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Comment by mberning | Hacker News Reader

Sadly $200k/yr does not go very far anymore, even in the midwest.

What? Is this for someone living in downtown Chicago and supporting a family? $200k a year even for a single earner should go pretty far, especially if you have a house (which is very attainable in the Midwest on a $200k salary).

Uhhh, excuse me, what? What on earth are you spending your money on? 200k/year goes quite far pretty much anywhere in the US. Yes, areas like SF or Seattle are so expensive that children are a luxury item and no house sells below 1M/year. But in nearly every other part of the country that's simply not true.

He is saying what many of us are thinking. $100,000-$200,000 are now middle class, not upper middle, thanks to inflation. For a family with kids you are looking at rent in excess of $3,000/mo or houses over $400,000. We make a quarter million a year, and while we definitely don’t have trouble getting by, we also aren’t maxing out our 401k. Childcare alone takes up a substantial chunk of our income.

Exactly.

This was not our situation even 3 years ago. 3 years ago we felt financially very secure, like the future was rosy, we could save money, and look forward to children. Even now, like you, we don't have trouble getting by, but, we aren't maxing anything out. We watch what we're spending and we feel like we're just about sliding by with how crazy childcare is.

Things aren't going well at all.

I think you should look at how much over the median household income you are and then go find out what those people are doing.

The evidence would suggest that people making a median income are up to their eyeballs in debt, particularly credit card debt, and have very little hope of their situation improving in the future.

I don't believe it does show that in 2023. Do you have a source that's better than a Bankrate survey? (FRED charts are the most reliable.)

Things like this are "okay":

https://www.stlouisfed.org/institute-for-economic-equity/the...

And of course, the poorest people in the country are non-workers (the elderly and children) who are probably not in debt, but have other problems. Should bring back the CTC and fix child poverty again.

And the definition of middle class is looking more like "owning a condo" than owning a single-family home in a high cost of living area, the type of area where it's easier to get a $200k income.

Exactly. This is not controversial or very hard to understand. By the time you pay the taxes on your income, health insurance, maybe fund your 401k, pay an average mortgage, pay for insurance, power, other utilities, etc. I won't even touch the subject of cars, vacations, or other frivilous expenses. If you have relatively average expenses there really is not a lot of meat left on the bone. I am sympathetic to these most likely younger or early career people that think it is a "lot of money" but when you move out of your apartment and have a family to support 200k is a decent middle class living. Which is a little bit depressing after you have been on the grind for 15-20 years in a demanding career.

$200k is around 88th percentile household income in the US. I'm finding it hard to believe one needs to be 88th percentile to have a decent middle class lifestyle.

Even in California it is above 80th percentile.

This is a better way to phrase it. $200k in the Midwest means a pretty good house in the best area public school district, two cars, some decent but not extravagant vacations, and you might be able to retire comfortably by your mid-sixties assuming nobody gets too sick in the meantime.

It doesn’t mean living in the nicest parts of the city, which have bad schools because everyone in the nice houses there sends their kids to a good private school, and the public schools are attended only by kids from the slums. It doesn’t mean a lake house (maybe a small lake fishing cabin, on a kinda-bad lake, but not a lake house. Maybe a tacky pontoon boat and a slip rental). It doesn’t mean annual long ski vacations and summering. It’s not upper middle class, in other words.

Accurate except you can easily shave 10 years off retirement.

Earning that much from like your mid-20s, yeah, probably.

[edit] or, hitting that level more like in your mid-30s but not having kids, yes.

I read this as more a reflection on the reality that children require dual incomes, not that software jobs all of a sudden got less valuable. Children have been luxury items - to some extent, depending on region - for a long time in the US. The only people I knew growing up who weren't dual income had rich families that actually fronted the bill for children. Single family homes have been unattainable for most since at least 2008. And so on.

if you don’t own a house yet and now staring at a mortgage at 7.5% instead of 2.5% you’re going to spend thousands more a month in interest as part of your mortgage payment, not accounting for home price appreciation since the low rates of 2021.

so it doesn’t matter if you make $200k-$300k a year in a high paid profession a mortgage these days will require a much higher % of your take home pay than someone who bought the same house at 2.5%

Yes, as was the case throughout most of US history. Housing has never been, and likely never will be, a financial guarantee aside for the rich. I certainly hope people didn't get into software thinking it was a magical get-rich-quick scheme, because it's never been that. It certainly is a high-paying profession that allows you to live a comfortable life with amenities.

you won’t be able to comfortably afford a $1M house, which would be well below average in a coastal area where SWE jobs are mostly located, at today’s rates if you make $200k. Would be tight even on $300k.

Childcare is so expensive that a single taxable income and someone staying home watching the kids of quite viable.

I'm able to get by as a sole income earner with a family of 5 on a ~$200k salary, in California of all places.

We aren't flying to Hawaii every weekend but it's enough for a lifestyle similar to what I had growing up here, which I would describe as middle-to-upper-middle class. I still have to think about what I'm spending, but money isn't really a problem.

California is a big state. Are we talking a major coastal city or inland somewhere?

It's a suburb of LA.

It’s like 2-3x median household income in most midwestern cities (let alone out in the sticks).

Could you clarify what it means to "go very far?" I make about that much and live very well in one of Chicago's most expensive neighborhoods.

I would consider $150k/yr in a MCOL area comfortably middle class - what single-income households used to have much more regularly. You can afford kids, a house, a car, a couple low-cost family vacations each year, and maybe put some money aside for savings.

That is now pretty much the median salary for a bunch of high earners.

During the automakers book in Detroit, UAW negotiated a $191.60 weekly salary (for 40 hours work) in 1972. https://www.americamagazine.org/issue/100/victory-auto-worke...

Adjusted for inflation, that is $1407 today, or about $73.1k per year.

HN moment.

This statement is ridiculous. $200k/yr goes very far, especially in the Midwest.

No it doesn’t, especially if you want to buy a house.

It isn’t just inflation that is the issue, it’s interest rates.

If you make $200k gross and put money into a 401k, you’ll net about $120k or $10k a month depending on state income taxes.

at 7.5% mortgage rates, a $1M house somewhere like Chicago would be $8k a month assuming 20% down. Obviously you cannot afford that on your own.

The average Chicago house price is like, a quarter or a third of that. And, uh, $2-6k a month for non-mortgage expenses goes a long way?

3+ bedroom, detached houses are not $300k-$400k in a good area of Chicago no

Sure they are. Pop open Redfin in Portage Park. Hell, you can get a detached 3bdr in Lincoln Square for under $400k. (Don't; buy one in Portage or Jefferson Park).

This weird argument seems to come up every 3 months or so on HN; I've only started noticing recently because we spent this year buying a new house, so incongruity of the argument ("you can't get a 3bdr for $400k") leaps out at me.

I’m not familiar with Chicago, but the only 3br showing up for me in Lincoln Square is $835k.

I get 3, one of them on the corner of Lincoln and Foster.

(For the record: $400k isn't the budget I'd go into Lincoln Square with, and if I was buying in Lincoln Square I probably wouldn't be thinking about a detached house in the first place. But it seems you can definitely do it.)

500k gets you a very nice house in Chicago. If you were to rent instead, 5k/month would get you a luxury 2 bed room apartment close to the Magnificent mile.

Why in the world would you buy a $1M house in Chicago? $500k would get you a decent house in a decent neighborhood that would be more than big enough for even a four-person family.

A $1mm house is an absolute luxury house almost everywhere in the US.

No it doesn’t. Feel free to look at new listings for detached houses in central Chicago right now with 3+ bedrooms and tell me there’s more $500k listings than >$1M ones

> central Chicago

Well sure, limit yourself to a tiny area filled with high-priced housing and nobody should be surprised that you find mostly high-priced housing. That doesn't mean that there's not tons of reasonably-priced housing in the area.

No family moves into a detached house in "central Chicago".

I find it amusing that people talked about low interest rates making housing more expensive and now people say high interest rates make housing more expensive.

The thing is, I don't think there is a "money" problem when it comes to housing. More or less money won't change a thing. The problem is on the physical side. One house can only house one family. If there are too few houses and too many families, houses will be expensive no matter the interest rate. The interest rate is just an additional expense on top that determines the bankers' share in the deal.

More people live alone now than ever, which has actually drastically reduced supply.

Any interesting consequence of all the boomer divorces is the square footage required for their lives almost doubled.

Low interest rates helped drive prices higher, but high interest rates help drive monthly costs higher even without higher nominal prices. You’re right that it’s ultimately a supply and demand problem.

You ought to tell that to all the homeowners in Jefferson Park, whose average household income is half that.

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