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> $125,000 is "upper class", you say, regardless of location?

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.

Thank you - missed that. The $125,000 line still doesn't make sense though, even in flyover country (where I live). That's barely enough to buy a 2nd/3rd tier home in a strong school district where I live. Would think that easy access to good schools and good housing are table-stakes for being "upper class".

Again, as I've posted several other places on this thread, the report is addressing a multiplier based region around the median income, a kind of "middle income tier". It has (despite the title) very little to do with "middle class", except insofar as the use of that term is drifting, at least in the US, to refer to various definitions of middle income tiers.

> 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

So what exactly is a 1st tier home by your standards? I've never seen anyone use that classification before.

Most people are just happy to have a roof over their heads.

Suppose you spend 30% of your pre-tax income on housing. A 125k income then supports a $3125/month payment, which works out to about a ~660k house. That's enough to buy the median house in every state in the country and all but 4.8% of zip codes[1].

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

If you bumped up your payments to about $2023/month (~29% of post tax income in Michigan) you would be able to afford a median single family home in every top school district (~430k).

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-...

> Sad to say, there are many areas of the country where living on $125,000 still definitely sucks.

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.

Attempting to answer the question a different way...

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>I don't think owning my own home and having good schools is a particularly decadent expectation.</i><br>To the GOP, your just greedy.

Obviously you are correct that $125k does not go in far in SF, LA, or NYC as it does in Cleveland. But these cities are extreme outliers, and my main point remains that you need a little more perspective about what "definitely sucks" in America.

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...

What you are referring to is what the Wall Street Journal once called the "HENRYs" - High Earner, Not Rich Yet. Or in other words, "once I spend all of my money, I have nothing left!".

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".

This is not accurate, $125k household income only puts you in the 84th percentile according to the 2014 census.

https://en.wikipedia.org/wiki/Household_income_in_the_United..., link to actual census results in footer.

Thanks for the correction, my numbers must be older (or just wrong).

Or, the income rank among "American workers" (which you referred to) and that among "American households" (which the person "correcting" you referred to) is different. Which is not merely plausible, but expected.

Good point, I believe the 97th percentile is per capita, not per household.

Location still matters, though. At a Silicon Valley software company you'd expect around $100k starting salary with a bachelor's degree and you could get a modest place to live. Working in the mid-west or the south you'd almost cut that figure in half and would end up living in a larger house with a nicer car. I graduated with the highest starting salary that I know of out of anyone in my class but I still ended up living in a very "low-class" area and struggling to make ends meet. I lived far more comfortably before with less than half the income while paying my own tuition in a different state.

Yes, anyone attempting to say that living in a first world country on $125,000 "sucks" is open to this criticism. I'd probably avoid phrasing it this way.

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.

I always found median income a little bit frustrating in these class and lifestyle discussions. Median income doesn't expose people who don't work because they receive passive income nor does it capture wealth very well. Let's say I am working 60 hours/week to bring in $125k and $4k/month of that goes to rent. My neighbor has $2 million in SPY yielding $40k/year and minimal overhead because his parents bought him a house free and clear (and, with no job, he has the free time to exercise, cook his own food, and enjoy a higher quality of life). These are extreme examples (although increasingly more common in SF, LA, and NYC) but demonstrate how median income can be misleading.

So $125k is much more likely in one of the big cities where cost of living is dominated by real estate.

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.

Qualifying 125k as upper class is indicative of a gross misunderstanding of capitalism and wealth concentration. Upper class are business owners, old money heirs, celebrities and the like who find it odd that other people go into work 9-5 for 40 hours of their lives for 40 years. They are less than 1 percent of the population and have incomes from investments of generally over 500k/year and net worths of 10 million+.

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

citation: http://www.wallstreetoasis.com/blog/who-is-rich

This scale is silly and meaningless.

That's because you and I have no idea what it's like to be part of the capitalist class. Perhaps studying the capitalist class is silly, but if we wanted to, this is an accurate description of it's members. Obviously 2-4 million isn't "poor" but it isn't quite capitalist class. More like upper-middle class saver. 10 million is entry level to capitalist class

> Northeast Coast, this is barely enough to buy a house (and I hope you like driving / riding the train for a few hours).

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...

Everybody who drives faster than you is crazy and everybody who drives slower is an idiot. ( George Carlin, I believe )

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...

Gr8 point. Also, cost of living is not adjusted for in federal taxes especially if one falls into the standard deduction. Living in the bay area as a renter on 125K, you probably end of paying about 20K in Federal taxes and 30K in rent.

That does give you a free-and-clear net income of 75k, which is better than a lot of households make before taxes and housing in other parts of the country.

Yeah, $75K is nearly 1.5 times median household income. So its substantially more than most households make.

Well .. 18.5K goes into the 401K, leaving 57K. Even if we saved 50% of what we earn, we'll barely be able to save 250K over a decade. Given the pace of house price increases, it seems like a hopeless situation :(

At the end of your 40 year career, with your numbers, not accounting for inflation, raises or the potential for investing, you would have $1.14 million in cash and $740k in 401k principal. At the end of most people's career they have social security... I'd call it pretty well off for having done nothing with the money.

Retire to Nebraska, live like a king.

Too bad I'm in my late 30s. Education cost a lot of time, money, and made me delay purchasing a house until it was too late.

My scenario does not involve a house purchase until you are 60 and can move somewhere where houses are essentially free, like Phoenix or Omaha, or Buffalo or wherever.

I guess, tldr; don't give up hope, consider what you are gunning for and remember everywhere but the coasts is dirt cheap.

Yeah. Making over $100k is not "roughing it." It's weird to see people say that.