Where the Middle Class Is Shrinking
nytimes.com
nytimes.com
What it actually is addressing is particular local areas where the share of the local population in a particular definition of the national "middle" of the income distribution is declining. (Well, actually, the article indicates that, but somewhat misrepresents the source research [0], which indicates that the locality-based analysis includes adjustments for local cost of living, so the definitions stated in the NYT article aren't actually what the graphics are based on.)
(Much of that so-called "middle class" income group would be working class by the conventional definitions used in looking at capitalist/mixed economies, and the middle class would extend well into what that study calls the "upper class" -- the traditional lower/working, middle, and upper/capitalist classes are not defined with the middle being around the median wealth or income, but by the middle being neither completely dependent on wage labor and immediately at risk from its loss like the lower/working class nor primarily relying on renting others labor to apply to their own capital, like the upper/capitalist class; the middle class has always been almost entirely in the upper half of the income distribution.)
[0] http://www.pewsocialtrends.org/2016/05/11/americas-shrinking...
Phrases can have two meanings, that you can determine by context.
While I agree there's a lot more than income at play in social policy and understanding of society and economics, it's still an absolutely fascinating set of stats to bring up. I will say I'm more disappointed by the huge ranges of the various distributions in the study (as pointed out by other commenters)
If by "we" you mean the US, this is not true. US manufacturing production was as high in 2015 as any prior year. Production took a big hit in the "great recession", it may be on the decline as percent of the total economy or as a percent of global production, but it's still a huge amount. https://research.stlouisfed.org/fred2/series/OUTMS
The US (like other mixed economies, which retain a basically capitalist system of property and overall structure, despite some public policy measures to address some of the discontents of capitalism) does, in fact, have all the classical relations to a capitalist economy: it does have people who derive support primarily through returns on capital to which others' rented labor is applied (capitalists/bourgeoisie/upper class), it does have small business owners, yeoman farmers (though those are a dying breed), and managers and other elite wage laborers with substantial outside investments who live by a mix of capital and labor (petit bourgeoisie/middle class), and it does have people who are principally dependent on wage labor for their sustenance with no significant capital holdings (proletariat/working/lower class).
And, while the income-based breakdown is common in the media, it also fairly consistently conflicts with people's expectations of what "middle class" should mean in lifestyle terms, which is largely shaped by cultural associations with the "middle class" that are tied to the traditional middle class rather than any "middle income" group (and to a time when the middle income group was consistently progressing toward the middle class, making moving into the middle class a not-unreasonable aspirational goal for much of the working class.)
So, you also see lots of comments every time there is an article about the income-based "middle class" about how the income cutoffs conflict with what people perceive to be necessary to be "middle class". Because those "middle class" expectations are increasingly out-of-line with any middle income group, because the progress which made "middle class" seem to be even within the reasonable aspirational grasp of the middle income group stalled decades ago.
Class has vastly different meanings in the US or India etc. As long as the meaning was clear that should be enough for any reasonable person. Especially when it's a very common definition. Whining about it is little better than trolling.
PS: The original definition of middle class even included working class people. Working class people are not serfs and they are not aristocracy so by default they are middle class. As the US got rid of slavery, has no real aristocracy, and calling everyone middle class is pointless, so the more reasonable definition is based on income. It's even been used in that context for 100+ years.
I disagree that its useless in terms of policy, and it has nothing to do with which legal profession people have (no matter what work you do, if you make most of your support from working for someone else, you are working class; if you are supported by a mix of your own capital and your own labor, with neither being overwhelmingly dominant, you are middle class, if you are mostly renting labor to apply to your own capital, you are a capitalist.
> The original definition of middle class even included working class people. Working class people are not serfs and they are not aristocracy so by default they are middle class.
Yes, the meaningful relations to the economy under the feudal economic system are different than under the capitalist economic system [0]. The replacement of the feudal system of property (notably, the end of feudal land tenure making land title a marketable commodity fungible with other forms of capital, as well as conversion of feudal obligations over time from service-based to payment-based obligations) eliminated the distinctions in relationship to the economy represented by the feudal class structure, replacing them with a different set of relevant relations, those of the capitalist system.
[0] As an aside, an interesting example of the period of transition between the two systems is found in Adam Smith's Wealth of Nations, where Smith talks about the relations of three classes to policy, and they map roughly to the feudal upper class -- which he favors as the class most reliable as both knowing and being able to pursue their interest and having that interest aligned with the common interest, the capitalist upper (and arguably, conflated with them, middle) class -- which he sees as dangerous because their interests will conflict with the common interest -- and the capitalist working class (which he sees as unreliable despite sharing, and arguably defining, the common interest because they are too uneducated to know their own interest, or effectively pursue them if they did).
You can argue about educational capital, but learning to be a truck driver and maintaining a clean record is capital in the same way as being an MD is capital, but the scale is vastly different.
The wider problem with this standpoint in the modern US is a 'working class' truck driver over their lifetime may make significantly more money from capital via 401k and home ownership than directly working. All it takes is someone living somewhat below their means and time to let compound interest takes off. However, the benefit more from policy's that help at the start than lower taxes late in life.
An 80 year old who owns their home and has 2.5 million in the bank is qualitatively very different than a 22 year old with 2.5 million in the bank and their own home. Most obviously future returns +/- 3% mean little to the 80 year old and are vital to the 22 year old.
PS: Some people add in a managerial class who make money from other peoples capital. But again scale is important, and pay is a huge indicator about the kinds of leverage you have. Managers making 30k vs 30m are worlds apart.
Most C-levels at Fortune 500 companies have substantial capital stores which are an important part of their overall support (even if they are not being drawn down regularly, but instead being grown for retirement or planned future use, or as inheritance) and are, in terms of the traditional capitalist class structure, either on the upper end of the middle class or outright capitalists.
There might be some living paycheck-to-paycheck without substantial personal capital reserves, but they would be exceptional.
This is due to income, not job function. AKA NFL coach vs. high school football coach.
Its due to past circumstance, including past income, past life choices, inheritance, and a number of other factors. Its not a function of either present income or present job function, though its loosely correlated with both (and, of course, having any job function indicates that you are to some extent dependent on renting out your labor; really, the classes aren't crisp categories, they are ranges on a continuum.)
Beyond that there are social aspects to class. The idea that America has a great big class that covers a wide of income levels is key to understanding the culture. I think it's a big part of why America tends to reject a large welfare state. Our middle class doesn't see itself as a low class even if they would be considered that in other cultures.
https://www.ssa.gov/oact/progdata/icpGraph.html
Even if you drop that to Disabled workers, Survivors, and Dependents that's ~17 million before looking at food-stamps and HUD ect. Include things like subsidized loans and you can get crazy numbers.
So when people talk about the decline of the middle class, I think they mean a decline in people who are not obviously poor or rich, and instead fall "in the middle."
I think we need a more refined term that makes adjustments for cost of living. A house in SF is a lot more than one in the Midwest
http://www.pewsocialtrends.org/files/2016/05/ST_2016.05.12_m...
Essentially, the middle class shrank from 55% of the population in 2000 to 51% of the population in 2014.
However, the upper class absorbed 3% (3/4th) of the shrinking middle class growing from 17% to 20% of the population, while the lower class absorbed only 1% (1/4th) of the shrinking middle class.
Having said that, you will not hear that 3/4th of the middle have disappeared and become upper class, you will only hear 4% of middle class has disappeared subtly implying everyone has become lower class.
Given this difference it's unsurprising the Pew analysis finds the upper class grew, but since the definition shifts we should be suspicious of the meaning of this statistic.
Given the other findings in this infographic and general zeitgeist around income statistics, I think the latter explanation is a lot more likely.
The "upper" mode is much more ephemeral and paper-based than is the "lower" mode. It's a frothy stew of bubbly paper goodness. But it's effect on the "lower" mode is not as we would like it to be.
So we treat the "lower" mode as its own ( not quite independent but not fully coupled ) distribution, raise inflation and wait.
And although the "upper" mode does have real effects, it being more fictional than the "lower" mode means it's much more volatile and less ... real.
Which is the correct explanation. See, for instance, the income distribution chart [0], from the national-level study that preceded the metro-level study referenced in the NYTimes article.
From 1970 to 2014: The share of aggregate income received by the cohort below the middle (middle, again, is 2/3 to double the median income) has gone from 10% to 9% of all income
The share received by the middle has gone from 62% to 43% of all income.
The share received by the segment above the middle has gone from 29% to 49% of all income.
[0] bottom of the two here: http://www.pewsocialtrends.org/2015/12/09/the-american-middl...
The definition used is consistent: an household income of 2/3 to double to the national median income.
The range shifts because the median income (even in inflation-adjusted terms dollars) shifts over time.
Aside from the complaints I've made about conflation of class and income elsewhere in this thread, the Pew definition is a reasonable and consistent way of defining a middle income tier over time, in a way which makes sense to talk about changes in size of that tier as an indicator of polarization of the income distribution, and which is a bit more intuitively understandable than some other distributional measures that relate to the same broad distributional concepts (e.g., the Gini coefficient of income.)
No, its intended to discuss the move of the income distribution to be less-tightly clustered around the median with more at the extremes (the particular release the NYT article is about talks about the by-metro-area effects of this, but the broader trend is succinctly illustrated in this graphic [0] from the December 2015 national-level report which preceded the metro-area-level one the article is based on.)
[0] http://www.pewsocialtrends.org/2015/12/09/the-american-middl...
From an ideological perspective, it damages the traditional worship of hard work and the idealization of middle class life. Idealistic visions (as reflected from the movies, the shows, the social policy of the era around the middle of the 20th century pretty much up until the end of it) showed the suburban life, the housewife, the house, the two car garage. It's easy to be politically complacent, knowing you're in the country that's number one, when those things are what you can realistically strive for. Laissez-faire capitalism was always sold as being more fair than the evil 'socialist' Europe - and worse - that was further east. Because even when you were low, you could feel comfortable about bettering your lot ("my grandfather came here with nothing..."). Now the stats are pointing away from that reality.
Economically it's pretty iffy, given that 80+% of the American GDP is the services sector, which has a large component of dependency on spending power. Retail alone is what, 5-6% of GDP, and then you have entertainment, real estate, and much else that depends on money being spent by people not on the very top.
Real estate's an interesting one. Another piece of the Dream that made us the greatest country, as we were told. That's another trend that the current generation faces that was not faced in the 1950's: the ratio of median income to median housing costs.
A lot of us here are in IT (or Law or other professions that I have noticed), and in many ways we're very lucky, even if we did work hard to get to where we are, since we're further up the curve and don't face the same exposure. In the U.S. health care costs and educational costs have also gone up well above the income increases, adding further to the discontentment.
Meanwhile, the political world has gone mad. We're now back to identity politics, with demagogues on both sides of the spectrum. Any explanation about the economic underlying conditions? Nope, instead we talk about immigrants, or X racial privilege, or gender/racial identity in the boardrooms, or X foreign power.
New thread suggestion: "Ask HN: Which remote island can I escape to and live comfortably and cheaply?"
This is really the fundamental problem in the modern world. The interconnectedness and shrinking of the globe in terms of distance means there is absolutely no where to escape to. Anywhere you would consider going there will be some government trying to dictate how you live your life and take a portion of your livelihood, and anywhere that you might avoid that you are usually risking that in conjunction with a humvee full of armed militants storming your home and murdering you.
Even a hundred years ago there were vast swathes of Australia, the central US, and South America generally uninhabited yet arable land, and the distances of the time made it infeasible for anyone to effectively police all of it. Today, not so much.
About the only hope left is setting up floating colonies in the Venusian atmosphere, but the problem is well before despondent settlers can migrate on a colony ship there will be governments establishing absolute control and monitoring of any habitable space someone could try to flee to.
It is like the "right to be forgotten" on Facebook - the right to be left alone was, fleetingly, a valuable thing that relatively few could enjoy, but in the same way the middle class shrinks the number of people capable of being in that state is also in dramatic decline.
It's almost like the two are related!
Lol, a fair bit of truth to this. However, I would say that in the past:
- There were places you could go where you didn't have either of those problems because there just weren't enough people around.
- Governments didn't take as much of your livelihood
- There were a greater variety of societies, so you had more options in choosing one that you found least onerous in their expectations.
Of course travel took longer, and life wasn't all sunshine and roses, but once you moved to a new place you could fairly effectively start over.
There is an explicit reason why the places people would "disappear to" like South / Central America, central Asia, or Africa, are all predominantly totalitarian states. You are just, in such places, hoping to fly under the radar and be the one mouse not to be pounced on by the lion destroying everything.
You're ommiting the fact that "bandits in a humvee" were there as well - see for example Quentin Tarantino's The Hateful Eight.
I'll provide a starting hypothesis for discussion's sake: maybe urban disdain for the suburban and rural lifestyles (exemplified by complaints about "subsidizing" rural areas) turns people off before they hear the good ideas?
An alternative hypothesis based on my own rural extended family: maybe one group decides based on what they are led to believe is practical or effective, while the other group decides based on what they are led to believe is "right" or moral, and the rhetoric of either side cannot penetrate the thought process of the other?
[1] http://www.syracuse.com/state/index.ssf/2016/02/poll_two-thi...
Violent gun crimes are nearly non-existent in rural settings. Plus, gun plays an important role for rural folks including: hunting, pest control on farms, self-defense when the police are 30 minutes away, etc.
Is it that surprising that rural folks say "Hey, that sucks you have a lot of gun crime, but why do I have to give something up that has value to me?"
This cannot be the basis of a rational policy, because it's false. Gun violence is much higher outside of cities. Please go to this site and set the stats to "Intent of injury: Violence-related" and "Mechanism of Injury: Firearm".
https://wisqars.cdc.gov:8443/cdcMapFramework/mapModuleInterf...
I wish this site had a reasonable way to make permalinks, then I would just paste it here.
The unsupported assumption here is that those policies would be beneficial.
What factors (emotional, moral, intellectual, cultural, derived from propaganda, whatever) feed into a decision to support or not to support UBI, as an example?
At the core of it, they don't trust you. Nothing you can say matters after that.
Well, I strongly doubt that a UBI that could actually achieve that is actually sustainable in the near term, especially absent a concrete policy that prevents zoning and other related policies from being used to prevent adequate housing affordable to those made more theoretically able to afford it by the UBI from being produced.
And I'm kind of an enthusiastic backer of UBI as a general concept after spending considerable time looking into it and thinking about how to make it work; I suspect that a lot of the working class is going to be even more skeptical of "free money" promises to start with.
I'm not going to claim to answer for anybody but myself -- in large part because (a) I'm an urbanite too and (b) my politics can be least inaccurately described as "anarchist" -- but to me, this question really comes down to one point: respect/maturity.
Much of the modern progressive social policy package sounds to me like somebody saying "Tsk tsk, daddy's little princess deserves better! You sit back, I'll deal with this!" (Wages too low? Have a horrid health insurance plan that doesn't cover what you need? Housing in short supply? Don't fret, Just vote Progressive! We can legislate your woes away!)
That attitude is OK if "princess" is only 8 years old -- but only because a child is not mature enough to make many decisions, nor expected to be capable of executing on them. Should the target of this attitude be 18, it becomes mildly condescending since "princess" is on the verge of being a legal adult. However, should this be directed toward someone who is 28 or 38 [as all universal government policy inevitably must], the concern arises that whomever carries this attitude will never be treating "princess" like a capable, autonomous adult peer.
You may find concern and compassion in the progressive social agenda, but all I will ever perceive is condescension and thinly-disguised contempt.
At least for me, the question is not, "How can I show these 'little people' how to live better," it's, "What resources would I need to get back to where I am now if I found myself in situation X?" I don't see how that is condescending.
> At least for me, the question is not, "...
Look, I'm sure progressives don't mean to sound patronizing when pushing for any of their pet programs -- however, the truth of the matter is you are no more able to dictate how people feel about what you say than you can the weight bearing capacity of a bridge or the speed of a computer program. [That is -- you can exert some control, but it's not done by directly writing the answer on the blueprints.]
I even read your original post in this thread as asking the right sort of question to exert that control: "When progressives put forth a program, what is it their opponents hear that seems distasteful?" and I gave you my answer to that question.
> I think this is why the only reasonable end-game for progressive ideas is ...
Just... stop right there. First off, I wasn't trying to address any sort of ivory tower, idealized "progressive ideas" -- yes, I'm sure there are academics who want something like universal income, healthcare, education, etc. I'm talking about the ones agitating in the streets for a $15 minimum wage, or the politicians who were willing to pass Obamacare instead of single-payer programs. In fact, I find it highly likely that such ideologues are ostracized even among left-leaning groups in the US, because that is not what is put forth by most progressive (Democrat) politicians.
Second, I don't really have any feelings one way or the other about those programs. Like the examples above, I don't think human beings have direct, final control over (or even enough knowledge to say in advance) what systems will or won't work. Instead, we need to attempt a great many different things -- yes, UBI among them -- to sort out which ideas are good or bad, because not all possible flaws are immediately obvious. [Remember in my last post how I said I'm 'nearly' an anarchist? This is most of what I meant -- making sure there's always room for experiments in governance, in order to reduce our ignorance about the mercurial nature of things.]
The questions are, why are positional concerns so obscenely powerful here as opposed to elsewhere, and why are positional concerns so obscenely powerful now as opposed to earlier?†
†Note the latter is somewhat questionable, as we had a black underclass to systemically persecute for a long time, and this action is blamed for everything from our lack of a public healthcare system to the gaps in our educational policy favoring high-income areas to suburban roadbuilding to the prevalence of private neighborhood & household swimming pools.
That's a bit smug[0].
>"Urban elites" have long advocated for policies that would benefit the rural poor but the white rural poor are dead set against any policy that would also benefit black people.
Certainly these urban elites could enact these beneficial policies for their (largely black) urban poor in their own cities without the interference of the white rural poor. How well is that working out?
[0]http://www.vox.com/2016/4/21/11451378/smug-american-liberali...
While that's one interpretation, there's Long been conflict in the US on the rural-urban axis - see Andrew Jackson's vision versus Alexander Hamilton's vision
Race is only useful in this sort of thing as a predictor of rough economic class, and even then it's less than useful. IOW, I don't think it's specifically race.
A better resource is "American Nations: A History of the Eleven Rival Regional Cultures of North America" http://www.amazon.com/American-Nations-History-Regional-Cult...
Indeed. Although I am not (currently) among the rural poor, I can't imagine ever trusting someone who openly refers to me or mine as "those people".
Or is there some deeper insult that I am missing due to not having experience of it?
The conditions of the past 200 years -- mass urbanization driven by the Industrial Revolution, and then the post-industrial service economy -- are both highly anomalous, a brief, tiny outlier in the vast historical data.
There's another class of (more depressing, IMO) dystopias like "Blade Runner", where people are nothing more than grist for the mill in large hyper-metropolises.
The article headline was wrong in the posting here, btw.
It means that the share of the population in the "middle class" (as defined in the work) has gone down, not that the direction that they have moved to the lower classes (from the national report [0] that preceded the locality-based one that the article is based on, the net movement has been nearly equal to the lowest and highest tier, with a slight bias to the highest tier.)
[0] http://www.pewsocialtrends.org/2015/12/09/the-american-middl...
http://fivethirtyeight.com/features/americans-dont-miss-manu...
One of the more interesting points I took away is that the Midwest, though facing issues, is one of the last holdouts of a large demographic that might be called Middle Class, often in close correlation with Union presence.
We typically don't see the income inequality that we see on the coasts.
It's also a moving target. It's based on relative income rather than a set point of achievements (ability to send offspring to college/uni). On the other hand we can infer that it's not as easy as it once was to become middle class through union/blue collar jobs, except in some government spheres.
Beset by offshoring and major political parties who only visit factories for photo ops, the blue collar middle class is feeling the strain and are making themselves felt by both parties who may ignore them at their political peril -if they continue to carry the brunt of the negative changes necessary for progress, their dissatisfaction will transform from indifference to a large political movement both major parties will have to manage in the next few election cycles.
Much of our family traces back to the Midwest or southern New England factory towns. It's been quite astonishing seeing the professional and geographic migrations that happen as a new generation comes of age.
The starting point is just as described: Rust Belt parents with fraying big-company jobs that were predicated on medium incomes, mid-level skills and high expected levels of job security.
The next generation is ending up in Seattle or North Carolina. Some are going to Colorado, California or Washington DC. They aren't staying in their parents' communities. They're switching employers more, and they're ending up in fluid fields like IT security, consulting, social services, graphic design, etc. where you're expected to fine-tune your career every few years.
Yeah, the older generation is unhappy and ready to vote for politicians who engage with them. But the next generation isn't asking government to make societal change stop. They just want a fair shot at whatever new opportunities come along (and some dreamy stuff about making college both cheaper, easier and more useful - all at once.)
While many people think of this as a blue collar white people issue, it's actually a poorly educated people issue which affects blacks and whites of poor backgrounds. Men and women.
We're not going to age out of the conundrum.
White fertility is relatively stable; other demographics are declining faster.
A very slight bias that way, national report shows; since 1971:
Lowest tier: +4 percentage points (pp)
Lower Middle: n/c
Middle: -10 pp
Upper Middle: n/c
Highest tier: +5 pp
(Difference is rounding errors.)
(Incidentally, I really wish there were a way to do the equivalent of an HTML <br> tag in HN comments, without going to code mode.)
Example: in energy, technicians move up the scale and perform less physical labor than comparable (if even possible) workers thirty years ago.
The lower classes are hard up against relative diminishing returns on labor. A textile worker, say, still makes what they'd have made in the 1950s in absolute terms. This does not keep up with a general rising standard of living in the US but it works fine in PacRim countries - until it doesn't.
$125,000 is "upper class", you say, regardless of location?
<explodes into laughter>
Let's translate that into the real world, shall we?
$125,000 Household Income....
Who makes it:
- IT manager or Senior Dev with stay at home spouse
- Mid-level Dev ($90K) married to a K-12 teacher ($40K)
- Two junior software developers (co-habituating)
Location matters, incidentally - if you're in CA / NY / Northeast Coast, this is barely enough to buy a house (and I hope you like driving / riding the train for a few hours).
A better analysis would be to draw the line somewhere in the the $200,000 - $500,000 range (based on salary + bonus, no equity boost) and include passive income. This is the point where you get a meaningful change in social options from the income (eg. top tier housing, private schools, accredited investor status, second home, ample emergency funds, etc.). Also incorporate some view of regional costs - since the "Social Freedom" point is much higher in NY / CA than in rural Alabama.
Sad to say, there are many areas of the country where living on $125,000 still definitely sucks.
If you click through to the source report, the locality-based breakdowns are, in fact, based on income criteria adjusted from the national definition using metro-area-specific cost of living.
> Would think that easy access to good schools and good housing are table-stakes for being "upper class".
Honestly, I'd say that access to good public schools and good housing are typical for middle class; if you are upper class your housing is probably beyond "good" and you probably aren't concerned, except from a political or philanthropic perspective, with the quality of the public schools.
But this article is (language aside) really about income tiers, not class
Most people are just happy to have a roof over their heads.
Let's be a little more conservative. Suppose you spend 25% of your post-tax income on housing. A 125k income supports a $1750/month payment, which works out to a ~370k house. That gets you a median house in all but 3 states: Hawaii (556k), DC (550k), and California (462k) - the next state up is Massachusetts (343k). You could also buy the median house in all but 16% of zip codes.
I couldn't find that much data on school districts, but just as a point of comparison, 370k is enough to buy the median single family home in 7 of the top 10 school districts in Michigan[2]:
1. 350k, Bloomfield Hills Schools
2. 411k, Birmingham Public Schools
3. 219k, Okemos Public Schools
4. 429k, Novi Community Schools
5. 343k, Ann Arbor Public Schools
6. 276k, Saline Area Schools
7. 370k, Troy School District
8. 285k, Grosse Pointe Public Schools
9. 335k, East Grand Rapids Public Schools
10. 429k, Northville Public Schools
Also, anecdotally, I grew up in Michigan and a 400k home was solidly upper-middle class even in nice areas like Ann Arbor and Bloomfield Hills. In Ann Arbor, a 600k home would be either a mansion or a family home in an extremely desirable area.
[1] http://www.zillow.com/research/data/ [2] https://k12.niche.com/rankings/public-school-districts/best-...
Only by truly decadent standards could an income of $125,000 be said to "definitely suck". $125k is 2.4x median income and puts you in the 97th percentile of all American workers.
I presented three fictional "couples" and their career choices that would easily get you to the $125,000 point in today's labor market. None of these pairing would be considered "highly compensated" or upper class. Middle class would be a more appropriate designation.
With regards to the "suck" factor - try running a household in SF, LA, or NYC (with kids and spouse) on that amount. I don't think owning my own home and having good schools is a particularly decadent expectation. Or having good access to health care and support services. Nor should I be expected to leverage myself to the eyeballs to buy a starter home.
Would think that the expectation of a professional earning that amount is that they are providing their kids with an environment where their kids can replicate their success.
I make right around $125k and live in SF. I have the luxury of not having to think much about how I spend my money, and yet I still have $2000-$3000 left over every single month. For perspective, half of all Americans would not be able to afford a single unexpected $400 expense[1]. That's what definitely sucks, not the fact that I can't afford a house in Bernal Heights.
[1] https://www.washingtonpost.com/news/the-fix/wp/2015/06/03/tn...
This is an argument that can be made at virtually any income level. Consider the following article and this really charming infographic they put together:
http://www.wsj.com/articles/six-figure-incomesand-facing-fin...
http://si.wsj.net/public/resources/images/BF-AE118B_05WIc_G_...
(infographic from http://www.wsj.com/articles/SB100014241278873236896045782201...)
After all - $400k isn't really that much, after you've paid taxes and put away $22k per year for retirement and the kids' college, and after you're done spending $87k per year on a mortgage, $25k per year on property taxes, $40k per year on maintenance and utilities, $30k per year on groceries, $21k per year on dining out, $26k per year on vacations, $24k per year on car expenses, $12k on country club dues, $10k per year on children's sports, and $9k per year on gifts and donations. Why in fact you're $10k in the hole!
I don't quite know how to say this other than bluntly, but $125k is a long ways above median household income everywhere in the country. For comparison, the median household income for New York City is $50,711 and the median household income for the San Francisco Metro Area is $83,222. Most people live off less than $125k, don't pretend it's impossible. Expenses tend to find a way to encompass available income unless you make a deliberate effort to stop that - even for people making $400k per year.
$125k isn't "rich" in the sense that you could quit working and live off the income from your investments or commute every weekend from your villa in the Caribbean, but it's vastly more than most people will ever see, and it's enough to be totally financially secure _if you choose to be_.
This is really the distinction the article is getting at: some people use "lower/middle/upper" in the sense of income quantiles, other people use it in the sense of working-vs-rentier classes (i.e. proletariat-vs-bourgeois). But there's always been a group of HENRYs - Marx labelled them as the "petit bourgeois".
https://en.wikipedia.org/wiki/Household_income_in_the_United..., link to actual census results in footer.
However, I'm generally in agreement with the post. I live in a relatively unfashionable neighborhood south of 280 in SF. Dumping and graffiti are common, front easements (yards) are paved over for extra parking or broken down car storage (illegally, but with extremely indifferent enforcement). Local schools aren't highly ranked in terms of test scores (though this doesn't matter all that much in SF, which is run by lottery much to the chagrin of people who live in higher performing districts). It would be very, very difficult to buy into this neighborhood in SF on $125k a year. You'd have trouble buying for much under a mil. On two incomes you can, but keep in mind, child care runs about $25k per year per kid, and even with kids in SFUSD ("free"), you have to pay extra for after care and summer camps, which will run you about 10k per kid per year even if you're doing things relatively cheaply (YMCA or SF park and rec run programs). At "upper class" incomes, you will lose the tax break for these things, so the second spouse needs to make a substantial salary before things get better financially.
Does living here "suck" by global standards of poverty? No way, not even slightly. Is it the kind of "upper class" life you'd expect for a dual income household of highly educated and skilled workers living in ground zero for a severe labor shortage for wildly profitable companies?
San Francisco is wonky, but keep in mind, the companies that say that there is a severe shortage of workers often do demand that their workers live out here, so the $125k salary really should be considered in the context of SF or NY level housing prices.
Since we tax labor and we don't tax land, this raises the suck factor. $125k in Northern Alabama probably means a darn good living. In SanFran? Probably not.
Also, Dallas used to be the place where land was cheap(er) and jobs paid relatively well, but that ended after Enron.
Retire to Nebraska, live like a king.
I guess, tldr; don't give up hope, consider what you are gunning for and remember everywhere but the coasts is dirt cheap.
This is a much more accurate description of the various levels of upper class from Economist Felix Dennis:
$2-4 million: The comfortable poor
$4-10 million: The comfortably off
$10-30 million: The comfortably wealthy
$30-80 million: The lesser rich
$80-150 million: The comfortably rich
$150-200 million: The rich
$200-400 million: The seriously rich
$400-800 million: The truly rich
$800 million - $1.998 billion: The filthy rich
$1.998 billion and Above: The super rich
Everybody who makes more* than you is rich, and everybody who makes less* is poor. Same basic idea.
*say twice as much or half as much or something...
That's not true, I live outside Manhattan and you can buy a very nice house for $250,000. I'm not in NYC (New Jersey) but close to the city. Well, it's a condo, not a house.
Also, what's wrong with riding the train? More people should be riding the train.
> A better analysis would be to draw the line somewhere in the the $200,000 - $500,000 range
That's wild! No, that's approaching upper class.
> Sad to say, there are many areas of the country where living on $125,000 still definitely sucks.
Proof? I don't think this is true unless you have no idea how to manage your money.
I can't imagine a single place where it would suck to live on ~$7,000 take home pay a month...
One book that covers this well is World on Fire: https://www.amazon.ca/World-Fire-Exporting-Democracy-Instabi...
Additionally, the discretionary spending of middle class households helps fuel the economy.
Sources?
This means a lower probability, all other things being equal, that a majority-supported position will be extremely unwelcome by a large minority, which is probably a good thing for a democratic state.
Political influence, time, land, attractiveness, power, etc. are all about sorting you relative to others. No matter how much new "wealth" there is, everyone can't have the same lobbying influence and live in Manhattan.
In the traditional view espoused by many advocates of capitalism, the traditional "middle class" (those living by a mix of capital and labor, either applying their own labor to their own capital as small business owners or yeoman farmers, or by having both capital to which other's rented labor is applied and labor which they rent to others -- i.e, an upper-income wage laborer with some personal real estate and financial investments) is idealized; I'm not sure if there is a substantive reason for this so much as a PR one, though -- its something that the working class can somewhat understandably (even if not always plausibly) aspire to and the existing middle class can identify with. But, if you look at most of the criticisms of capitalism, they mostly focus on the problems that exist in the relationship between the capitalist class and the working class, so the more of the population that is in the middle class -- which is both less subject to exploitation than the working class and less capable of it than the capitalist class -- the less the problems associated with capitalism are.
Note, however, while this idealization of the "middle class" remains in the US, the definition of middle class in many media uses (including this article and the supporting research) has drifted to refer to a range around the "middle income", which is very different from the traditional concept of middle class; most of the people in this band are firmly in the working class, with only the top-end of most median-income-centered definitions of "middle class" containing people that are plausibly in the traditional middle class.
The middle class has enough material wealth to have "something to lose", but not enough material wealth to individually upset the status quo too much. On top of that, there are enough resources to go around to allow a large group of people have that same approximate level of wealth.
Ergo, the middle class is a tremendous stabilizing force in a society, and they're "guillotine insurance" for the rich.
The middle is the padding/margin that keeps the possibly of moving up and out of your class a seeming reality, but also keeps the divide from rich/poor from being too strong. If you just have rich/poor, the opportunities seem more dire, less opportunity and less mobility is possible and lots of bad things start to happen.
A society that tends to the middle is a more healthy one, one that tends solely to rich/poor needs leaves those middle people out of luck, that is what we have now.
This is also a consumer economy, the lower/middle spend over $1 or 100%+ of their incremental dollar earned, the rich only spend .05 or 5% of their incremental dollar. It is good to have consumers that can spend in a consumer economy, it helps all levels of class/wealth. Rich/poor do not spend enough to keep a consumer economy afloat that actually moves money the way it is supposed to move and you end up with stagnation and long drawn out recessions. In downturns, the poor have no money and the rich don't spend or invest in downturns enough, the middle always has to spend.
If you sell products it is also nicer to have middle class out there that can buy, not just upper class. The products that target each are fairly different and there are only so many rich consumers.
http://www.uctv.tv/shows/The-Coming-Collapse-of-the-Middle-C...
She has become more controversial of course since then, and more well known politically, which may account for your negative votes. I don't know.
But her observations about the use of revolving credit to counteract the effects of stagnant wage growth (in real terms) is still relevant today. The narrow emphasis on wages however, ignores the wealth creation made using other means, for example, by small business and entrepreneurship.
http://scalar.usc.edu/works/growing-apart-a-political-histor...
i would like to see these numbers for 4x or 5x the median (roughly $250k/year). to me that's really where the delta in income starts to become apparent as manifested in lifestyle choices and accumulated wealth.
edit: okay, reading the actual research reveals that pew calls it 'upper income', not 'upper class', which i generally agree more with. this is probably a slight editorial twist by nytimes to emphasize the point.
Does it matter if you're capturing the middle 20% or the middle 60% of the country? Not really. There are fewer people in the "middle", for some definition of middle.
Its actually capturing a multiplier below and above the median. If it was capturing a fixed percentage in the middle, then the share in the "middle class" could not change over time...
Its the spread that matters, and holding the income multiplier steady and then looking at %...
Or holding the % steady (then looking at the income numbers)...
That doesn't matter. Really. They all measure the spread away from the median over time.
I know most HN people tend to see urban/suburban areas as the only habitable zones, but come on - you are definitely living high on the hog, it's just hard to see because you choose a location and lifestyle with very high expenses.
Plenty of positions are available for remote workers. From what I've seen, it's not the employers, but rather the employees. For some reason, the convenience and distractions of cities are lifestyle requirements, not employment requirements. Which is fine, but I take issue with the widespread delusion that lifestyle expenses are not a choice, especially for cognitive workers like developers, designers, etc.
If you're trying to escape expensive house prices though, you're looking in the wrong place. Housing prices have been on the rise for years now. I love the weather here, but you have to be prepared for lots of rain and grey winters. Traffic can be pretty terrible too depending on where you're going and when. Because of the geography of the area, there's lots of bridges that people like to get in accidents on during rush hour. If you can avoid having to cross a bridge in rush hour, or drive in the downtown core, you'll be fine.
FWIW I grew up in Victoria, spent a year in TO, and have been in the lower mainland for the last 5 years and it's been my favourite place to live by far.
Vancouver is big, but more spread out. The downtown core isn't huge. It's in the Fraser Valley so it's beautiful pretty much no matter were you are. You have these bit mountains in the north and east. Not quite as multicultural, it's predominantly white/Asian(/Indian). I live in Delta which is a 35 minute drive from downtown with no traffic or closer to an hour wirh traffic. There is lots to do, especially if you like the outdoors.
Weather is pretty drastically different. TO has hot hot summers and cold cold winters. Expect a bit of snow but mostly it's just freaking cold. However, it's typically still nice sunny blue skies in the winter. Vancouvers winters are much more mild; we didn't get any snow last year where I live. It will get close to 0, but we play outdoor soccer year round so it's certainly bearable. Winters can feel long when it's just grey skies and rain though; part of living in a valley. Summer's are beautiful, hot and humid. Luckily there's no shortage is beaches and lakes to go cool down in.
Looking for anything in specific or does that help?
In addition, I think Bay area real-estate is a far better deal than TO or YYZ real-estate. The key reason is that you can get a 20-30 year fixed mortgage in the US while you will you only get a 5 year in Canada. The -average- detached house in Toronto is 1.2 million bucks. Absolutely out of whack with incomes. In the Bay area, prices are high but so are incomes.
I agree Bay area real-estate is better and so are the incomes high, but I think I will save on child-care and stuff as both me & my wife's parents can baby-sit and even though how much I like to live in Bay Area, the current immigration system is making me cringe as neither her nor my parents can stay here for more than 6 months, whereas the super-visa in Canada can help us start our family more easily.
I think upper class is the ability to afford, without undue stress, an ample house and two car payments while still going to get manicures.
Houses, cars and even food expenditures can easily vary by a factor of 3-4 even within a relatively small area based on individual preferences and habits.
What is an "ample" house?
Define your terms.
If you live in Modesto - yes.
More about upward mobility and immigration trends. No need for all the hand wringing!
Posting this separately from response on the substance of the source article (because hopefully it will be corrected and this will be come irrelevant.)
EDIT: Oddly, the current HN Title is closer to the focus of an earlier Pew release [0] that is a predecessor to the one the NYTimes article behind the current title is based on [1].
[0] http://www.pewsocialtrends.org/2015/12/09/the-american-middl...
[1] http://www.pewsocialtrends.org/2016/05/11/americas-shrinking...