

Upper-income people still don't realize they're upper-income - clay
http://www.stat.columbia.edu/~cook/movabletype/archives/2011/04/upper-income_pe.html

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brg
Consdier any family of two engineers in silicon valley. If they graduated from
college and joined successful companies, after a decade or so they will be
making over 150k each, for a family income of 300k.

But yet they still work 50+ hours a week each, maybe 60 if they are checking
email at nights and on the weekends. How have their lives changed between the
interview and now? Not much. Meals are still prepared at home or work.
Weekends most likely still mean riding bike or going to a movie. Any talk of
family causes worry about taking time away from the career or delaying their
hopes to be founders. Vacations disrupt work schedules, and the catching up
afterward cause more headache then they are worth.

This level of wealth is different than what we hear about from the days of
robber barons or Mad Men. Its even different than what anyone images when they
prepare for undergraduate school. There is no luxury lifestyle with a condo
downtown and home in the country. There are no two hour martini lunches. There
are no personal chefs or nannies. You don't spend more time in leisure than at
work. You always spend more of your time doing something you wish you could
delegate, but you do it because you know it has to get done.

And maybe that is because wealth is very transient in tech. In five years your
100k+ job could be just as easily gone as become a 200k job. But more likely I
would think that in tech high income comes with higher responsibilities. More
wealth means more work, not less. And that is not about to change.

Perhaps this is the same in all sectors consistently creating new wealth; bio,
pharma, engineering and tech. If so I think it is not surprising to see that
families in the 200-500k range don't think they're wealthy when their current
income level crosses a certain mark, because it has little immediate, and
maybe little permanent, affect.

~~~
entangld
I think the people in the 250k range are having a philosophical argument about
what it means to be wealthy. And the working class are arguing numbers.

I get it. They can have a decent income and not live a "rich" lifestyle, but
they probably have a house, investments, kids in nice schools, they probably
travel, eat at nice restaurants, etc. It's not wealthy, but they're not broke.
I think that was the idea of a progressive tax. It increases as you move up
the ladder. We're all debating the cutoff point.

~~~
brg
My thesis was the opposite of your statement; those at the cut-off point are
not travelling, they are not eating a nice restaurants, and they do not have
kids let alone kids in good schools. They are working longer and harder than
they did at the beginning of their career, and hence do not have a feeling of
having obtained wealth.

To restate, I posit that while they have recently acquired a high income; with
that has not come wealth in any sense that has made an impact on their
lifestyle.

Concretely, having a 30 year mortgage on a 1500 foot house isn't a significant
change from a 900 sq ft apartment. A 6% pay decrease for a 401k account might
not be noticable, but when an investment can't be touched for 29 years there
isn't a feeling of wealth attached to it.

I would assume that 10 years at this salary level may change that, but with
the transient nature of tech this is not something that it assumed by most. I
am also working under the assumption that that the distribution of people with
earnings in this range is skewed towards those having reached it within the
last decade.

------
orijing
I don't remember the source, but there was a great article that discussed a
similar topic and showed that the income inequality isn't _really_ that skewed
unless you look at those making above some threshold (maybe top 0.1% of the
population or so). For example, the average income for any percentile of the
population is a fairly straight function until you hit around 99 percentile,
after which there is a sharp discontinuity rising higher.

This wasn't the original source but you can take a look here:
<http://elsa.berkeley.edu/~saez/pikettyqje.pdf> (Excuse my Berkeley bias, but
Emmanuel Saez has produced great works in this field).

As you can see, the action is in the top 1 percentile, and the _real action_
is in the top 0.01 percentile.

In other words, those in the top 5 percentile do not feel rich because there
are people who are _much MUCH_ richer than they are, due to the discontinuity
you can see. So those making 240k are only four times as rich (less, after
taxes) as those making 60k despite being nearly 50 percentile away. In
contrast, those making tens or hundreds of millions are two orders of
magnitude richer than those making 240k despite being less than 5 percentile
away. Plus, most of their taxes are in the form of capital gains on stocks and
dividends.

Crazy world, huh?

This leads me to a different point, which is that politicians' focus on
250,000 as some threshold for "rich" masks the bigger inequality. In my
opinion, those making 250k or so are hard-working households who mostly
"deserve" what they earn as families of doctors, lawyers, engineers even; and
that the real inequality manifests itself above the million dollar threshold.
The reason I say that is, a family with decent opportunities, a strong work
ethic (since youth) and a decent set of brains can reach those levels through
just hard work and persistence, while getting above the 1 million threshold is
either reserved for severe luck, entrepreneurship (also heavily influenced by
luck), inheritance, or politics.

So my point is that upper income people don't feel rich ('realize they're
upper-income') because they are so close to those earning tens to hundreds of
times more. In that context, all of us are in their shadows.

~~~
entangld
I hate to rain on your parade...

 _As you can see, the action is in the top 1 percentile, and the real action
is in the top 0.01 percentile._

It doesn't so much matter how people feel. It matters what the reality is. If
you make 250k there are millions of people who make much less than you do. The
top 5% in a country of 310 million is a lot of people.

I'm not necessarily even favoring dramatically increasing taxes on the lower
threshold of rich people, but I don't want to pretend like the life of a
family that makes 250k+ and a family that makes 60k are very similar. This
issue is about self-awareness, not "the other guys".

~~~
brg
What are the significant differences between these two families that we
shouldn't pretend to gloss over?

I grew up extremely poor, my father making around 18k a year at the time he
was required to provide his tax statements for a student loan.

There were no high profile private schools in my area, and so I attended
school with the children of doctors, lawyers, bankers, and the local
newscaster. While they often had newer clothes, I don't think our childhood
experience or family situation were much different.

And now, when I look to start a family of my own, I cant see how having a
family income of 4x that of my parents is going to induce any significant
change.

Perhaps if I make it to 10x my fathers wage I'll see these difference you
speak of, but as of now I don't see them.

~~~
entangld
Well I have a friend who makes more in 1 day than I pay in rent.

He talks about being broke all of the time, but doesn't mention the fact that
he's always traveling, has bought 3 cars in a year and lives in a large house
and he started and shut down a business within 1 year. He doesn't think he has
money, but that's because he spends it. If he could afford those things, so
can other people in his bracket.

If he saved all of his money he might complain about his poor lifestyle, but
for some reason he doesn't seem to realize that they're all choices. He could
have easily bought a house half the size and price. It would stil be large.
The article was right.

------
r00fus
From a statistical standpoint, it'd be interesting not to talk, as the article
does, in terms of raw percentile, but based on region, normalized by the cost
of living index.

A couple making $250k in Medford, OR would probably be considered fairly well
off, but in NY, NY that would not take you very far at all.

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ck2
"upper-income" is way too broad of a term

If people really want to compare, then they should rank their wealth as a
percentile.

ie. instead say, your income is in the 20% percentile (meaning you have more
annual income than 80% of other people in the nation)

It's probably a nice problem to have but I cannot imagine working at a job
that paid me $250k a year, I'd keep asking myself how the hell I am worth that
much - I'd put 10% of it as cash in a safe and open it once in awhile and
freak-out just looking at it.

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bwanab
To talk about the average income in Manhattan is nonsense. Big parts of
Manhattan are untouchable by someone making less than several million a year.
Other large parts are populated by families dependent on food stamps. There is
no "average" neighborhood in Manhattan. As a statistician, the writer has to
know that was a straw-man argument.

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mgkimsal
"but only 6 percent say that they personally pay too little." (in taxes).

No one is stopping people who feel this way from writing a check to the
government. They'll take your money just fine.

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swampplanet
First some facts: The upper 5% of the population pays 75% of all federal
revenue, even though they only account for about 25% of the GDP Almost 60% pay
no income tax The real US tax rate is already one of the highest in the world
The corporate tax is #2 to Japan

Now the ramifications are that the US is already seeing a capital flight out
of the country and that trend will only pickup until the Tax Code is fixed.

We should have a flat tax and a VAT.

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storborg
The two assertions, taken alone, are not contradictory. If Joe makes $250,000
a year, he may think that _he_ pays too much in taxes, but that the entire
portion of society that makes over $200,000 pays too little. It could be that
he thinks that only the top 0.1% pays too little, and everyone else pays
slightly too much.

Also, what is "upper-income"? Is that the top 50% of earners? The top 1%?

