In Germany, couples with more than €5160/month belong to the upper class
zeit.de
zeit.de
I'm not even going to look but just guess that 60K EUR/year isn't even enough to buy a house near Frankfurt or another decent sized city.
They might be in a high percentile. That only means that most people are very poor.
“Name on building: upper class. Name on desk: middle class. Name on shirt: working class”
It’s not perfect, but the idea is that class as most people conceptualize it is determined by workplace and lifestyle affordances and isn’t a neat percentile cutoff but flexes and wanes in size.
[0] https://www.just-one-liners.com/name-on-building-upper-class...
But it captures the essence of the upper-middle split. The upper class earns income from assets. The middle and lower classes from employment.
This isn’t an economic conversation, but a political one. The upper classes are economically sovereign. The middle and lower classes are beholden to their employers, at least during the savings stage of their careers.
Put another way, a child born to an upper-middle class family gets a leg up in educational opportunities and connections. A child born to an upper-class family may never have to work at all. Their principal challenge is retaining familial relationships. Referring to the upper middle class as “upper class” papers over the exorbitant privilege the latter retains.
Gross income in Europe is also after pension contributions and employer taxes.
[1] https://www.iwkoeln.de/fileadmin/user_upload/Studien/Kurzber...
https://www.handelsblatt.com/today/finance/who-is-rich-defin...
"It would take the average labourer in Zimbabwe 71 years to earn the same amount."
A statistical threshold. Europe has a landed aristocracy with political power, tax and social advantages and investments to last generations. The upper class lives off investment income. The middle class requires income to achieve its goals (if not survive).
The practical effect of this distinction is people over whom employers have power versus those over whom employment, if it exists, is electively pursues.
"Class" in the European sense is not an income based thing. It falls apart a bit at the extremes (what is Jeff Bezos?) but it'd be incorrect to categorise e.g. a CEO as being upper-class despite them being in the 99th percentile by income in their country.
The term really describes nobility, inheritance, large land ownership. Existing in a different 'class'.
Pensions are usually a part of the "social contract", and usually pensioners have only a few years of expected healthy life left. So in most cases, a pension is more akin to having decent savings than having enough capital to live off investment income perpetually. Also, crucially, pensions rarely pass on money to inheritors, and almost never enough that the inheritors can live indefinitely from the income.
'A few years' seems an understatement for what is reasonably expected to be 20+ years, I'm not sure what difference the healthy modifier brings.
But yes, an annuity wouldn't generally allow you to pass on family wealth. That isn't the dividing line that was being discussed though.
This [1] suggests that $1,180,000 would put you in the top 10% in the US, which if you're living off (and in) it won't stretch that far.
If top 10% of income earners, that's quite a movable feast. If I have $1,000,000 in shares earning 10% and taking all as income, am I rich, if I've got $10,000,000 in less risky investments, and after reinvesting to account for inflation, earning 1% the same amount of rich? One advantage of taking an income from assets is that you can choose how and when.
I suspect the latter approach notionally invested in some prudent fashion would give a figure comparable to a wage, I misses out on some big differences though, no having to work, worry about getting sick, having the money there if you need is a major psychological boost, and if you want to buy a house, you can, plus you can pass on assets, which you can't do with a job.
[1] https://dqydj.com/net-worth-percentile-calculator-united-sta...
No it doesn't. First of all, the price of land can vary wildly. One square meter in the middle of Amsterdam will be a bit more than a square meter in Bumfuck, Alabama. IF you can buy land at all, in some places you can only lease it (you could own a home, but not the ground it sits on). Then there's all kinds of taxes you'd have to pay, just for owning that piece of land.
A 19.5ft by 8ft parking spot in London was on the market a few years back for £350,000, and you won't even be allowed to build a shed on it, just park your car.
An empty lot without even a tin shack can cost more than a mansion, depending on location.
Yes, that was my point, they aren't the same thing at all. It's complete bullshit to say that it costs pretty much the same to live in a tin shack everywhere, as it clearly doesn't.
Your minimum is probably a well, septic tank, permits and so on, this is if you even get planning permission. It's almost certainly going to be cheaper to buy an old terraced house in a post industrial town.
Put it this way, India is a relatively wealthy nation and a large proportion of middle class Indians don't have flush toilets. How can you compare that to a middle class European with a straight face?
It's not that the cost of living is lower it's that standards of living are.
https://www.walmart.com/ip/Great-Value-Long-Grain-Enriched-R...
Yes, they do. Because it is defined in relative terms -- as the top 10% by (net) income.
EDIT: Why do I get downvoted for a non-emotional, purely factual comment that provides additional information?
A ridiculously stupid definition only some economists can come up with.
A family with a huge mansion and its own multi-billion trust (living expenses paid by the trust) is not upper class, a graduate who owns nothing but debt and has just landed a well-paid job is, according to this definition.
[1] https://en.wikipedia.org/wiki/Bundesausbildungsförderungsges...
A trust (Stiftung) owns itself. Its capital gains are not the beneficiaries' capital gains. It may also own the mansion in my example, so good luck taking imputed rents into account.
> Furthermore, university in Germany is basically free and there is government support for poor students (BAföG) [1], so graduate debt is not that much of an issue.
This doesn't change the point that someone who just started a well-paying job and owns nothing but debt is considered "upper class" by this so-called study.
I wish this discussion could move on from this unfortunate, but minor semantic point to the substance, namely that 5160 EUR/month of net income for a couple take you into the top decile in Germany.
It may be a minor semantic point to you, but it's half of what makes the headline a low-effort clickbait as typical for the "Zeit" since it goes against all common sense and why people take offense. The other half is the obvious flaw in the study, also typical for low-quality research that results in such left-populist articles, of asking people sensitive questions about their income (and perhaps wealth) and expecting valid responses.
I wish we would move on to debating why this kind of trashy content gets so much attention and why certain people just crave for it to be published.
People making 100+K per year pretax are making money off of investments in education etc.
PS: For more physical examples, a stripper can deduct cosmetic surgery from their taxes. http://backalleytaxes.com/is-cosmetic-surgery-tax-deductible...
For a married couple without children, 5160 EUR net income per month then equates an income of over 100,000 EUR per year.
Well paid but not upper class. Give Germany has a bona fide upper class, this is a meaningful point to snuffle about. The couple with €5,160/mo. in net income is still, in all likelihood, beholden to their employer.
And the comments in this thread are disagreeing with that terminology. (The term of art has been “high earners” when I’ve seen income statistics in America.)
That would put you close to the 1% of the top earners in Finland. Even most mid-sized company CEOs don't make nearly that much.
It might get you a mortgage on a 500K EUR home. Maybe.
Now consider everything above that, farmland, companies, warehouses, etc. Not some theoretical tiny portion, but actually a load of stuff above that.
Leaving aside any form of apologism if you define 100K as upper class you now have no term to describe those that are actually rich.
We've got plenty (you even used one, "rich"). "One percenters", "millionaires", "wealthy", "upper upper class", etc.
This is mainly because your non-earning spouse can be included in your health care insurance for free, and because of the Ehegattensplitting [0]
Also, this is _net_ income. In Germany that means healthcare is covered and you don't have to pay off large student debt.
To reach this net income, both partners have to make about 54.000 a year pre-tax.
Most important point: the data is based on surveys, which means the super-rich don't really show up.
Here’s a comparable listing from Atlanta in a nice urban area. Atlanta is a lot bigger than Munich.
https://www.zillow.com/homedetails/867-Peachtree-St-NE-UNIT-...
I think you have to click through a couple of places to get a better feeling.
It's also insanely different between countryside and cities. Back home where my parents live, you could build a really, really nice house for that money. That's probably triple of what my friends back there spend on their homes, and those are really nice already.
Because everybody starts their worklife with a huge salary? I don't see the point of this calculation.
> Most important point: the data is based on surveys, which means the super-rich don't really show up.
The rich and super-rich don't show up whenever only income is considered. Any class definition based on income and not wealth is pointless.
It's the simplest and quickest back-of-the-napkin calculation to try to visualize what an income like this means.
> The rich and super-rich don't show up whenever only income is considered. Any class definition based on income and not wealth is pointless.
Which is my point properly explained, thanks.
I have no idea what percent of the population is actually upper class, but they usually outright own multiple houses and luxury cars, and most importantly, a significant stack of wealth that is not necessarily bound in everyday living.
Either something is wrong with the social system which is making individuals to spend so much. Or something is wrong with the economic system, which is not providing enough income. Or something else wrong?
One of the middle class problems I do see is that owning your daily stuff (like a house and a car) - and hence gaining some measure of independence - is increasingly difficult, even for relatively high earners. I think another poster here got it right when they said that being upper class ultimately means being a rentier instead of a rentee.
The fallacy in this argument is assuming that if you cannot buy your own house and car, there is literally no other way to obtain shelter and transport.
I live in a big German city, though not quite in the city center. (My commute into the city center is 20 minutes by tram.) My monthly expenses for shelter and transport (not counting long-distance trips) come out to 500 € in total. With other non-negotiable expenses (food and insurances), this goes up to about 750 €. Rounding up a bit because there are always unexpected bills, a salary of 1000 € is the minimum that I need to live comfortably, if slightly frugally.
If you have a 40-hour earned income job you are almost certainly not upper class.
Practically calling 90-th percentile the "upper class" is whitewashing the extreme difference between the lifestyle historically associated with the upper class and the middle class.
It strikes me that people like to deny the fact that the upper class is actually a very small group indeed. It's not about just having a slightly bigger house or car or whatever, the entire lifestyle is fundamentally different.
"Upper class" means those who are rentiers, as opposed to those who have to sell their labor or body to others.
Some CEO's are quite rich but still not "upper class", because at the end of the day they're still employers who sell their time to the highest bidder.
Exactly. Good luck buying a 3 room apartment in Berlin (outside the ring-bahn!!) even with 5.1k net without dramatically changing your lifestyle.
* the author chooses not to use the terms lower, middle, and upper class because doing so just leads to arguments about where to draw the lines. Interesting that so many comments on this thread are just people arguing about what "upper class" means because it's a personal term. He instead splits the distributions of income into three parts, the bottom 50%, the 40% above that, and the top 10% and simply refers to them by centile and decile. The "top decile" has an unambiguous meaning, whereas "upper class" could mean anything. * there are three distributions: income from labour, income from capital, and combined total income. The people at the top of one distribution aren't necessarily the ones at the top of the other. The book analyzes inequality across different countries across the past two hundred years or so, super interesting stuff * only when you get into the top 0.1% are you earning more income from capital than income from labour * inequality of income from labour is far lower than inequality of income from capital and always has been in every society in every period * inequality from income from labour is _easier_ to morally justify than inequality from capital, but still not necessarily just in any absolute sense * the bottom 50% owns only about 5% of the total capital
Summary:
- €5160/month is the German 90-percentile monthly net household income
- The US 90-percentile monthly household net is probably around $9k - $10k
- Major contributors to the differences in the gross are in my guesstimate (1) overvalued USD, (2) more hours worked in the US
- differences in the net are clearly mostly due to different taxation/collective spending
Sure, you won't get a house in Starnberg for that, but they don't say you're rich with that money, just upper class.
The middle class isn't as rich as most people here think.