$250K a Year Is Not Middle Class
nytimes.com
nytimes.com
If you primarily live by renting your labor to be applied to someone else's capital, you are working class.
If you primarily live off your own capital, with most of the labor applied to it being labor you rent from others, you are in the capitalist class.
Income correlates with economic class, but neither strictly determines the other. $250K a year is not middle class in the same way that, say, wearing a bowtie is not middle class.
Its possible to be in any (of the three mentioned) economic class and have $250K/year income.
Plus I'd bet they invest their residual salary in capital.
What about something like: Do you feel like your needs are met and some of your desires are indulged? If you are, you're living a middle class lifestyle.
Though heart surgeons often own practices and contract with facilities rather than being employees, so they are often middle class.
And, yes, real economic relations are complex and don't fall neatly into the categorization, are not of a continuum (e.g., lots of higher income workers that are don't actually love by applying labor to their own capital nevertheless have some some, potentially substantial, capital from which they derive some income (in many cases, not used for current needs but reinvested), and therefore don't face the same insecurity as most of the working class, while still having to deal with employer/employee relations the same way as the rest of the working class. This group shares some features of the working class (because of their primary source of support), the middle class (because the both rely on their labor and have non-trivial capital holdings that are important), and the capitalist class (because generally , to the extent they derive income from capital, it is not through application of their own labor.) Nevertheless, their primary engagement with the economy is as hired laborers, so dominantly, from an economic class perspective, they are working class.
(This is distinct from lifestyle, and from group identity -- indeed, the political manifestation of the divergence between identity and economic class explains a lot of apparent political irrationality jn which people expend considerable effort working against their own economic interests in the political realm because of an identity with an economic class that is not their own.)
- is why I love HN - you open the comment section to leave a comment explaining why the author is an idiot and someone else has already beautifully done it already as the first comment.
Well done, sir.
How large is that going to be?
> With a home loan and student debt
Elizabeth Warren keeps banging on about housing, health-care, education, and energy being the four out-of-proportion expenses in a middle-class budget. They are also some of the most amenable to state intervention.
Is your LTV ratio greater than 1? I suspect you might be not including the market value of your home against your loan.
http://blogs.wsj.com/numbers/one-in-four-american-households...
"The proportion of one-person households increased by 10 percentage points between 1970 and 2012, from 17 percent to 27 percent."
If my wife and I work 80 hours/week for an energy company that is highly cyclical, we are very different than two physicians who work 80 hours a week but have lots of job security, who are in turn very different from a retired police captain who collects $250k from two spiked Government pensions, who himself is very different from a retiree who lives on $250k in dividend income from a $10 million dollar portfolio of index funds. Not to mention who owns their own home (inherited perhaps), and who doesn't. It's almost like ''income is the worst way we have to measure relative prosperity, except for all the others''.
We rent our time just like anyone else and eventually our time will be worth less. But right now we are taxed heavily to be middle class.
No, it's that 53k a year is near poverty but no one wants to tell America that the majority of its citizens are so badly compensated for their time.
Median income =/= middle class
You should be netting 200k or so a year, and even a fairly lavish lifestyle should let you save 100k a year, given that you have no kids and live in a place that should cost less than 10% of your net income.
I've lived in the Bay Area for several decades, and I could buy a very nice house tomorrow if I made 370k this year, even starting from flat broke.
I don't know the percentile, but $250k in SF is not even top 5% per an article someone else shared in comments. [0]
0: http://www.businessinsider.com/san-franciscos-top-5-of-earne...
Over 250K it most likely won't matter as their political opinions might not be swain but 150-250K is quite a lucrative poaching ground for both parties, the republicans spread fear that those are the people who'll suffer the most under the Dem's taxation policy and the Dem's advertise that they are part of their precious middle class that must be protected.
The 150-250K range is also where quite a few of the Dem's force multipliers lie; young educated professionals which are tethered to social media and are quite likely to be politically active on various social issues attacking and preserving them is quite paramount for the Dem's long term strategy if they want to keep the white house for another 8 years.
Owning your home has long been the staple of middle class. In places like San Francisco even the very high income engineers mostly pay rent. Especially the ones in their 20's.
(source: me and my girlfriend put together make just over $200k/year, we wouldn't dare think of buying a place, probably ever. According to the article we're top 96th percentile)
Living in San Francisco is a luxury good.
Buying a house in San Francisco is one of the most expensive luxury goods there is.
It doesn't work like that in most of the world. In spite of how interconnected we've become, we're still largely blind to the terrible conditions of hard working people who follow the rules in the rest of the world.
So now you're seeing a lot of people upset that they're following the rules and ending up in bad places-- in a lot of student debt, or unable to find jobs, or unable to find well-paying jobs. They look at their parents and grandparents and think that it must be some small systemic problem-- the 1% isn't taxed enough, or even worse, they think that it's not some systemic problem, and that this is just a result of the 2008 economic downturn.
I think the problem is a bit worse than that. I think we're on the tail end of our post-war powerup. I think we're going to try to tax our way out of it and end up with a broken country. I think we need to face some hard truths and be a bit more concerned about our national debt; a lot of people on either side don't seem to realize that a devalued dollar only hurts people that hold dollars-- you know, lower and middle class Americans. The Trumps of the world hold capital and couldn't care less about an inflated dollar.
If you click my comment history you'll see that I'm a jaded man that speaks a lot of doom and gloom, so who knows. I'm just not comfortable simplifying this as much as the article does. America can't stay on top of the world forever.
Would $55k get you this today? I don't think so. Would $250k get you this today? Maybe.
edit: typo
But looking at it a different way, where is the money going in those various locales? Given the cost of living in the Bay Area compared to the Columbus metro area, the amount of 'pay dollars' is generally flowing out at a much higher rate in the Bay Area, but they are soaked up just as quickly as they are in Columbus. So who is getting them? Banks with their Mortgages? Schools? Government? Restaurants? How can you have a population of people making $200K a year in one place experiencing the same level of "wealth" as people making $100K a year in another place? That makes for an interesting conversation.
Which I think is far more interesting.
There's a lot of factors at play here. I can imagine a time where not everyone in the middle class had an expectation of going to college. I could also imagine a US advantage on skilled labor that would have yielded far better wages which has steadily eroded under globalization. I am also imagining a time when taxes where less burdensome. Probably some other factors at play that I am overlooking as well, still I wonder when the tipping point was 1980s?
Banks and landlords, mostly. Local governments would love to get in on it all, but Prop 13 restricts their ability to raise real-estate taxes.
The point is just that there are many people with arrangements such that they might have to file on $250k+, but never realize that as personal income.
If you have three children, and 250k income, that will provide you a decent living, maaaybe allow you to purchase a home, and just barely afford college funds. That's what's broken.
As others have pointed out, there's not much margin there if you are doing what you are supposed to be doing, i.e. owning a home, paying your bills, saving for retirement for two and saving for college for 2.5.
I'd agree with others sentiment here, the median income being 53k/y is the real problem. There is no excess capital to redistribute from the top of the 95% to the bottom. It just doesn't exist anymore.
> Even in NYC and LA, 250k is more than any family you know makes
What on earth does this even mean? If you have 2 professional incomes in a family in any of the cities you mentioned, you're at $250k.
I knew I could never afford a family or house at that level, much less retirement and college funds, so I put off having children, buying a home, etc.
That said - I do think that a family that earns just enough to maintain a 'middle class' lifestyle should be considered middle class.