What Wharton Students Reveal About The Economic Stories We Tell

Wharton School, University og Pennsylvania. Photo by Bitcollector2, CC BY-SA 4.0 , via Wikimedia Commons

Last week, Fortune Magazine’s online edition reported on a tweet from a Wharton Business School professor that revealed a completely unsurprising (but still unfortunate) snippet about our nation’s future business leaders:

Nina Strohminger, a legal studies and business law professor at Wharton, the number two ranked business school in the U.S., wrote on Twitter that one quarter of her students thought the average American salary was over six figures, and one even thought it was $800,000 a year.

“I asked Wharton students what they thought the average American worker makes per year and 25% of them thought it was over six figures,” Strohminger tweeted on Wednesday. “One of them thought it was $800k. Really not sure what to make of this (The real number is $45k).

The average annual wage in the U.S. 2021 was $53,383, according to the Social Security Administration. That’s nearly $30,000 less than the annual tuition at Wharton which is $80,432 per year. 

The answer may have shocked some, but considering that Wharton student’s median family income is $195,500, and almost 3/4th of then come from the top 20% of American household economically, this should not really be a surprise.  The disconnect is also likely reinforcing – Wharton grads have a median income at age 34 of  $91,800.  Wharton MBA students specifically do a lot better – their median income is $155,000.  And this was reported against a backdrop where Americans can’t accurately diagnose things like racial economic inequality:

In particular, respondents thought that the Black–White wealth gap was smaller, by around 40 percentage points in 1963 and around 80 percentage points in 2016, than its actual size.

When it comes to race relations in the United States, in other words, most Americans hold an unyielding belief in a specific, optimistic narrative regarding racial progress that is robust to counterexamples: that society has come a very long way already and is moving rapidly and perhaps naturally toward full racial equality.

This is especially distressing given that wealth is the most consequential index of economic well-being, in that it provides a more effective safety net for families when facing unexpected financial shocks relative to other economic indicators, such as income. Because it takes wealth to grow wealth, it is especially important to discern the extent to which Americans are (or perhaps are not) aware of the racial wealth gap in contemporary American society. Critically, the cumulative nature of wealth makes it particularly vulnerable to the effects of both past and contemporary discriminatory policies and practices (e.g., chattel slavery, Jim Crow, redlining)—practices that helped to produce the wealth gap in the first place and make it difficult for everyday Americans to track, or perhaps acknowledge, its magnitude across time.

I can see so many of you now shaking your heads and clucking about.  Why does this matter you plead?  We have inflation, CRT, a horrible withdrawal from Afghanistan, a failed but not quite coup, the fall of voting rights, the fall of Roe v. Wade.  Tom Brady loosing a playoff game. This just isn’t important to real Americans.

Except – it is important to real Americans.  These huge misperceptions by the kids of the upper middle and upperclass in America fuel bad economic policies that have grown the gap.  Equally importantly, they keep us from grappling with the inherent failures of our American Myths to account for our real conditions.

Take the myth of Equal Opportunity. This one postulates that since discrimination is illegal (meaning its been codified into law), and since Americans of all background do succeed (i.e. grow wealth and accrue large salaries), anyone not succeeding fails because of their own inability/laziness/refusal to work hard.  Unfortunately, statistics again show us this myth is precisely that.  

The poverty rate for Black Americans in 2019 was the lowest on record, according to the Census Bureau.

But at 18.8%, it remains far more than double that of non-Hispanic White Americans, who had a poverty rate of 7.3%.

The gap is even more striking among children.

More than a quarter of Black children fell below the poverty line in 2019, compared to 8.3% of White children.

In fact, companies are more than twice as likely to call minority applicants for interviews if they submit whitened resumes than candidates who reveal their race—and this discriminatory practice is just as strong for businesses that claim to value diversity as those that don’t.

the practice or advocacy of individualism in social and economic relations emphasizing personal liberty and independence, self-reliance, resourcefulness, self-direction of the individual, and free competition in enterprise.

Simply this – when you grow up so far removed form the daily experiences and history of the vast majority of Americans, you then become a person who advocates for, institutionalizes and champions economic polices, corporate decisions, and educational opportunities that contribute to the vast wealth inequality in the country.  You perpetuate a system that takes people like you and makes them richer and wealthier at the expense of a greater and greater swath of the nation.  You cease to believe in the American dream for all.  And that, as much as anything else, is why America is at the dark crossroads it is at today.