
Where did your middle-class customers go? - petethomas
http://www.chicagobusiness.com/section/blogs?blogID=enterprise-city&plckController=Blog&plckBlogPage=BlogViewPost&uid=16ea2629-7e90-46f0-a706-dd6152764513&plckPostId=Blog%3a16ea2629-7e90-46f0-a706-dd6152764513Post%3a6951e0af-23f8-4938-8d13-5c0fef4e6eaa&plckScript=blogScript&plckElementId=blogDest#axzz1EztjhDdZ
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fleitz
You can be pretty much sure that any article that discusses the 'middle-class'
is politcally motivated. It's ill-defined and redefined for any purpose. The
term 'middle-class' is practically meaningless, except as a mechanism to cause
the reader to identify with the the group supposedly being victimized. It's
purely an appeal to ethos and pathos.

That top 5%? Thats us. Never forget it.
[http://en.wikipedia.org/wiki/Household_income_in_the_United_...](http://en.wikipedia.org/wiki/Household_income_in_the_United_States)
A couple who lives together making 75K each are in the top 5% of household
income in the US. That's not even an incredibly high programmer salary. So as
to where did your middle class customers go? Hacker News.

As to why the top 5% have so much wealth, well it's by starting early.

A year after I got out of high school I had a techsupport job for 36K / year I
was making on par with my parents who had 25-30 years experience each, 3 years
later and I was no longer a renter. Starting early and building a nice egg
early on allows you to take advantage of compounding interest. I had a house
at the time that most people were getting out of school with a pile of debt.

People in North America have a tonne of disposable income, look at McDonalads,
Starbucks, etc. They do very good business trading on disposable income
(consumer surplus). You don't need either of those companies, you can make a
coffee/burger yourself and save a pile. In fact you can make yourself a fairly
decent retirement for a latte a day.

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unshift
> In fact you can make yourself a fairly decent retirement for a latte a day.

not really. $3 * (40*365) = $43,800. in order to save $1M over 40 years, you
need to save $2083 a month. and $1M is not a glorious retirement.

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ScottBurson
You're forgetting the magic of compound interest. At 5% annually, $3/day comes
to more like $137k. For $1M you need to save $655/month at 5%.

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yummyfajitas
The article makes a major flaw. It equates income with consumption, assuming
that if people are not earning money, they are not spending it. This
assumption is utterly false.

ftp://ftp.bls.gov/pub/special.requests/ce/standard/2009/income.txt

Households earning $39,999 or less tend to have consumption exceeding income.
For example, households with income in [$5000,$9999] tend to consume about
$18k.

Presumably the difference between earned income and expenses is made up for
with credit and welfare.

~~~
borism
_Presumably the difference between earned income and expenses is made up for
with credit and welfare._

umm, why would credit and welfare not be counted as income?

Credit is (presumably) just a future income. And welfare is very real current
income.

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yummyfajitas
When the BLS and other government agencies talk about "income", they generally
mean " _earned_ income". Welfare is not earned income, neither is credit.

~~~
borism
ok, thanks.

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bugsy
I don't agree with the article's cut off point that $50k household pre-tax
income is middle class. 2 parents, 2 kids making $50k is $36k after tax.
Mortgage on a small house is $1800/month. Cars are expensive too, add $400 a
month for payments on that. Food prices have doubled the last couple years.

Average family can't afford health care ($12k/yr cost for 60% coverage plan
for 2 parents 2 kids according to Congressional Budget Office), housing and
food on that income.

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yummyfajitas
_Food prices have doubled the last couple years._

No, they are up 6.7% since Jan 1 2008.

<http://research.stlouisfed.org/fred2/series/CPIUFDSL>

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michaelchisari
Food prices have risen twice as much as inflation. So, no, they haven't
doubled, but their rate of increase has outpaced the rest of the economy. And
with wages stagnating in relationship to inflation, this is a cause for
concern.

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Duff
It depends on how you eat. In my efforts to lose weight and get more healthy
in general, I shop mostly along the outer edges of the store (produce/meats).

In these areas, prices have shot up way beyond 6.7%. Onions and potatoes are
easily up 100% or more since 2006/7. "Cheap" cuts of meat like chicken,
roasts, pork chops, skirt/flank steaks and beef briskets are easily up 15-20%.
Milk is up. Butter up 150% of more since 2006/7. Beer is up 10%.

If you eat processed stuff, those manufacturers can blunt price increases by
using lots of subsidized commodities like corn and soy products.

~~~
michaelchisari
_If you eat processed stuff, those manufacturers can blunt price increases by
using lots of subsidized commodities like corn and soy products._

I think this is an important factor to consider. In many ways, this
stratification simply offsets the costs into health issues later in life.

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roboneal
Safe to say that anyone carrying an iPad while talking on an iPhone sipping a
Starbucks is middle class.

In many, ways middle class is better defined as access to disposable income
(at least from a marketing/retail perspective). What defines disposable income
varies at all income levels, regions, social situation, etc.

