Ask the grumpies: An invitation to rant about @#$@# who think 300K/year (or more!) is middle class.

Anoninmass requests:

I just read on another blawg a comment that declared $400,000 a year was middle class. Discuss…

Chacha1 asks:

what does “middle class” even mean, anyway?

Clearly we think that idea is ridiculous.  Even in Manhattan.  There’s not any set definition of middle class, even in economics.  I think in practice we mostly use Obama’s “Under 250K” definition, even though that’s from a couple presidential campaigns ago, or we use something like 25th percentile to 75th percentile of household or family income.  If you’re curious, that’s something like 29K to 106K for household income .  There might be adjustments for cost of living, but cost of living isn’t going to get to 400K.  You can also look at median incomes by state, but with the caution that you shouldn’t cut the geographic area too small– it is likely that 400K complainer is living in or wants to live in a big house in Atherton or one of the nicer LA suburbs or Battery Park in Manhattan.  There are plenty of places in the same commuting zones with decent schools that have wider ranges of income and housing prices.  (And even there, 400K is well above median household income!)

Anyway, we don’t need to go on too much at length as this topic went around the blogosphere this past Spring.  Here are some links worth reading.

Is frugality inspiration porn?

Fire Blogger Manifesto– why it’s important to be transparent about income.

Who is the audience for this blog?  (This one also has especially great comments.)

Some forum commentary on the FrugalWoods higher than expected income.

Delagar discusses life in the lower middle class when you started out with medical debt.

Here’s another forum thread on why the post from Financial Sam about needing 300K/year to be middle class in SF is so much BS.  (I’m leery about sending more traffic his way though because that rewards him for spewing crud.)  That post did finally get me to stop clicking on his click-bait headlines when they pop up in blogrolls though.  He’s another blogger with an extremely limited lens.  His post probably emphasizes the point most of all (by the way he completely misses it) that middle-class people have to make trade-offs within the set of middle-class lifestyles.  If you can have all of the variants of middle-class lifestyle (geographic location, house, schools, cars, vacations, no college debt, insurance, stuff, no real money worries), then you’re not actually middle-class.

Middle class:  What everyone claims to be, but nobody knows what it actually is.

Discuss

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20 Responses to “Ask the grumpies: An invitation to rant about @#$@# who think 300K/year (or more!) is middle class.”

  1. jjiraffe Says:

    This article made me think a lot about what is (and isn’t) the middle class: https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

    Obviously $300,000 is not middle class. Even in SF area, where I live.

    • nicoleandmaggie Says:

      Thanks for the link! We definitely need to give advantages to everyone and democracy would be a lot better off if the ultra wealthy had less money to spend on political Ayn Rand stuff.

  2. yetanotherpfblog Says:

    Thanks for the link!

    I really like the article jjirafe posted. I think a lot of people have been normalized to think of “rich” in the Occupy sort of way – 99% versus the 1% (or even the 99.9% vs the 0.1%). Not to say that isn’t important but it masks the tension between the affluent class (top 10-15%) versus everyone else, where the former gets its policy preferences way more often: from the structure of employer sponsored retirement savings to NIMBYism to everything and anything related to the composition and funding of schools. I often think of the time the Obama administration got ripped apart for suggesting the elimination of 529s in favor of more Pell Grant funding as just one small example, and that’s downright trivial compared to what DeVos or all state/local legislatures are doing every day.

  3. rose Says:

    Yesterday the NYT had an article about a new migraine medicine that basically appears to eliminate them in frequent suffers. Insurance may or may NOT be willing to pay for such medicine, there seemed to be doubt in the article. Cost was set at $102,000/year; $8500/month. Made me think about the income one would need to pay for such a drug and the probable incomes of the top people in the drug companies who are going to produce it.

  4. Middle class Says:

    This Atlantic article is worth a read.
    https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

    The upper middle class has a lot of opportunities simply based on location. It’s not only access to better schools, enrichment opportunities, travel, and network. It continues through life and affects income earning potential to a higher degree that people like to admit.

    Some examples.
    Unpaid internships in many glamorous industries are common. That blocks the pathway for many people from poorer backgrounds, including the truly middle class and lower. No wonder editors of top magazines and publishing houses are always white people from upper middle class backgrounds.

    Job location. When I lived in Los Angeles, all the best jobs in marketing and entertainment were ( and still are) located on the west side of town or other higher income predominantly white areas. That is a huge reason you don’t see a true diversity on TV, movies etc.. Even the Los Angeles times was or is considering a move to the west side, which will cause many people of color on the Eastside to either quit or endure 1.5 hour commutes one way.

    Many higher positions now require or prefer a Masters, even jobs I held before without that degree. Guess what? People from the true middle class are less likely to be able to afford a graduate degree or if they get it, can go into crippling debt. I probably couldn’t land my own job today unless I paid for grad school or got an MBA.

    Phew got that off my chest…

  5. becca Says:

    If old age is always 10 years older than I am, than “upper class” is always twice my income. ;-)

    I actually strongly prefer the 25-75%ile for household income numbers, because they are within my scale of experience, and by definition will be within many people’s scales. 250k is arbitrary, and while it makes emotional sense to many college law profs, it really has no real generalizability.

  6. Leigh Says:

    I don’t know what middle class is either, but I sure as hell know we aren’t middle class. That $300k is middle class post really pissed me off. The couple was honestly spending all of their income. We (well my husband) make a bit more than the numbers in that post and I was really taken aback by how much that couple spent. They clearly weren’t thinking about their spending and their life honestly looked incredibly extravagant to me, despite us making a similar income. On the other hand, I feel like it was telling of how our friends who spend much more than us probably spend?

    My parents talk about themselves as if they’re middle class and the rich people are these others, but they don’t really realize that they are upper middle class in terms of income/wealth. I guess that’s what owning a blue collar business instead of a white collar one and not having a high school diploma does to you?

  7. Matthew Healy Says:

    Those of us who really aren’t middle class need to stop pretending we’re in the same boat as people who have to think about dollars on a daily basis. Not that I’m rich exactly, but it has been a long time since my wife or I had to give up anything we really wanted for lack of dollars. I just accepted a job that pays less than my previous two jobs because it’s what I really want to do in a place I really want to live, and the money will still be more than enough.

    Those of us in such a fortunate position ought to do what we can to help those less well off. And stop moaning about what my grandmother called The Cost of High Living.

    • Debbie M Says:

      That’s true for me, too. My highest income ever was 44K, five years ago. BUT I’ve never had dependents, I’ve always had roommates, I’m extremely healthy and have never had bad medical expenses, and I’m fairly good at and enjoy frugality. And so I haven’t had to live paycheck to paycheck in a very long time and was able to retire early (“pensioner” is kind of like a job that pays less than my previous jobs!). So I’m definitely in the boat of being in a fortunate enough position to be helping those less well off.

      I did have a friend who moved from Austin to Dallas and found that she could no longer live as frugally as she once did. For example, she had to eat out with her co-workers in order to get access to all the important information for her job. And she had to pay 1/n of the bill, regardless of how much she ordered, because that was the tradition, so she would seem like a whiner otherwise. She also had to do pricy status things to be perceived as worthy. Ugh. And I’m sure many people feel they have to do pricy status things to fit in, and that affects their idea of whether they’re rich or not.

  8. undine Says:

    Interesting discussion. That Atlantic article has as much to do with cultural capital (which comes with wealth, but not invariably) as with regular wealth. Would I call the people in that article rich? You bet. “or right around the time that my great-grandfather was secretly siphoning money from Standard Oil and putting it into a shell company in Canada.” Uh huh. They come from money, they have money, and they’re not going to be without it.

    This logic is confusing, though, because it confuses correlation with causation: “The fact of the matter is that we have silently and collectively opted for inequality, and this is what inequality does. It turns marriage into a luxury good, and a stable family life into a privilege that the moneyed elite can pass along to their children.” The assortative mating thing I understand, and the horrible consequences of income inequality, too. But the divorce & single parenting statistics that get trotted out are also part of a huge social revolution: “According to the Harvard political scientist Robert Putnam, 60 years ago just 20 percent of children born to parents with a high-school education or less lived in a single-parent household; now that figure is nearly 70 percent.” That’s in part because of the sexual revolution; people don’t live in miserable marriages now (or have shotgun weddings) because there’s no issue at all with sex before/outside of marriage, as there was 60 years ago.

  9. First Gen American Says:

    It’s weird with me. I went from a family income of $15k/year growing up to having 2 six figure salaries now in midlife. I was very poor…now I am not. In terms of socioeconomic status I have a bit of an identity crisis.

    I spend a lot on some things but am still super cheap about others. I have no food budget, I take vacations, I live in a pricey town with good schools. On the other hand, my house needs work, I still do a lot myself, I am very debt averse, i clip coupons, my car is 10 years old. It’s hard to let go of that poor person persona. So “middle class” is a nice label to put on myself and family as I am I longer poor but still don’t feel or act like a stereotypical rich person. Plus, I’d hate for my kids to turn out like one of those 80s rich kid douchebags in the movies.

    So I guess I am not trying to hide it, I just identify more with middle class sensibilities and values.

    Future College expenses still seem like very big numbers. It seems that education felt within reach for a middle class family a generation ago and is much more challenging to achieve today.

    I could live off a fraction of what I earn if I really needed to. Hell, my moms house sold for $120k. Anyone can afford such a small mortgage even without roommates and MA is not a cheap COL area. It’s just about choices. Homes the next town over are 4x the price. Yes, if you succumb to lifestyle inflation then $300K could go really quickly, especially if you are house poor but that’s not What I’d define as middle class. Entitlement at its finest.

  10. gasstationwithoutpumps Says:

    $300k/year is about the 98%-ile level, which is definitely above any reasonable definition of middle class. [https://dqydj.com/united-states-household-income-brackets-percentiles/]

    I think of myself as professional middle class, partly because that is how I grew up, and partly from my current lifestyle: 2-bedroom house in a small city, eating out once a week, no debt, paying full price for my son’s public college education, … .

    By the numbers, my income is around the 81–89%ile range (I don’t know what definition of income the charts use for “pre-tax income”—does it include deferred compensation or not?), which some people would classify as “upper middle class”.

    http://money.cnn.com/infographic/economy/what-is-middle-class-anyway/index.html gives 5 rather different definitions of the middle class, and I fit the definition for about half of them.

  11. Xin Says:

    Oh man, Financial Samurai… This is a tangent, but “spewing crud” is right. He has another one of those clickbait-y things ostensibly about two biglaw mid-levels (allegedly based in part on real individuals he purportedly talked to) and the numbers and scenario all the way down the line and the whole scenario as described were just completely preposterous. Various numbers (including the alleged loan payments that’d still be in play by then) were just wrong, wrong, wrong.

    This is also a tangent, but as I mentioned at YAPFB, I’m unusually salty about the Frugalwoods thing. Because his numbers in the public record happen to be so similar to mine (though my job has an expiration date because biglaw-type firms are “up or out”), it really makes me think about the differences in our values to a point where I don’t think I can enjoy reading them anymore. Also, if K and I were to combine finances (which we aren’t ready to do), our savings rate may, depending on calculation method, actually be very close to some of the ones thrown out for Frugalwoods. Except that we would never hold ourselves out as frugal at all, we live very nice and indulgent lives in NYC, a very HCOL area. Our overall financial situation is, of course, much less healthy. I need to factor in student loan payments, under the theory that they’re a “net worth positive” activity, to get to my high savings rate. We don’t own any property, or have alternative income streams, and we’re both in jobs with expiration dates. So it’s not a very fair comparison, it’d understate their financial progress, and maybe I’m just jealous!

  12. Debbie M Says:

    Apparently, the problem is that it’s hard to feel rich when you’re living paycheck to paycheck, no matter how huge that paycheck is.

    Hmm, if I were picking percentiles for a “middle class,” I’d probably pick 33 – 67 rather than 25 – 75. But apparently, everyone wants to be in the middle class, so maybe we should pick 5 – 95 percentile instead. (I think either being able to imagine someone richer, or actually knowing someone who can afford things that you can’t means you get to call yourself middle class. And maybe that happens at the other end, too: “Sure, I have three roommates in a two-bedroom apartment and spend all day studying so I never spend money on entertaining or eating out, but I still eat every day and live indoors, so I’m middle class.”)

    Wait, actually some people prefer the term working class, because they don’t respect white-collar jobs, so that’s a thing.

    Also, it’s not just income, it’s taste and other cultural identifiers. For example, beer = working class, wine = middle class, champaign = upper class. (I like chocolate milk. Hmmm.)

  13. Revanche @ A Gai Shan Life Says:

    “Middle class: What everyone claims to be, but nobody knows what it actually is.” Yup.

    We live among a mix of blue and white collar working people here so it helps keep us grounded knowing that “middle class” has a meaning, even if no one gets it or everyone wants to be it. We live in our own kind of bubble that way.

    I’m in similar circumstances to First Gen American coming from poor to comparatively rich while we still have to make tradeoffs. I eschew the “rich” label in those ways that I worry will affect JB adversely and make zir think we should be spoiled rich jerks.

    I stopped clicking on FS a long time ago, he’s in this area and from the get-go he was such a total jerk, I refuse to send him traffic on principle.

    • nicoleandmaggie Says:

      Good call re: FS.

      We do the opposite with our kids– let them know that they are able to get benefits and advantages because we have lots of money (but not everybody has that, so we have to work to make the world a better place, etc…. also we’re close enough generation-wise to low income that there’s a bit of “you need to like math and work hard if you want to keep your current lifestyle”). But we also live in a(n almost) McMansion in a HOA full of McMansions, so it’s a very different situation.

      • First Gen American Says:

        We do spend a lot of time talking about privilege to the point where my kid rolls his eyes when I bring it up. My younger son has never had poor friends and by all his metrics we are the poor ones. (They have more toys, a stay at home parent, they don’t have to take the bus to school, they have fewer chores, etc) I am hoping good work ethic can offset some of the bubble we live in.

      • Revanche @ A Gai Shan Life Says:

        @FirstGenAmerican That’s what I worrying about right now but I think it may pass once we get past the daycare stage. Daycare is a weird moneyed world where everyone has extravagant parties and rooms full of toys and now JB thinks ze will have a birthday party and can invite ALL these kids but that’s just not our thing.


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