI. During the 2010s, low interest rates checked the marginalization of white collar workers, though blue collar workers already felt constriction. The pandemic exposed widening economic fault lines, and the last several years of inflation and high rates have shined a harsh light on the loss of opportunity.
To tweak John Edwards’ (and Martin Luther King, Jr.’s) refrain, we are now in a “Three Americas” era.
How did two become three?
What hasn’t changed - in truth, only grown worse - are circumstances for the poor and near poor, who face profound structural disadvantages and therefore live on the margins of economic and cultural life. What hasn’t changed - in truth, only grown much better - are circumstances for the extremely wealthy, those whose means insulate them from the harsh macro conditions now bedeviling everyone else.
What has changed is the development of a third cohort of Americans in the vast middle, comprising both white and blue collar workers, both tradespeople and office workers, who are gainfully employed in moderate- or well-paying jobs and yet unable to advance economically.
The Haves and Have Nots have become: The Have Mores, the Messy Middle and the Have None.
A way to distinguish The Have Mores, beyond sheer wealth, is the composition of that wealth: They are an equity class, with a considerable amount gained not from income but ownership. The inequality now compounds as The Have Mores transfer extraordinary amounts of wealth to their children. We understand the impulse to bestow fortune upon one’s offspring, but the trend is increasingly detrimental to society overall.
The US was never a true meritocracy, but we weren’t an oligarchy either. The twenty-first century has seen a lurch toward the latter.
The Messy Middle
Unlike previous eras, this middle group is comprised of upper, upper-middle and middle classes, previously distinct groups with different situations and trajectories now joined by the reality of economic stress. To be clear, that stress manifests in varying degrees and with different implications. But while their realities are dissimilar, the three groups, for the first time, share the overall condition of financial instability. In a 19 June article in The Wall Street Journal, “America’s Economic Anxiety Is Rising Up the Income Ladder,” Aaron Zitner reports on a recent WSJ poll: “More than 40% of Americans who call themselves upper class or upper-middle class say they haven’t saved enough money to retire comfortably.” He continues, “Some 86% of people who call themselves upper class or upper-middle class say they lack confidence that life for their children will be better than theirs has been.” Most remarkably, “…65% in the most affluent classes say America’s political and economic systems are ‘stacked against people like me.’”
John Anzalone, a Democratic pollster involved in the report, summed it up: “The overall picture is bleak. What we’re seeing in this poll is Americans under siege.” Republican pollster Adam Geller, who also participated, added, “They still feel stress…It’s not the same level that the working-class or middle-class person will exhibit, but it’s very real.”
For the middle class, the numbers are even more jarring. A full 72% of self-identified middle class Americans believe “America’s political and economic systems are ‘stacked against people like me.’” And 82% “lack confidence that life for their children will be better than theirs has been.” Respondents defined “middle class” as an income between $65-135K per year.
So the large middle includes Americans making both an average wage and those in the top 5%. Essential costs for both have risen to such a degree that they no longer have a path to upward mobility. In our recruiting practice, we see white collar professionals of all kinds - in previously advantageous industries making what used to be considered healthy salaries - struggling with the cost of living. Some are moving to smaller markets and/or are trying to switch industries. Often without much change in their prospects.
In a recent piece in The Financial Times, Rana Foroohar traced what she suggests has been a 50-year period in America of affordability buttressed by falling capital, labor and energy prices. She wrote about this period in the past tense. As she describes it, we have entered an era of much higher prices across the board. Money will no longer be cheap. It’s a reality to which most of us are unaccustomed and for which we are unprepared.
Free Market? It Depends on One’s Definition of “Free”
An open competitive economy within an elective political system remains the greatest engine of broad-based opportunity, prosperity and well being humans have yet created. But we are moving away from such a system more rapidly than many of us realized. Maintaining and expanding the economy has always been a question of balance. In a competitive system, there will always be winners and losers, and therefore those with more and those with less. But, to put it crudely, we are seeing that it’s possible - and problematic - for the richest to be too rich and the poorest to be too poor.
If for no other reason, the 1% are well advised to embrace policy that ensures widespread opportunity for practical reasons. Historically, societies that experience a dramatic increase in income and wealth inequality, thereby soiling the basic contract with the citizenry, decline. Some eventually peter out. Or they are met with the conflagration of civil unrest and even revolution.
It is a question of freedom, but not as defenders of the status quo would have us believe.
People aren’t truly free without opportunity.
It is also a question of fairness. It is both functionally and morally wrong for a nation to allow conditions that produce, at the same time, the world’s first trillionaire and a permanent underclass, financially compromised and job poor, also often unhoused and malnourished. Many Americans, of course, are all four.
That is not a healthy market at work.
One basic test: Can every adult in America who works a full-time job earn enough from that job to reasonably pay for shelter, food and the basics of life. When an economy can’t do that, it ceases to function well for the majority of its participants.
The country achieved that balance, more or less, in the latter half of the 20th century, producing America’s ascendance and abundance. Still the wealthy were many (and plenty wealthy) and the vast majority of citizens middle class, able to work hard and live comfortably without the specter of economic instability hovering over their every day.
It’s worth asking: for whom do we build society?
The “Good” in Good Fortune
Building society around a strong middle class is practical: it offers the most security and prosperity to the most number of citizens. And it is also principled, an acknowledgment that the one trait every successful person shares is luck.
Good fortune produces fortune.
In his Masters in Business podcast, host Barry Ritholtz pressed Howard Marks, Chairman of Oaktree Capital, on the roles “intelligence, hard work, and perseverance” played in his extraordinary career in finance. Marks replied:
“Everybody in my MBA class at the University of Chicago was very smart and very hard working. But hard work and intelligence are mere table stakes. Not everybody has fortune smile on them; not everybody gets lucky.”
Marks expounded on this crucial ingredient to success in one of his legendary Chairman’s Memos:
“You make your own luck? Success is never accidental? Bull!!
I know how lucky I’ve been…Rather than detract from my satisfaction over the success I’ve enjoyed - because of having to admit it wasn’t all my doing - this realization makes me feel fortunate to have been born when and where I was and to have benefited from the developments that have come along.
And what about the things I may have brought to my career: perhaps intelligence, insight and a talent for writing? Isn’t having these things a form of luck? Intelligent and innately talented people didn’t do anything to earn their gifts. No one can take credit for them as ‘something I did’ or ‘something that was in my control.’ These things, too, are luck, and something for which we should give thanks rather than take credit.”
As wealth inequality has grown, so to has the full-throated defense of the “self-made,” a fallacy increasingly used to justify a kind of insular, less accountable stance on the part of the wealthiest Americans. It is no wonder that this century has witnessed a decline in rates of philanthropy among this group, according to data consulting firm Altrata. (Real charitable dollars have risen because overall wealth has exploded and due to the small number of individuals and families who make outsized gifts to certain initiatives and causes. Their good will, of course, does not relieve others from acting in kind.)
Instrumental to a more balanced, well-adjusted system will be a return to the prevailing Post-War attitude among the wealthiest that, given their good fortune, no matter its origin, they have an outsized responsibility to both society and the economy to foster broadly-shared prosperity.
What, Then?
Still, into the midst of this jumbled economic landscape each of us must find our way forward with career. So how to proceed? There are no guarantees, unfortunately. There never were. But past eras did have more reliable, recognizable trajectories. There were more paths both to choose or fall into that provided stability and financial growth.
We all hope for luck but not all of us will have it. Nonetheless, there are substantive actions we can take to safeguard and propel our careers.
It isn’t enough to attain high education, to work hard and persevere. Nonetheless, they remain the foundation for success. Achieve what you can and apply yourself as thoroughly as you can, and you’ll be best positioned to recognize and leverage luck should it look your way. Ina Garten’s recent memoir, “Be Ready When the Luck Happens,” is a case study in this approach. With creativity and grit, she dove headlong into the professional opportunities before her, those that preceded her rise as a culinary authority, and those that directly led to her purchase of a fine foods shop in East Hampton, her television programs and her books. And she is aware enough to know that she was extremely lucky at critical moments in her career, and life. The luck was the gift, the winning poker hand. All she could do - all we can do - was position herself to be ready when she drew that hand.
So we make luck work for us. That might mean grinding it out in a frustrating job longer than feels necessary, or even possible. It might mean a risk that nine out of ten times you wouldn’t take. It might mean a bridge role or two during a period of professional transition. Simply, we are always and forever trying to create space in work and life - in a crowded, complicated world - to allow opportunity to find its way in.
But First, Hope
Recently, we have seen a renewed focus on dignity as a standard by which to measure the health and wealth (the non-monetary kind) of society. Dignity comes with basic opportunity. And with hope.
Society is how we come together. How we form a union, the “more perfect” version we have sought in this country since its founding. Replete with idiosyncrasies and hypocrisy, this version is a radical, unwieldy collective, combining individual liberty, shared purpose, elective government and an open economy.
We are still, all of us, wrestling with the formula.
BC + CA + EH