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Comment by bilbo0s | Hacker News Reader

I know this will sound provincial to the HN crowd since it's very Silicon Valley oriented, but a thought occurred to me while reading this comment. The thought that it's pretty amazing that there are places in the US where, say, 5 million in assets is "middle class". I understand the thinking, it's just that where I come from all of the guys with 5 million in assets are considered to be pretty F'n rich. I don't know anyone in the town I grew up in who would say that 5 million was "middle class". We wouldn't even call that "UPPER middle class". In my hometown they, (we? cognitive dissonance, sorry), would say that guy is LOADED.

It's that existence of these two completely different economic realities that makes the inequality issue at once so intractable, and so critical to address.

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I don’t think it’s really that intractable. The traditional middle class lifestyle in the US for the past several decades involves getting married, probably having a few kids, and buying a 3 bedroom house to live in. Probably even in the towns you’re thinking of, that describes a middle or upper middle class lifestyle.

The thing that’s crazy is that this can cost 2-3 million dollars in many places in the Bay Area. The housing crises in affluent cities is absolutely the driving factor of our growing inequality issues. It’s been shown in different ways in many studies. We need to build a lot more housing if we hope to make any real progress on these issues (and in desirable places like the Bay Area it probably requires shifting the ideal to be a 3 bedroom condo rather than a standalone house).

> The thing that’s crazy is that this can cost 2-3 million dollars in many places in the Bay Area. The housing crises in affluent cities is absolutely the driving factor of our growing inequality issues.

how can this be so? i agree it sucks that {insert middle class profession} can't afford a 3br in the bay area or NYC, but how can that be the root cause of inequality across an entire nation? there are tons of affordable 3br houses around where i live (mid-size coastal city).

i see that it is a bad thing for service workers the wealthiest cities to be pushed ever further from their place of work, but this seems like a more local problem.

I also don't agree it's the root cause, but certainly it's a big contributing factor. Buying that 3 bedroom house in a more affordable area might be a smart idea, or it might severely limit one's economic mobility. Most of the jobs that mint new members of the upper / upper-middle class are based in big cities. Living elsewhere might mean trading class mobility for housing security, a trade-off that some don't have to make.

> Most of the jobs that mint new members of the upper / upper-middle class are based in big cities.

i feel that this claim is exaggerated. anecdotally, i live in a suburb of a midsize city. i rent a 3br house for under $2k a month and there are tons of tech companies within a 25-45 minute drive of my dwelling. an entry level job at any of them would easily put a person in the high end of middle class incomes for this area.

to be sure, companies in the wealthiest US cities offer experienced employees compensation that is unmatched anywhere else. but for entry level and/or average skilled developers, it seems like SF, NYC, etc. are the only places where you aren't guaranteed an upper-middle class lifestyle.

As with anything there is obviously some debate and disagreement. But growing inequality is basically the result of capital's share of income being higher than labor's share for the past several decades. When you look at where these consistent outsized returns for the wealthy are coming from, it turns out it's mostly housing [0].

You bring up a point about how can this be causing inequality across the nation. Well if you think about it there really isn't consistent inequality across the nation, wealthy people by and large tend to live in or around big expensive cities, where their returns are consistently driven higher than they would otherwise be thanks to housing prices. It's not only NY and SF that have housing issues, it's more pronounced in these places but lots of cities across the country are seeing housing costs increase quickly.

[0] https://www.brookings.edu/bpea-articles/deciphering-the-fall...

I certainly didn't mean to imply (nor state) that a net worth of $5MM was middle "middle class", merely that someone with $1MM was technically in the dastardly "millionaires and billionaires", but wasn't someone that confiscatory and redistributive tax policies should heavily target, and that single digit millions wasn't outrageously wealth hoarding.

If our family had $5MM net worth and paid off our house, we'd be looking at a passive income stream of somewhere around $120K/yr, or about what two median public school teachers make. That's hardly Scrooge McDuck or "day drinking mojitos on the fantail" territory...

Well 120k for doing nothing is a pretty rent I would say... unless you have a nasty disease and no health insurance. (Unlikely)

Most commonly, it's $120K/yr in income based on a lifetime of two earners carefully saving (deferring current consumption-this is the "doing") and investing for their self-managed retirement.

Couple A with $3MM in liquid assets and self-funding their retirement is not particularly better off than couple B[0] who has zero liquid assets and $120K/yr in state-funded pensions, yet couple A is the target of multi-millionaire scorn and couple B is just "well, that's why we have unions and pensions..."

[0] Couple B is probably far better off as most state pensions include healthcare coverage.

It's not scorn for Couple A, but rather for their cheerleaders. There is a real problem with setting an expectation for everyone to have had the financial skills and good luck of Couple A. I think that's more what people mean when they say "that's why there are unions and pensions . . . " -- to give security to large numbers of retirees regardless of their personal situations along the way.

>"To give security"

Missing an /s? The expected value of my Fidelity account is >$0, which is more than I can say for Social Security or public pensions in almost any state.

Thank Reagan, Thatcher, Third Way Neoliberals for that...

Searching didn't help me out much; is $120k in state-funded pensions for a couple a typical amount?

In Australia, it's A$35k (US$27k) a year for a couple. I would have thought the US amount to be less than ours off the top of my head.

Wealth doesn't map exactly to class - you can be poorer than some one but still not be in the Upper class.

We can all stay on the same page by expressing the numbers as percentage-above-cost-of-living. Or, we just represent this dollar amount as X, where X is how much money you need to live comfortably off passive income for any given region. In the case of SV, it’s $5-10M. In other places, it’s $1M.

I'm not sure it should be based on cost-of-living at all. If it is, then you're middle class while living in SV, but all of a sudden rich when you sell your home, collect the equity, and move to Montana.

It should be enough to say, only rich (or soon to be rich) people can live in SV.

It sounds like SV is becoming the monaco of the US; you need to be rich to just get by there.

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