WDYT? Top ten percent of households (income)

[Catwoman]

It is when you can't afford shoes.

 

I know she was saying it tongue in cheek, but still...

 

Yes. When you can't buy shoes, being able to afford it without sweating seems elite to you.

 

So while everyone in the elite is focused on how this makes them feel uncomfortable bc of the wording, they are missing the real point of the situation. Privledged, elite, upper classes, whatever.

 

I don't care what term is used. That's not the point.

 

The point is 90% of the population can't even fathom living the way 10% take for a given as just daily normal life.

 

That's a problem. It's a daily problem for an ever growing number of our population.

 

For the 10% to respond to that with how uncomfortable the terminology makes people seems to be a deflection of recognizing, much less dealing with, the problem at hand.

You seem to be saying that people define "the elite" as being pretty much anyone who makes more money than they do. I think that is ridiculous.

 

"Elite" is someone like Bill Gates. We also have some friends and family who I would define as "elite" (top 1% but nowhere near Bill Gates' level!) But a family making $150k in a high COL area? Definitely not elite. Not by a longshot.

 

Do you realize how much it costs to live in a high COL area? You seem to think $150k is a very high income and that it must buy a lot more than it really does. In some parts of the country, $150k might be considered elite, but in the places where it is relatively common for families to earn at least that much money, the expenses eat up far more of those earnings than you might think.

 

(Edited to add a few words for clarity.)

[Lawyer&Mom]

$150,000 would be comfortable in my high COL city. Your after tax would be around $100,000, so around $8000 a month. Just subtract $3000 a month to rent a 3 bedroom house in a neighborhood with good schools. And $1800 a month for any toddlers in daycare. Like I said, totally doable, but not lavish.

 

You just can't look at income alone. Cost of living is so variable across the US.

[Scarlett]

I don't think anything you posted sounded "elite." Sounds more like a normal middle class lifestyle to me.

 

Unless you're driving to Starbucks in your new Bugatti and driving back home to park in the garage of your 25,000 square foot castle. ;)

It may not be elite ( whatever that means) but it is definitely not average middle class.

[chiguirre]

There is a real elite, about 1 - 2% of our population, maybe 3%, whose money works differently than the rest of our money. And those individuals have the power to seriously change the structure of society by merely distributing profits among the people who create the profits--the workers.

There is a real elite, but it's the top 0.1-0.2% of income (and you can bet that almost none of it was "earned" from a job). Someone making $423 K, the top 1% in Texas, is nowhere near rich enough to buy the kind of influence that Kennyboy Lay did.

[Catwoman]

It may not be elite ( whatever that means) but it is definitely not average middle class.

It is average middle class where we live. It certainly wouldn't impress most people.

 

I think these definitions are incredibly variable, depending on where you live.

[Tsuga]

Yes, it's much more clear to have a conversation involving real numbers and statistics than words like "elite." Of course anyone in the top 10% is doing better than most others; that's built into the definition of "top 10%." 

 

Sure, but you could have a wealth structure which has the poorest person at $5k and have it go all the way up to $6k spread over 95% of the population. Then at that point, every gain in social status is accompanied by a $100,000,000 increase in annual income.

 

People making $6k would still be in the top 10%.

 

What I am trying to say is that in fact, this is closer to the actual wealth distribution that we have, than anything which people probably have in mind, or that Daily Beast graphic.

 

If my salary puts me richer than 90% of other people (let's clarify: I just filed my taxes, not there yet lol), that does not mean that my salary bracket is higher than 90% of other salary brackets. The skewed distribution means that in actual fact, a person who is richer than 90% of the rest of the population, has a salary in the bottom 5% of salary brackets!!! Because the first bin is 0 - 200k, the second would be 200k-400k, the next bin, 400-800k, then 800k-1m, then 1 - 1.2m, then 1.2m - 1.4 m, all the way up, 

 

If that sounds mathematically insane it is because wealth distribution in our society is INSANE.

 

 

 

A middle class income probably hovers around the median + 20, 000 ? Around 60 - 90 000 sounds about right to me.

 

Well, I guess it depends what you mean by middle class. I don't believe that a median income = middle class. To me middle class means that your earned wages can be earned through hard work with average intelligence and slightly above-average work ethic, to provide for your family, including health expenses, education, and a basic quality of life that would include a modest vacation, such as camping, or going to your mother's house, in a car.

 

In my experience, what we have in the United States actually requires about $150k for a "middle class" life, and what we really have is a third-world country in which people are just really flipping poor. I do not accept the $30k salary as a "middle class salary". It is not. It is a joke of a salary. And some college-educated people earn $35k--such as instructors at universities, social workers, starting teachers in some areas, among other things.

 

It is appalling. We have a society in which only the rich can be artists, because the rest of us are so close to the brink of poverty. It's absolutely disgusting.

[Frances]

Sure, but you could have a wealth structure which has the poorest person at $5k and have it go all the way up to $6k spread over 95% of the population. Then at that point, every gain in social status is accompanied by a $100,000,000 increase in annual income.

 

People making $6k would still be in the top 10%.

 

What I am trying to say is that in fact, this is closer to the actual wealth distribution that we have, than anything which people probably have in mind, or that Daily Beast graphic.

 

If my salary puts me richer than 90% of other people (let's clarify: I just filed my taxes, not there yet lol), that does not mean that my salary bracket is higher than 90% of other salary brackets. The skewed distribution means that in actual fact, a person who is richer than 90% of the rest of the population, has a salary in the bottom 5% of salary brackets!!! Because the first bin is 0 - 200k, the second would be 200k-400k, the next bin, 400-800k, then 800k-1m, then 1 - 1.2m, then 1.2m - 1.4 m, all the way up, 

 

If that sounds mathematically insane it is because wealth distribution in our society is INSANE.

 

 

 

Here's a video that does a great job of visually showing wealth inequality in the US which is even more extreme than income inequality:

 

 

 

[Tanaqui]

 

"Elite" is Bill Gates. We have some friends and family who I would define as "elite." But a family making $150k in a high COL area? Definitely not elite. Not by a longshot.

 

Elite is the wealthiest person in the world? You have to be not just in the top 10%, or the top 5%, or the top 1%, but the top .000000001% to be "elite"? Do you really know people in that category, as you claim, because if you do, I suggest that your view of the world is a little skewed.

 

Do you realize how much it costs to live in a high COL area? You seem to think $150k is a very high income and that it must buy a lot more than it really does.

 

Living in a desirable area is what that money buys... but you know, I bet there are plenty of people in your area who are surviving on much less than $150k a year. For example, here in NYC we are home to 3 of the top 5 areas in the country with a high cost of living (that'd be Manhattan, Brooklyn, and Queens)... but the median household income is $50,711. And no, it's not Staten Island and the Bronx bringing the rest of the city down: Measured by median income, Manhattan and (especially) Brooklyn are much poorer than you think. Manhattan's median annual household income is $66,739, while Brooklyn's is a mere $44,850. Its less fashionable neighbor, Queens, outearns Brooklyn at $54,373 per year. (Source for all my numbers: Google, ultimately, which I swear gets more helpful by the day.)

[Tanaqui]

For reference, $1,000,000 AUS is $778,095 US and $966,804 CAN

 

But I don't know how your general cost of living compares to ours.

[Guest]

Binip, I'm curious, how would you propose we solve the wealth distribution problem?

[Tanaqui]

Nm, confused.

 

All I know is that a ten dollar book on Kindle isn't ten dollars anymore, but more like 12.50.

 

Well, $12.85 AUS = $10 US, so if those books used to be US priced and now are Australian priced, you're getting a $.35 bargain per book.

 

(I confess. I love, love, love comparing currencies! Also, using the inflation calculator. Even if I hate the results, I love to punch in the numbers. We all have to have our little joys.)

 

[Catwoman]

Elite is the wealthiest person in the world? You have to be not just in the top 10%, or the top 5%, or the top 1%, but the top .000000001% to be "elite"? Do you really know people in that category, as you claim, because if you do, I suggest that your view of the world is a little skewed.

 

Sorry if my post wasn't clear. I consider someone like Bill Gates to be pretty much the pinnacle of "elite," but I also consider many of our friends and family members to be "elite" as well, as they would be in the top 1 percent -- but certainly not in Bill Gates' happy little corner of the top 1%.

 

I'm not sure why, whenever these topics come up, anyone who isn't poorer than dirt is told that they have a skewed view of the world. It gets old. The OP seemed to be asking what we thought about the information she posted and whether we thought that figure seemed accurate. But as usual, it's turning into yet another "us vs. them" discussion because some of us don't happen to think a family income of $150k is particularly impressive given the high COL where we live.

[Catwoman]

Never mind. :)

[Laura Corin]

and there's always this:

 

(source questionable, but the general idea is what I'm going for)

 

http://www.leastof.org/worldwealthcalculator

 

Well, yes but: having lived in a developing nation, both when it was really, really poor and when it had come up a bit, the cost of living is so extremely low that incomes can't be compared to other countries.

 

When we sold our flat in China, we gave our housekeeper a wedding present that was enough to cover all the expenses of the birth of her child in hospital.  It came out to about USD 1,400.  From what I hear on these boards, that might not pay for medical supplies in the US.

 

L

[Incognito]

...

If that sounds mathematically insane it is because wealth distribution in our society is INSANE.

 

 

...

In my experience, what we have in the United States actually requires about $150k for a "middle class" life, and what we really have is a third-world country in which people are just really flipping poor. I do not accept the $30k salary as a "middle class salary". It is not. It is a joke of a salary. And some college-educated people earn $35k--such as instructors at universities, social workers, starting teachers in some areas, among other things.

 

It is appalling. We have a society in which only the rich can be artists, because the rest of us are so close to the brink of poverty. It's absolutely disgusting.

 

FWIW, what you have to say about wealth distribution being a big problem is interesting and I agree (although solutions evade me).  

 

But your comments about the US being a third-world country are so very off.  Go to a third world country.  The US has occasional pockets of abject poverty, but it is not a third-world country.  Third world issues are a whole different conversation (or if they are in the conversation, then almost everyone in the US is part of the "elite").  

 

I do not find it disgusting that only the rich can be artists - it isn't bad for people that people generally need to work for a living.  It is a bit obscene that some people don't need to work at all, ever.  But it's more of a shame if that person is then never taught the value of money and hard work - if they learn those things, then what they do with their life is no more or less a shame than what the rest of us manage to piece together.

 

ETA: I should add - I understand that artists do work, and often work hard.  I think it is okay, however, that if a society does not value work monetarily then a person needs to choose to spend time doing something that is worth money in order to do the things they enjoy/thrive with that do not earn money.

[Laura in CA]

Median household income in our semi-rural town is over $100k. That doesn't go very far here in CA ... (Median house prices in our area range from $400k (in the boonies) to over $2,000,000 (Palo Alto).)

 

One gauge is that UC Berkeley's financial aid plan for middle-class families targets students whose family's household income ranges from $80,000 to $150,000. So, I guess $148k is middle class here ... :)

[LucyStoner]

It is an objective fact that income of that level is the top 10%. What we think about that is irrelevant- it is factually a true statement. The word elite is highly subjective but people with more income than 90% of other people should probably not be claiming poverty either. It is affluent, even if it's not wealthy. People tend to compare themselves to those with more than them rather than thinking long and hard about their advantages relative to others.

 

Wealth also is not income. Your relative comfort level and sense of security is dictated more by your assets and savings than by income. We have a modest income until my husband finishes his schooling but we take 1-3 (cheap) vacations a year and a big car repair will not phase us because we have a lot more resources than average for our present income level. Conversely, I have a friend with the same size family who is well into top 10% territory and they are decidedly tight on cash and would be stressed by a sudden car repair. There are a lot of people with very high incomes who are living paycheck to paycheck with minimal savings or retirement assets. Most of people people I know in that situation just don't have savings either due to economic instability beyond their control (past layoffs, costly life complications) or due to choices they make to spend more on big things like housing, private school, new vehicles etc. in some cases, it's a mix of these two things.

[Tanaqui]

No, there used to be parity, so I used to get a $10 US book for $10 AU.

 

Now I pay $12.50 AU for a $10 US book.

 

I don't see how that's a bargain, to be paying $2.50 more for a book. You'll have to explain my 35c bargain more clearly I'm afraid.

 

I wish parity would return. I'm sure there's all sort of good economic reasons for a weak AU dollar, but I can't buy as many books!

Before, you were paying less for a book than we were. It was the same number, but that's like that poem about the boy who trades his dollar bill for two quarters and thinks he got a good deal since two is more than one.

 

Now you're still paying less than we are, actually. You're paying $9.73 US for a kindle book that Americans pay $10 for. I call that a good deal!

 

If it helps, I wouldn't describe a family living on $150 000 as 'elite'. Well off, yes. Elite ? No.

 

As a reminder to folks following along at home, $150,000 AUS is $116,694.75 US.

 

I'm not sure why, whenever these topics come up, anyone who isn't poorer than dirt is told that they have a skewed view of the world.

 

 

Well, when you whine talk about how you're struggling due to choosing to live in a very expensive area, the 9/10 of the population that makes less than you do thinks you're a jerk! Especially if they also live near you, but struggle more. But "out of touch" is a nicer way of putting that.

 

Do you really think that 9/10 of the population counts as "poorer than dirt"? If you do, and you don't think that this merits an "us v them" conversation, well, your view is pretty skewed.

 

You know, I remember the first time I heard somebody say $150k a year wasn't that much, back when I was attending a certain public high school that attracts a lot of students who are, to be blunt, quite wealthy. This person also put forth the opinion that there was a "good" part of the Hamptons and, I suppose, a "not good" part, but really, what do you expect from a conversation like this?

 

That school was when I first formulated the belief that people over a certain income level are a wee bit clueless when it comes to reality, and thus far, that idea has rarely steered me wrong. If your response to "I think it's likely lots of people in your HCOL area are getting by on much less than $150k a year" is "I don't have a skewed perception!", well, I don't know what to say. Where do you live? We can look up the median income right now on google.

 

I do not find it disgusting that only the rich can be artists - it isn't bad for people that people generally need to work for a living.

 

Well, it is if we've indeed hit peak jobs.

 

And it kinda IS bad for people if only one point of view is represented, and that view is that of the people with copious leisure time.

 

[Ausmumof3]

I guess another thing that comes into play is how long you're at that income level or have been. Because earning 150,000 in one year buys you a few extra luxuries but not filthy rich. But if you earn those $$$ consistently over a number of years you gradually accumulate wealth. As you buy better quality goods, they last longer and the wealth goes further.

 

I think $150,000 is a pretty comfortable income in Aus for a family. For a couple with no kids it's a living it up income. For an older couple with no mortgage it's definitely rich. It shouldn't involve welfare payments. But there are so many different circumstances that numbers don't show the whole picture.

 

I hate the assumption that anyone on that income doesn't know or understand poor. Most of the people I know have done poor for a number of years before reaching that level. They do have both perspectives.

[Jane in NC]

It is an objective fact that income of that level is the top 10%. What we think about that is irrelevant- it is factually a true statement. The word elite is highly subjective but people with more income than 90% of other people should probably not be claiming poverty either. It is affluent, even if it's not wealthy. People tend to compare themselves to those with more than them rather than thinking long and hard about their advantages relative to others.

 

Wealth also is not income. Your relative comfort level and sense of security is dictated more by your assets and savings than by income. We have a modest income until my husband finishes his schooling but we take 1-3 (cheap) vacations a year and a big car repair will not phase us because we have a lot more resources than average for our present income level. Conversely, I have a friend with the same size family who is well into top 10% territory and they are decidedly tight on cash and would be stressed by a sudden car repair. There are a lot of people with very high incomes who are living paycheck to paycheck with minimal savings or retirement assets. Most of people people I know in that situation just don't have savings either due to economic instability beyond their control (past layoffs, costly life complications) or due to choices they make to spend more on big things like housing, private school, new vehicles etc. in some cases, it's a mix of these two things.

 

Indeed to the bolded.

 

We often see salary comparisons which do not take COL into account.  I would love to see more analysis of Net Worth since that may give all of us a better clue about standards of living, food security, and relative comfort.

 

[Laura Corin]

I guess another thing that comes into play is how long you're at that income level or have been. Because earning 150,000 in one year buys you a few extra luxuries but not filthy rich. But if you earn those $$$ consistently over a number of years you gradually accumulate wealth. As you buy better quality goods, they last longer and the wealth goes further.

 

 

Yes.  When Husband was unemployed for three years, we definitely cut back enormously, but we had a cushion built upon: savings, good credit, existing mortgage, no need to buy much because already had most of our needs (house, cars in good condition, clothing, furniture) plus intangible aspects (education, confidence, etc.) built up over years of comfort.

[creekland]

One other thing that hasn't been mentioned is the size of family.  That really does come into play with income as well.  Raising children and/or assisting parents is not inexpensive.  There are ways it can be less expensive - raising one's own meat and/or veggies and eating more at home vs eating out, but if one wants to take a vacation or even go to the movies, it costs more for each additional person coming along.  Then there are doctor, dentist, and potentially optician visits (and glasses for two of mine).

 

We had three kids, so I've always been aware of costs (and how much travel is set up for 2 parents and 2 kids), but we just adjusted it all into our budget.  When oldest went to college, it became more noticeable as to how much "easier" it was with just the four of us.  Then middle went to college, and now youngest.  Travel is incredibly less expensive for us - as is eating out, etc - with just hubby and I.  With oldest married and out supporting himself, we don't even have that college cost to contend with any longer.  Grocery shopping is cheaper - movies are cheaper - travel is cheaper.  I can't think of anything (except college expenses) that are more expensive for us at the moment.

 

Then my mom saved well and has $$ to live comfortably as did hubby's parents.  When we travel with any of them they are able to pay their own way (and still like to treat us to extras).  By traveling together we save costs on lodging and gas, etc.  If they hadn't been in such a good financial position and we were helping them, then our spendable income would be different.

 

And FWIW, we're not even close to 150K annually, but we take at least three trips of some sort per year.  I'm a travel junkie (addicted to it) so travel is a high priority and on 99% of the trips, all three boys came with us as we wanted to share our travel love (only our annual Anniversary trip was without them).  Considering our budget, they are/were NOT all "high class" trips.  We often camped, rarely flew (with the three boys), and sought out free or near free activities (hiking, etc).  We went/go without many other things to fund our junkie habit - with no regrets.

 

We did choose to live in a low(ish) COL area - again with no regrets.  When hubby and I were fairly newly married and figuring out where we wanted to live, he had a job interview in a higher COL area.  We were amazed at the salary potential and had stars in our eyes.  Then, while he was interviewing, I was checking out housing, etc... when I ran a quick budget through my mind I found out we'd be LOSING money due to how much more things cost.  It wasn't a great raise - it would be a pay cut.  We axed the area.  We traveled around finding our niche, but when we opted to settle somewhere, lower COL was a very important consideration.  We don't "need" to live where "it's happening."  Our income is lower here, but it goes much further due to housing costs.

 

To those without the travel addiction, it can be well worth it to live in a higher COL area with more to do locally, etc.   

 

And I certainly don't regret having any of my kids.  They were well worth it too.  But if we had had more, there certainly would have been less "extra" that we could have done with them with the same income.

 

To each our own. 

[amy g.]

I don't think people get pensions anymore. My dh is in the 50k with OT group, and he has to save for retirement just like the guy making 150k. I've never heard of anyone working now receiving a pension.

My husband is interviewing for a job that includes a pension and medical coverage for life. These jobs are few and far between, but they do exist.

[Susan in TN]

My husband is interviewing for a job that includes a pension and medical coverage for life. These jobs are few and far between, but they do exist.

Dh discovered that he is eligible for a pension that will amount to about $25 a month. We are looking forward to a nice meal out once a month in retirement - probably at McDonalds :D.

[Guest]

My husband is interviewing for a job that includes a pension and medical coverage for life. These jobs are few and far between, but they do exist.

My mil worked for a state hospital and was promised health insurance for life. It was one of the reasons she worked there instead of places that paid more. Fast forward 10 years, and it is now a fixed stipend to go toward insurance and it covers about half. Just FYI.

[umsami]

I have no problem believing that 150K is the top 10%.  I just saw an article a few weeks ago which showed what you needed to make in your state to be in the top 1%.   For most states, that's in thee $300-400k range, with NY being above $500k.  

 

Of course, COL and number of children matters.  If I'm making 150k as a single income person, life is golden.  If I'm making 150k with 4-5 kids, it's not going to go very far.  One kid, you can afford private school.  Three or four kids, maybe not if schools cost 15-20k/year.   Even for somebody making $250k/year, taking away $80,000 of your post-tax income is going to be difficult.   But the fact that you have the luxury to even consider private school is another thing altogether.  The fact that you could spend what would be the cost of a house in some parts of the country (or maybe half of a nice house), each and every year.....that's an amazing luxury.  The fact that even with one kid, you're basically spending the cost of a new car on school, is luxurious.

 

We have four kids, two of my friends have only one.  Of course, it's a lot easier for them to enroll their kids in after school activities, take them to Disney/Universal, etc.   If we go to Disney (which we've yet to do with the kids), it's minimum of $600/day just to get in.  If they go, it's half that amount.  If I take my kids to the local trampoline place, I'm dropping $80 for the afternoon.  If my friend goes, it's $20.  (Which is why we only go when we have a Groupon.)  

 

We do have a big income inequality problem in this country.  I'm not sure how it's going to be resolved, or if it ever will be. 

[Murphy101]

You seem to be saying that people define "the elite" as being pretty much anyone who makes more money than they do. I think that is ridiculous.

 

"Elite" is someone like Bill Gates. We also have some friends and family who I would define as "elite" (top 1% but nowhere near Bill Gates' level!) But a family making $150k in a high COL area? Definitely not elite. Not by a longshot.

 

Do you realize how much it costs to live in a high COL area? You seem to think $150k is a very high income and that it must buy a lot more than it really does. In some parts of the country, $150k might be considered elite, but in the places where it is relatively common for families to earn at least that much money, the expenses eat up far more of those earnings than you might think.

 

(Edited to add a few words for clarity.)

No. I don't think elite is anyone who makes more than X.

 

I'm saying even in a HCOL area, someone making $150k is not sweating. Their kids aren't hungry. Their bills are paid. They eat 3 square without stress. Yes they have to budget and work, but they are far more likely to see fruit for that budget and work.

 

Am I saying they are living the life of the filthy rich and famous? No.

 

But statistical numbers don't lie. They ARE part of the elite 10%. Are they at the very bottom of the elite and could drop way down any day? Sure. I don't doubt that at all. Is there just as huge a gap between the bottom 7% and the upper 3% of the 10% elite? Absolutely. And I do agree that's a problem too.

 

You do realize the most of people who live and work in HCOL areas don't make 150k, right? The median household income in NYC for example is around 50-54k

 

So all this talk of, "oh but in a HCOL area.." has nothing to do with anything. Because even in a HCOL area, if you are making $150k, that's triple what most are there and they have to live in the same city. They can't save money at that level. They can't take vacations or go to Starbucks or buy their kid a new pairs of shoes at the last minute when they wake up having an overnight growth spurt or have a pair get ruined or take off work unpaid for a dr apt they can't afford.

 

This is not about me saying oh those awful elitist jerks. Not at all.

 

This is about me saying that until we accept that this is exactly how it is for the majority of Americans, we can't work on the problem of fixing it.

 

No one thinks someone making 150k should feel bad about their life.

I hope everyone agrees that the issue is that what those making 150k take for granted as just normal life should actually be an attainable life for every citizen and it just isn't.

 

Most people aren't upset about the lifestyle someone on $150k+ can have.

They get upset when people put them down as too lazy or too stupid or too not ambitious enough to have it when the facts are that it really isn't about that at all.

[mommymilkies]

In this area, that would make you beyond the elite.  I know part depends on COL area, but we make *nowhere* near that and that's a "winning the lottery" type fantasy to me with an income I can't even imagine having. Even when we lived in far more expensive places, that would count you as being exceptionally well off. 

[clementine]

That sounds about right for our area too.  

[mommymilkies]

the needing benefits thing is a bit insane

 

but the thing is, depending on your social circle, you can be convinced that you need to spend money on things you don't need to spend money on

 

many people in the third world, or even in NYC for instance, would think we in the midwestern US are crazy, *crazy* to only have 2 people per bedroom in a house - but in Missouri, for instance, it is a legal requirement for renting - no more than 2 people. 

 

Even the poor here could largely make do with much much much smaller homes, and less heating/cooling (when I grew up in south Texas we had no air conditioning at all, and generally it was okay except during extreme heat waves), and older cars, and less fast food, and etc.

 

Compared to the world at large we are almost all very wealthy, and they probably think it's insane that poor people in the US demand minimum wage raises, for instance

 

but it's all relative, so it makes sense here - the gap between rich and poor cannot be sustained at this level

I agree with you.  I grew up very packed in.  Even with big old houses, we had big extended families and room sharing was normal.  In fact, I can't really sleep otherwise!  But dh grew up in the big house small family mentality-NOTHING wrong with that, but our views are definitely different about house size and room sharing.  

 

I doubt poor people elsewhere think our demanding minimum wage increases are insane, though.  I bet they support that as that's how they'd like to be treated.  Does that make sense? 

[BlsdMama]

So, this is the amusing part of it, how in the world does the Jones family afford what they do?!?!

 

The reason it seems low is that DH makes a good living, not the 10% lol, but better than average.

 

But I have to be honest, we're awfully glad the company contributes to his 401k, new shoes here jnvolves consignment shops or whatever Costco has at the time, and I don't want to fathom what replacing four major appliances would do to my stress level. Well, actually it would just gave me scurry to Craigslist to replace it with used.

 

Now, we're the first to admit we are happy with our house. It's not extravagant and needs some work but it's on an average in the country and everyone fits. I can't say that I visit a coffee shop without guilt but I do do it on occasion.

 

However, and this is what DH said when I read him parts of the article, if that's true how is everyone affording stuff?? Medical costs are out of control in our home. We just did taxes. We had under $20k on medical, vision, dental, etc bills last year but not far under. Folks are constantly trading in vehicles. How? Our newest vehicle is a 2008 and if I have my way we'll keep her until she's dead. ;)

 

I look at the houses people younger than us with half the education are buying and I think, "What in the world?!?" A fairly nice, moderate home in our hometown in IOWA just went up for sale near our first ever home for almost $300k and I have to tell you that's nuts.

 

Now, before you tell me, "Oh, pshaw, $300k is peanuts compared to...." Yes, I know. We've lived in both SoCal and Oregon and we considered a job transfer to NoVa but we were terrified by their COL. I get the Midwest is a low COL but the pay for jobs that are simply that, jobs, not professional careers, matches that moderate COL.

 

Is it that the Midwest avoided the recession more than other areas?

I can say family here couldn't fathom the job chamges and downgrading folks had to do to adjust to the market in Oregon.

 

But I don't understand if the majority of folks around us are bringing home $45k then how in the world do they afford stuff, toys, vacations? Are they just maxed to the hilt on debt?

[Jean in Newcastle]

My brother has a modest house in a modest neighborhood in our higher cost of living state.  About 5 years ago he rented out that house and moved to a very low cost of living state.  He was able to buy an entire farm (foreclosure) and live there for 3 years with no local job, just living off the money from his rental from the high cost of living state.  I told dh that if we sold our house here and moved there we'd be able to buy a mansion.  Unfortunately he's rather attached to this area.   ;)   But ds gets over $15 an hour here just to be a bagger at the grocery store.  

[mommymilkies]

So, this is the amusing part of it, how in the world does the Jones family afford what they do?!?!

 

The reason it seems low is that DH makes a good living, not the 10% lol, but better than average.

 

But I have to be honest, we're awfully glad the company contributes to his 401k, new shoes here jnvolves consignment shops or whatever Costco has at the time, and I don't want to fathom what replacing four major appliances would do to my stress level. Well, actually it would just gave me scurry to Craigslist to replace it with used.

 

Now, we're the first to admit we are happy with our house. It's not extravagant and needs some work but it's on an average in the country and everyone fits. I can't say that I visit a coffee shop without guilt but I do do it on occasion.

 

However, and this is what DH said when I read him parts of the article, if that's true how is everyone affording stuff?? Medical costs are out of control in our home. We just did taxes. We had under $20k on medical, vision, dental, etc bills last year but not far under. Folks are constantly trading in vehicles. How? Our newest vehicle is a 2008 and if I have my way we'll keep her until she's dead. ;)

 

I look at the houses people younger than us with half the education are buying and I think, "What in the world?!?" A fairly nice, moderate home in our hometown in IOWA just went up for sale near our first ever home for almost $300k and I have to tell you that's nuts.

 

Now, before you tell me, "Oh, pshaw, $300k is peanuts compared to...." Yes, I know. We've lived in both SoCal and Oregon and we considered a job transfer to NoVa but we were terrified by their COL. I get the Midwest is a low COL but the pay for jobs that are simply that, jobs, not professional careers, matches that moderate COL.

 

Is it that the Midwest avoided the recession more than other areas?

I can say family here couldn't fathom the job chamges and downgrading folks had to do to adjust to the market in Oregon.

 

But I don't understand if the majority of folks around us are bringing home $45k then how in the world do they afford stuff, toys, vacations? Are they just maxed to the hilt on debt?

 

I have no idea.  We're in your last category there, and we bring home less than that after taxes, union dues, and teaching job-required payments (about $10k a year).  Huge debt, lots of Ramen, and crying yourself to sleep a lot is generally how it's done.  Vacations?  No idea.  The one real non-job interview related vacation we've been on was paid for by family (trip with family). I have no idea how people do it, even here in the cheaper bits of the Midwest. The housing market here is overpriced since few houses are on the market and there's no way many people can afford to buy.  The cheaper houses are snatched up for people to bulldoze as bigger manicured lawns or bulldozed for yet another corn field. This simply is not sustainable. 

 

[Scarlett]

Sure, but you could have a wealth structure which has the poorest person at $5k and have it go all the way up to $6k spread over 95% of the population. Then at that point, every gain in social status is accompanied by a $100,000,000 increase in annual income.

 

People making $6k would still be in the top 10%.

 

What I am trying to say is that in fact, this is closer to the actual wealth distribution that we have, than anything which people probably have in mind, or that Daily Beast graphic.

 

If my salary puts me richer than 90% of other people (let's clarify: I just filed my taxes, not there yet lol), that does not mean that my salary bracket is higher than 90% of other salary brackets. The skewed distribution means that in actual fact, a person who is richer than 90% of the rest of the population, has a salary in the bottom 5% of salary brackets!!! Because the first bin is 0 - 200k, the second would be 200k-400k, the next bin, 400-800k, then 800k-1m, then 1 - 1.2m, then 1.2m - 1.4 m, all the way up,

 

If that sounds mathematically insane it is because wealth distribution in our society is INSANE.

 

 

Well, I guess it depends what you mean by middle class. I don't believe that a median income = middle class. To me middle class means that your earned wages can be earned through hard work with average intelligence and slightly above-average work ethic, to provide for your family, including health expenses, education, and a basic quality of life that would include a modest vacation, such as camping, or going to your mother's house, in a car.

 

In my experience, what we have in the United States actually requires about $150k for a "middle class" life, and what we really have is a third-world country in which people are just really flipping poor. I do not accept the $30k salary as a "middle class salary". It is not. It is a joke of a salary. And some college-educated people earn $35k--such as instructors at universities, social workers, starting teachers in some areas, among other things.

 

It is appalling. We have a society in which only the rich can be artists, because the rest of us are so close to the brink of poverty. It's absolutely disgusting.

Exactly. Everything you said. I live in a LCOL area and 35k is not enough money to pay modest bills for a family. A single young person out of college? Yes....but not a family, even a small one.

[Murphy101]

So, this is the amusing part of it, how in the world does the Jones family afford what they do?!?!

Are they just maxed to the hilt on debt?

Yes. For the vast majority, yes they are maxed in debt.

 

For some, they are in the edge or wheeling and dealing to get what they have for far less than what it looks Ike they paid.

 

For some, they get a lot of assistance in various forms that they don't discuss.

 

For many, you just don't see all the other stuff they do without to keep the public image.

[duckabell]

One thing that's interesting too is that often small business owners will show a high income, but they leave some in the business for future business needs.

For example, if a small company had a profit of $150,000, but they kept $30,000 in the business, then their income still shows as $150,000, even if they only took home $120,000.

[Murphy101]

One thing that's interesting too is that often small business owners will show a high income, but they leave some in the business for future business needs.

For example, if a small company had a profit of $150,000, but they kept $30,000 in the business, then their income still shows as $150,000, even if they only took home $120,000.

Then something is messed up?

 

It should show their business had $30k in additional profits with the CEO (or whatever title) making a salary of $120k.

 

This is exactly what my fil and other small business owners I know do. Their company money and their salary are clearly separated specificly for tax purposes.

[Scarlett]

We will have to agree to disagree on this one, Martha. :)

 

Where we live, a household income of $150k is simply not elite. Depending where you live, it may not even qualify as comfortable.

Cat my point is not about the amount of income. Clearly 150k will buy you a lot less in a hcol area. But there was a long description of how someone was living very comfortably.....three vacations a year, buying 4 appliances back to back etc without it cutting I to the budget in any significant way. And you responded that sounded pretty middle class to you.

 

We are trying to tell you that is NOT middle class,....it doesn't have to be elite, but the vast majority of working middle class are not taking 3 vacations a year and shelling out 1000s for new appliances with no problem.

 

I don't know the specifics of your income, but it is clear that you live quite well. And that everyone in your circle lives well too. That doesn't make you evil or bad and I certainly dont begrudge you your life. But the fact remains that some of us out here are struggling to keep a hot water tank alive so that a new one doesn't have to go on credit.

 

And our income is higher than median for this area.

[SKL]

Well, I refused to move to a HCOL area because I would have been cramped for space and stressed over money, even with the raise they promised me.  And I was making more than $150,000 at the time.

 

Try pricing even a modest home in a HCOL area.  A house like mine (30yo 4br on a quarter acre w/in 20min of int'l airport and 2 big cities) would cost at least 5x as much (probably more) in a HCOL area.  Parking there costs more than a house mortgage here.  A good school for multiple kids?  That is a big sacrifice.  And tax rates tend to be higher in HCOL areas too.  No thanks.

 

If you can afford to live comfortably in a HCOL area, the cost of a travel vacation is a drop in the bucket.

 

That said, I don't see anyone saying that $150,000 is poverty in any place.  It just isn't fancy in some places.

[idnib]

I agree with those who say it would be a nice idea to get data on net worth. For example, I have a friend who makes ~24k/year but her divorced parents both passed away and left her both houses plus cash. She lives in one and rents out the other. Her net worth is higher than one would expect from her income.

 

Untaxable cash gifts, inherited homes and businesses, grandparents putting money into college funds, etc all may serve to increase someone's net worth and are not reflected in their income.

[hepatica]

I have no problem believing that 150K is the top 10%.  I just saw an article a few weeks ago which showed what you needed to make in your state to be in the top 1%.   For most states, that's in thee $300-400k range, with NY being above $500k.  

 

 

 

Just had a good chuckle looking at North Dakota on that map......the joys of fracking!

[Lucy]

Median in my county is 37,000.  We make much more than that, certainly not close to the 150 mark, but like others have said before, we have a single income, more dependants, high medical bills.  Mortgage is our only debt, but we drive cars from the 90's both over 200,000 miles.  It just doesn't go as far as it used to.  We do have a savings, though, and that puts us ahead most of our friends.

 

But really, it's all relative.  I have friends who make less than us, but because they started without a mortgage or any personal debt, they seem ahead.  Each individual circumstance will prove a different viewpoint as to what is necessary, and what is abundance.

[SKL]

I don't think elite is an amount of $$.  There are lots of down-to-earth, humble people who happen to have a lot of $$ according to the tax man.  I think elite is when someone uses their money or other gifts/talents to make a big impressive name for himself.  Whether that is by buying out politicians so they will do favors for their business, or giving highly-publicized gifts to charities they'd like to see prosper, or becoming a world-famous artist/scientist.  Money tends to be involved in all of this, but money doesn't make one elite per se.

[Arcadia]

One thing that's interesting too is that often small business owners will show a high income, but they leave some in the business for future business needs.

For example, if a small company had a profit of $150,000, but they kept $30,000 in the business, then their income still shows as $150,000, even if they only took home $120,000.

Their income would be $120k. The $30k would be in the business account as contribution to the sinking fund and accounted as such on the balance sheet. Hubby was self-employed and plenty of cousins still run family businesses.

[idnib]

. 

 

[Arcadia]

Financially comfortable would be a closer description than elite. Private school tuition is cheaper than rent/mortgage here if you have an only child. However when hubby was going to be retrenched in 2013, all the interviews he got were within a 10mile radius of home even though he applied to a 25 miles radius.

I was looking at the relatively cheaper homes south of where we are but commute time would be crazy as he works office hours.

 

ETA:

Median in my zip code is around $90k. My county has a wide income disparity.

[Katy]

I think net worth is far more important than income.  Many of my friends where both spouses work earn $150k, which isn't difficult if they went to a good state university and chose Accounting, Actuarial Science, Computer Science or MIS, Engineering, Medicine, Pharmacy, or Veterinary Care.  Ten years after graduating college or grad school you're probably making in the $75-100k range in those fields. Many of my friends with nursing BSN or MSN degrees who took one promotion now make something like $80k/yr.  But many of us have massive student loan debt, mortgages, car loans, and many have daycare expenses or nannies, and working that much might lead them to have a housekeeper and a lawncare service because you can't work 80 hours a week, keep good relationships with your families, and still keep up with HOA rules.  So they have a high income, but a negative net worth.  Someday hopefully all those debts will be paid off and they'll catch up, but to be truly well off (have enough money to not have to work and to live off their investments), we'll probably all need to be at least in our 50's, if not late 60's.  We opted to have me stay home because it was important to me, and we try and do the Dave Ramsey thing, but it will still take more than ten years for us to have a positive net worth unless I change my mind and go back to work. Even then, my income will effectively be cut in half due to taxes and increased expenses.

[SKL]

Their income would be $120k. The $30k would be in the business account as contribution to the sinking fund and accounted as such on the balance sheet. Hubby was self-employed and plenty of cousins still run family businesses.

 

It depends on how the company is structured.  If it is a corporation, you don't get taxed as an individual on money you keep in the corporation, but the corporation gets taxed.  If it's not a corporation, then the net income of the company flows through to the owners' individual tax return.  It does not matter where you put the cash on the balance sheet.

 

Also, if you take cash from one personal source and put it into your business (corporation or otherwise), you don't get out of tax.

 

The exception would be if you put the money into something currently deductible, i.e., paying current business expenses, or making certain purchases that Congress wants to encourage.

 

ETA:  I was assuming we were talking about income "per tax," which may have been an inaccurate assumption.  But income per books also considers the increase in the value of businesses one owns.

[Catwoman]

If it helps, I wouldn't describe a family living on $150 000 as 'elite'. Well off, yes. Elite ? No.

 

It's all a distraction - although families on that income are way more comfortable than families on lower incomes, $150 000 isn't where the wealth is concentrated and the obscene wealth gap is found.

 

Although I think its odd that people won't accept $150 000 as being substantially more than the majority of households, it's not really the core of the problem of inequality.

I don't think anyone is saying that $150k isn't substantially more than the median, because it is obviously a very significant amount higher.

 

I can't speak for anyone else, but what I was saying is that, where we live (and I'm sure where you live as well,) $150k isn't anywhere near enough to provide a family with an elite lifestyle.

[amy g.]

My mil worked for a state hospital and was promised health insurance for life. It was one of the reasons she worked there instead of places that paid more. Fast forward 10 years, and it is now a fixed stipend to go toward insurance and it covers about half. Just FYI.

That is a good point. He did bring it up in his interview that he would not rely on the pension and health care being funded but would need them guaranteed in his employment contract.