The New Gilded Age

A little over a century ago, America witnessed an unprecedented burst of opulence.

The wealthy built grand mansions. They created private streets that kept out the unwelcome. The economic spurt took place all over the United States, but it glittered most strikingly in the rougher, less sophisticated Western cities such as San Francisco and here in St. Louis.

Mark Twain derisively called the era the Gilded Age. And the name stuck. Today, St. Louis, like the rest of the country, is engulfed by another gilded age.

Here, a new class of well-to-do is building huge homes, extending the line of opulent 19th-century mansions farther west into the suburbs. They patronize luxury shops and drive expensive cars. There are so many of them this time that some economists call them the mass upper class.

In its day, the Gilded Age was criticized for its showy wealth but it also gave rise to a legacy of civic work and new public institutions such as libraries, museums, and hospitals. Will today's mass upper class do the same? The signs so far are mixed.

"Our standard features are pretty good," says Mike MacKaben, a salesman walking through a demonstration home of the estates at Baxter Pointe in suburban St. Louis. He points out the oversize wood-burning fireplace, the Corian countertops, and downdraft cooktop stove that come at no extra charge. At the top of the stairs on the second floor is a home office with two(!) built-in computer workstations.

Overall price: $425,000. The development is hardly unique to St. Louis. Huge, amenity-filled homes are spreading across the US as thickly as fast-food restaurants. There are so many, some observers now call them McMansions.

Here at Baxter Pointe, the homeowners snapping up the lots earn $200,000 or more and range from a computer-consulting couple in their early 40s to retirees in their 70s, Mr. MacKaben says.

That variety marks one big difference between the late 19th and late 20th centuries. At the turn of the century the wealthy were predominantly white Anglo-Saxon. "Wealth is a little more democratized now," says Eric Sandweiss, director of research for the Missouri Historical Society in St. Louis., "The society of 1890 would have been able to recognize one another. But even in a city as small as St. Louis, that's no longer true. [The new well-to-do] are more Jewish, they're more black."

"To join today's elite, a family has to earn at least $100,000 a year. In many homes today, both spouses work, so the ranks are swelling. In 1967, only 3.2 percent of America's families earned today's equivalent of $100,000. By last year, 11.8 percent held that distinction.

"This is not just a tiny group of yuppies," says Andrew Hacker, political science professor at Queens College in New York and author of "Money: Who Has How Much and Why." "The group has expanded by three to four times," he says.

Are they rich? Not exactly, argues David Frum, senior fellow at the Manhattan Institute, a free-market-oriented think tank based in New York. "My definition of rich is someone who, if they stopped working today, wouldn't see a change in their standard of living." The mass upper class, on the other hand, has grown because of its income, not inherited wealth.

That suggests the new well-to-do have staying power. Wall Street may play havoc with their stock portfolios. But unless a nasty recession eliminates their jobs, they'll continue to earn big salaries.

"It's not just fluff from the stock market that you're seeing," says Frank Levy, professor of urban economics at the Massachusetts Institute of Technology in Cambridge. "This group is now as big as a third of the middle class."

And they're making their mark in obvious ways. The new well-to-do are buying not only luxury homes (the average size of the American home has grown by a third since the mid-1970s) but also high-end vacation homes, cars, and luxury goods such as designer clothing.

"There is definitely a move toward more upscale products," says Gerald Celente, director of the Trends Research Institute, a forecasting firm based in Rhinebeck, N.Y. "The money is going to quality-of-life purchases, whether it's education, health care, or the leisure quality of life."

The consumption is sometimes so conspicuous that some researchers worry about overconsumption - or "affluenza."

It's "that strange sickness of too-muchness," says Vicki Robin, co-author of "Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence." Many Americans spend too much energy working so they can keep spending, she argues. That is why many are dropping out of that cycle and joining the voluntary simplicity movement.

"It's people who want to get a life - and that becomes more important than the symbols of having a life," she adds. Her Seattle-based nonprofit organization, the New Road Map Foundation, caters to people throughout the economic spectrum, including some in the mass upper class, ,such as former Microsoft programmers, engineers, and lawyers.

A worse challenge posed by the mass upper class is the widening gap in incomes, many economists argue. Their gains have not spread to the rest of society. Most Americans aren't worse off than they were 20 years ago. But their earnings are hardly growing at all. And, for the poorest in society, there's evidence that they're moving backward.

"There's more inequality than there was," says Professor Levy. And the reason is education - or the lack of it.

For the 45 percent of working Americans who don't go beyond high school, hopes for a continuously rising standard of living remain dim, he says. Economic growth is good, but only if it benefits the majority of people, he argues in a book due out next month called "The New Dollars and Dreams." "If the nation forgets the caveat - if winners see no reason to compensate losers in a time of change - popular support for free-market policies will decline." That lack of growth will affect everyone.

A century ago, the Gilded Age gave way in the 1890s to the reform-minded Progressive movement. Progressives exposed corruption in business and government and enlisted the upper class of the day in bettering society. Nationally, tycoons formed charities and public institutions. (Andrew Carnegie alone funded nearly 1,700 libraries in the US and Britain.) Here in St. Louis, they endowed hospitals, became involved with the city-planning movement, and created private welfare initiatives.

It's not clear whether today's mass upper class will follow in those footsteps.

Ironically, one hopeful sign may be the widespread disaffection with both political parties. The disgust is so high that Mr. Celente foresees a new political party taking shape in the next few years made up of people he calls "progressive libertarians" - progressive in economic and social philosophies but with laissez-faire libertarian approaches to personal privacy and foreign policy.

"We have a country that's built on the Reagan consciousness - 'I want this to be a place where everybody can get rich' - and we have the Ben Franklin consciousness - the golden mean," Smith says. "There seems to be a pendulum swinging back and forth."