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Comment by jasode | Hacker News Reader

It's really not strange nor contradictory. Most people probably think of "middle class" like this:

- lower class: on welfare & food stamps

- middle class: have a job, must work for a living

- upper class: not having to work and living off interest payments of wealth investments

Therefore, the middle class covers the wide spectrum of $9/hr Starbucks baristas and $500k white shoe lawyers. For "lower class", most people use the label "poor". For "upper class", most people use the label "rich".

(I'm guessing Bloomberg was attempting to give an insight similar to the mathematical contradiction of "everybody thinks they're an above-average driver". However, they misunderstood how people self-identify themselves as "middle class".)

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I heard it was:

- lower class: your name is on your shirt

- middle class: your name is on your office door

- upper class: your name is on the building

:-)

I think that's the best description. Today with all the propaganda around 'open workspaces', white collar workers have been forced back into the lower class (in spite of getting higher salaries).

Your class is more related to your self-esteem than your income.

In one of the companies I worked for as a contractor, I had my own office and it felt great.

When I was younger, I briefly worked in a telemarketing call center for the equivalent of $20K per year. Then many years later (after I finished uni), I was earning $200K per year in a different company (as a software engineer in an open workspace).

The $200K workplace didn't boost my self-esteem much more than than the $20k workplace.

> Today with all the propaganda around 'open workspaces', white collar workers have been forced back into the lower class.

This is the epitome of pampered engineer BS. You aren't lower class because you don't have a private office.

$200k/year and lower class? You can afford to buy your own private office for much less than that.

Isn't it kind of interesting that normative respect for software engineers is so low that even when salaries are $80k to $150k on a team, that same team is going to be sitting in an open plan setting and talked down to by management?

It's funny because software developers are more kin to the 'real professions' like law when it comes to earnings potential: like lawyers, a software dev can simply make money by setting up his or her own shop with very* little capital investment beyond education.

Edit:

Now that I think about it, the loss of respect might come from the fact that software devs have a 'management' looking over their shoulders at all. In other 'true' professions, the ones who are liable to cut-costs, haze, or otherwise pour abuse on a professional would also be in the same profession. E.g. if you're a lawyer, you may work 100 hour weeks for the first 8 years, but you're doing so not because some pointy-haired MBA is telling you, but because X lawyer with prestige who owns the company is telling you to. So even though the outcome is the same, it may feel more okay because its coming from someone of your same class/category.

  coming from someone of your same class/category

I think you make a very good point here: it is coming from a colleague, someone who is on (more or less) the same track as you are, only a little ahead of you in terms of the career path.

> Isn't it kind of interesting that normative respect for software engineers is so low that even when salaries are $80k to $150k on a team, that same team is going to be sitting in an open plan setting and talked down to by management?

Nah, that's just how wage-labor works.

Oh I agree that is how it works. Though I still think it interesting.

Historically, there's been a push-pull between engineering and the professions. Engineering (artillery, civil, metal-working and the like) being seen as low class labour where as the professions (law/medicine/natural philosophy then science) was seen as high class work.

I once believed this was because engineering always had a physical outcome, where as professional work could be done as a pure though experiment (e.g. law) or had literal connotations of power of live (e.g. medicine).

But looking at computer science/engineering, I wonder if that's a good hypothesis. CS is still suffering from the same low-prestige status despite having billionaires rise from its ranks, and despite that it has no physical equivalent.

I agree that it sounds ludicrous to claim that one can be 'lower class' at $200k/year, however, I think there's a charitable way to read this position.

Perhaps their point is that autonomy is a better indicator of class than salary. Just like 'stupid is as stupid does,' 'class is as class does.'

Being able to afford your own office means nothing if you can't actually use it because you spend 8-10 hours a day trapped in an environment that you find degrading.

The barrier to class mobility in this case is mental. The engineer has traded autonomy for cash.

My own opinion is that one becomes upper class when they can choose not to work. If your living expenses are $20k/year and you make that from returns on passive investments, congratulations, you're a part of the leisure class.

If your expenses are $190k/year and you earn a salary of $200k/year you're a part of the lower/precariat class.

If your expenses are $190k/year and you earn a salary of $200k/year you are an upper-middle class person with poor judgement. Lifestyle inflation does not make someone lower class.

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery." -- Micawber (from David Copperfield, Charles Dickens, 1850)

Being lower or higher class is not only a matter of money, but also and mainly a matter of social capital. People might not be rich, but they might use the wealth of their class peers - as long as they share their codes and culture. That's why having your own office is important. Because it brings you into another class through codes and culture. Same thing with owning a boat or a country house.

That is a good heuristic, I think most Europeans would agree.

However having your family name on your building seems less common in the US and Europe nowadays. In American business culture having a generic name such as Google, Microsoft seems to be viewed as being more elite. Would Americans say that is accurate?

This causes me to suspect that Trump and Andreessen Horowitz are exceptions that view themselves as outsiders to the corporate club in some way, which is interesting.

It might have something to do with the difference between new and old money or different subclasses butting up against each other.

I myself would be proud to put the family crest blazoned on the helm of our battlebots at the factory, Game of Thrones has evidently influenced my education. Much better than something like 'Active Defense Ltd' or 'Pro-Tech.org'.

I've heard there are two kinds of jobs: the kind where you shower before, and the kind where you shower after.

And if you just don't shower? ;)

I don't think this works since it doesn't factor in age in any way.

Just because a 22yr old might work as an intern does not make them lower class.

In the UK we generally consider class to be something to include family, upbringing, attitude and as well as finances.

I have always thought of it this way:

- Lower class: convert social good into survival, dependent on others for basic survival

- Middle class: convert work into survival, provide for yourself and maybe your family

- Upper class: convert capital into survival, provide for yourself, your family and potentially society.

I stopped saying lower/middle/upper colloquially and started saying simply dependent, middle class or capital class.

> middle class: have a job, must work for a living

This is not the way most people have traditionally thought of the middle class.

The middle class were the highly-skilled white-collar professionals: doctors, lawyers, engineers. In contrast, the lower class were the poor or blue-collar workers: farmers, factory workers, and the unemployed. Whereas the upper class referred to business owners and financiers.

With the decline of farming and manufacturing, blue-collar workers shifted to service industries.

What is striking is most people think they have the living standard of skilled white-collar professionals, even though they are just service industry workers.

This situation is only possible because of universal access to cheap credit.

When was this ever the typical definition of lower/middle/upper class? That's not the historical definition nor is it the modern one.

The idea that being a business owner makes you "upper class" is absurd. Most business owners have always been middle class. Most businesses aren't that lucrative and require large amounts of time relative to the amount of profit generated.

Actually, as a Brit (and so an expert in these matters), it seemed a fairly good definition for me. It's similar to how class is represented in Downton Abbey and in books like "Watching the English" (Kate Fox).

As far as I know, there are no formal and universal definitions of the class system. Certainly in Britain, class has almost nothing to do with your income or bank balance. A lot of the upper class are completely broke, while there are many "working class millionaires".

I think, in general, that US and UK ideas of socioeconomic class are different. The UK puts much more emphasis on the "socio", and the US in the "economic".

Isn't the notion of "upper class" in Britain usually based on peerage titles or being related to people who have them, as opposed to business ownership? A small business person is almost the epitome of middle class, to the point that impoverished aristocrats would never stoop to such an occupation.

Sort of. It is possible to buy yourself a title.

Many Europeans are descended from people that potentially give them the right to nobility. Few invoke that in everyday life though.

So you could become an aristocrat if you really wanted to be, by blue blood or by financial assistance. In the old days somebody successful in business would often transition to aristocracy by taking on a name and the associated trappings. It is something of a controversial area! In Japan it is still common for an unrelated successful young man to be adopted into the family tree of a business dynasty.

I suspect the upper class alternates between being meritocratic and being hereditary, while claiming 'it ever twas'.

Americans don't have the baggage of nobility so don't have to wedge the class system into a historical (but no longer relevant) model. In the US all that matters is money. It might come from your parents, it might not.

> In the US all that matters is money.

Not entirely. Perhaps more than in the UK, yet behavior and social circle are still a factor in the US.

> Certainly in Britain, class has almost nothing to do with your income or bank balance.

That's fine and indicates you're using a more historical definition, but doesn't make the parent comment accurate. A decidedly lower-middle class individual can start a business and this will in no way suddenly push them into the upper class. If they make millions, they still won't be upper class by your definition unless maybe they do so well they somehow get a lordship or at least a knighthood out of it.

See another comment below: "I think infodroid was using 'business owner' in the sense of 'captains of industry', not 'local corner store proprietor'".

Some of the biggest disagreements between my wife and I occurred as a result of her have this British definition of class and me having the American one. She told me early on, she wanted a "middle class" life. I thought, "Oh, that's easy!" But she really meant she wanted to live like a doctor or lawyer. I've been busting my ass ever since I figured out what she actually meant.

>When was this ever the typical definition of lower/middle/upper class? That's not the historical definition nor is it the modern one.

Nope, that is very much the historical definition. With the caveat that for "business owners" you should read big business owners (from Larry Elisson to the guy that owns a restaurant chain), not some person with his own hair saloon in Iowa, or some programmer who freelances as an LLC.

From the dictionary:

"the class traditionally intermediate between the aristocratic class and the laboring class."

From Wikipedia:

"In Weberian socio-economic terms, the middle class is the broad group of people in contemporary society who fall socio-economically between the working class and upper class."

"The modern usage of the term "middle class", however, dates to the 1913 UK Registrar-General's report, in which the statistician T.H.C. Stevenson identified the middle class as that falling between the upper class and the working class. Included as belonging to the middle class are professionals, managers, and senior civil servants. The chief defining characteristic of membership in the middle class is possession of significant human capital."

And generally:

https://en.wikipedia.org/wiki/Middle_class#History_and_evolu...

Obligatory Orwell on class in England: http://www.bradford-delong.com/2010/12/george-orwell-on-belo...

I think infodroid was using 'business owner' in the sense of 'captains of industry', not 'local corner store proprietor'.

I agree.

Also, they went to the Mall of America to get opinions. Malls almost by definition avoid having the extremely poor (who can't afford anything) and the extremely wealthy (who certainly don't need to go to a mall to buy things).

That's not true.

There are always window shoppers and people that go there just to "hang out" without buying anything.

The wealthy people also have to buy their clothes somewhere and they probably stick to overpriced items in brand stores (not sure if I'm using the right name, but I'm thinking of the stores where they only sell one brand) which could be locates in a mall.

I'm not sure a $500k white shoe lawyer is middle class. Sure, they may work for a living, but they're also likely to have enough investments that they can just live off the interest if they wanted.

I mean, $500k a year is a LOT of money, even in places like SF.

Here are some numbers to consider. $500k pre-tax is about $325k after taxes (SF or NYC). Spend 50% ($162.5k), save 50% ($162.5k). After 10 years of a consistent $500k pre-tax income (no burnout, no voluntary breaks, no unemployment), with modest annual stock market growth, and no black swawns (family illness, lawsuits, divorce), you've saved up about $2 million. The rate at which you can spend money and not run out before you die (called the Safe Withdrawal Rate or SWR) is about 4% (some will argue closer to 2.5-3%). 4% of $2 million is $80k/year pre-tax. How long you need to work to cover your $162.5k/year lifestyle becomes an obvious function of savings rate and market returns over an extended period of time (decades). The bottom line is that it's extremely difficult for working professionals to become ''rich'' in the sense that they can indefinitely sustain an upper class lifestyle on passive investment income alone. Read ''The Millionaire Next Door'' by Thomas Stanley (http://fave.co/2cLN5gp) to learn more about how wealth is truly accumulated and managed in the United States. This book had a greater impact on me than pretty much any other I've ever read.

Which is why the number of years until you can retire has nothing at all to do with how much you earn, and everything to do with how much you save as a percentage of your income.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...

Given that consumption (almost always) scales with social position, I imagine people will only really consider someone "rich" when they can still buy whatever they like, for the rest of their lives without working for a living.

Yep, it's the "keeping up with the Jones" and the Hedonic Treadmill.[1]

The $500k lawyer isn't going to just drive a Honda. He has to have the BMW 7 Series ($130k) -- and he wants a brand new one every 2 or 3 years. Instead of getting a mortgage that consumes a tiny fraction of his income or buying a cheap house free & clear, he'll take on a mortgage up to the max credit limit allowed by the bank. Hence he has a $2+ million dollar estate in a gated neighborhood. Does he have kids? Well then, it must be private school. The most desirable private schools in NYC cost $40k tuition per student per year. 3 kids means $120k/year. Basically, you do the arithmetic and $500k/year is abject poverty -- uh I mean -- middle class.

[1]https://en.wikipedia.org/wiki/Hedonic_treadmill

I know a lot of people in that income bracket. I don't know anybody with a 7 series or an estate in a gated neighborhood. They're comfortable, but more like Audi A3 than 7 series.

Few lawyers (or consultants or bankers) can make $500k in Iowa City (or even Seattle for that matter). Someone with a household income of $120k can easily afford a 2400 square foot house (that's the national average for a new house) within 30 minutes of work in a good school district near Des Moines. I'd estimate same combination takes an HHI of around $300k in the DC metro area. Jump to $500k (at that bracket you're losing almost half in taxes), and you're wearing nicer suits and saving better for retirement and your kids' college, but saving $100k per year isn't going to let you quit your job and live off interest any time soon.

Bill Gates can't buy everything he might want to for the rest of his life. While people tend only think of things they can afford as reasonable expenses, there is no clear line between an iPad and paying for a Mars mission.

If anything the Medean income seems like a good ballpark for enough. But, it's really hard to stop.

Well, Bill Gates is a bit of an odd example. He's very thrifty. He could certainly afford $50 hamburgers, but due to the cost decides he doesn't want them.

Even if MicroSoft didn't take off, he'd still be wealthy. He's the kind of guy that waits to get the absolute maximum value out of each dollar he spends.

That's not a bad thing, by the way, just unusual.

Bill Gates bought a Porsche 959 for $225,000 (in 1987 dollars) and left it in customs bonded storage for 13 years while he and his buddies successfully lobbied for a law blocking its importation to be changed [1]. The idea of BillG as some thrifty philanthropist isn't born out by reality.

Being the richest man in the world makes pretty much everything appear a trivial expense, but there has to be a limit somewhere.

1. http://blog.dupontregistry.com/celebrity-cars/bill-gates-ame...

I don't know how much he spent on lobbying. A low milage 959 is a 1.4 million dollar car. 9% rate of return?

edit

I get what you're saying. I just don't see the millions thrown away into nothing. Drugs, parties, wrecked cars, pissing away cash. Mike Tyson was worth $400,000,000. now he has nothing. It's easy to find people that got rich and lost it all. Lottery winners and pro athletes are prime examples.

Granted, spend one dollar less than you earn, and you're winning. He just seems like the kind of guy that has a hard time parting with cash for any reason.

Insurance, and inflation eat into that return. So, no it's not good ROI as a 30 year treasury bond from 1987 beats it let alone the stock market.

The real difference is often positive vs negative investment returns. Most sports stars lose more money from poor investments than they do spending.

He lives in a 'thrifty' 66,000-square-foot house. Sure, he could spend 10x as much on his lifestyle, but there is a point where more expencive does not mean better.

As to being rich, sure he inherited millions. But, connections, background, timing, and luck only go so far. You really can blow any amount of money.

In 1988 Gates was a billionaire. spending 6% of his net worth on a house really doesn't seem crazy. Most americans, well, most americans don't own a house. Those that do, it's their biggest asset. And his house has nearly tripled in value. Of course it has taken 25 years, because real estate is like that.

I've never met the guy. By all accounts he's smart, dedicated and hard working. I think he'd be doing just fine regardless of the field he went into. He got very lucky, so he's a billionaire 80 times over.

And, yes. The prince of Brunei is a great example of not thrifty. 14 billion in just 10 years. [1]

[1] http://www.vanityfair.com/news/2011/07/prince-jefri-201107

He did spend 28 billion at one point. Which is my point.

It's natural to think of spending in morale term so donations or gifts don't count or relative to income. Which makes finding a reasonable limit on the absolute scale meaningless. Supose he had 10 trillion and spent 1% on a house would a 100 billion be extravagant in that context?

I don't understand. I asserted that Gates was thrifty. As in "using money and other resources carefully and not wastefully."

I guess you're saying he's just doing whatever he thinks is fun from moment to moment, like prince Jefri. It seems like there's a subtle difference there, but I don't know how to articulate it.

I don't think thrifty simply implies someone lives well below their means. I think thrift applies in both a relative and absolute terms, so living a multi million dollar a year lifestyle you can easily afford does not count.

I make good money as a developer and live well below my means, but I am not thrifty. I simply don't have much interest in buying most things, but I can point to 10's of thousands of dollars in wasteful spending.

The clear line is a yacht with 2 helipads.

Like Paul Allen's [1] you mean?

" Octopus sports two helicopter[2] pads on the top deck, a twin pad and hangars at the stern and a single pad on the bow; and a 63-foot (19 m) tender docked in the transom. There are a total of seven tenders aboard. The yacht also has a pool, located aft on one of its upper decks[citation needed], and two submarines (one of them operated by remote control for studying the bottom of the ocean).[citation needed] Side hatches at the water line form a dock for jet skis. "

[1] https://en.wikipedia.org/wiki/Octopus_%28yacht%29

Is that above or below two yachts with a helipad each?

Maybe so, but when its not worth it to you to pick up off the ground more than what other people make... I think its close enough to not quibble.

Eh, taxes and other expenses add up. I don't think it would be very comfortable to stop working. 500k today isn't what it was just a decade ago.

And a 100k isn't what it was a decade ago either. While I understand your underlying point (and somewhat agree with it), how you got there was a bit bizarre. We are talking about making 500k this year, which would be obviously less a decade ago when adjusted for inflation.

500k is still over 20 years of working full time at target.

Funnily enough, "have a job, must work for a living" is Marx's definition of 'working class'. The people who had no income in the pre-welfare days tended to be short-lived.

The petite bourgeoisie must also work for a living. They may be self-employed. They are not members of the proletariat, which is Marx's definition of the working class.

Your definition of "upper class" corresponds better to my definition of "rarefied wealthy"

I think to satisfy my own definition of class, it has to have some sort of hereditary component to it. Class has meant all sorts of things historically. In many ancient human societies, class is formally defined.

I think you've put your finger on what's interesting here: that people self-identify emotionally, using lifestyle and value judgements, and not based on actual income or statistics.

The classes are most commonly defined by economists as income brackets, not as welfare vs jobs vs passive income. [1] Yet when people are asked what class they're in, they use welfare and investments as the indicator.

Look at the stats and you start to see that by almost all definitions, the vast majority of the "rich" still have to work for a living, they simply have very high salaries. Passive income lifestyles are only being had by a very very few people well above the median of any "upper class" definition you can find.

It's not surprising that relatively well-to-do people think they're middle class, but it also doesn't hurt to have some perspective and realize that at at household income of $200k, you're in the top 3% in the US. [2] The goal of a passive lifestyle is not and might never be a realistic definition of rich, nor a practical goal for the vast majority.

Of course, as others have pointed out, it definitely depends on where you live. For more perspective, here are some stats on the cities used in the infographic:

[In 2000] The median income for a household in [Lakefield, MN] was $31,250, and the median income for a family was $37,898. [3]

The median household income in Edina in 1999 was $66,019. [4]

According to a 2007 estimate, the median income for a household in [Scottsdale, AZ] was $70,533, and the median income for a family was $92,289. [5]

According to the U.S. Census Bureau's American Community Survey data estimates for 2008-2012, the median income for a household in [Chicago] was $47,408, and the median income for a family was $54,188. [6]

Real Median Household Income 2014: US=$53,657 Minnesota=$61,481 Minneapolis=$69,111 [7]

That's over 2x variation, but most people would judge incomes of 50k and 100k very differently. *Edit: btw, kinda wierd 3 of 5 examples were from Minnesota...?

  [1] https://en.wikipedia.org/wiki/Affluence_in_the_United_States#Status_and_stratification
  [2] https://en.wikipedia.org/wiki/Affluence_in_the_United_States#Top_percentiles
  [3] https://en.wikipedia.org/wiki/Lakefield,_Minnesota#Demographics
  [4] https://en.wikipedia.org/wiki/Edina,_Minnesota#Demographics
  [5] https://en.wikipedia.org/wiki/Scottsdale,_Arizona#Demographics
  [6] https://en.wikipedia.org/wiki/Chicago#Demographics
  [7] https://www.google.com/search?q=median+income+minneapolis+mn

That's because traditionally class is about lifestyle, with income being either a consequence or a cause for that lifestyle depending on the situation

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