
How Much (Or Little) the Middle Class Makes - evo_9
http://www.npr.org/blogs/money/2015/03/19/394057221/how-much-or-little-the-middle-class-makes-in-30-u-s-cities
======
rayiner
Here's a chart I think everyone should keep in mind when we argue about what
happened to the middle class: [http://www.familyfacts.org/charts/340/married-
couple-familie...](http://www.familyfacts.org/charts/340/married-couple-
families-have-higher-incomes).

Single-parent households have always made less money, and the percentage of
single-parent households has doubled to about 25% since 1960. That creates a
lot of downward pressure on the income "median household" that is the result
of sociological rather than economic factors.

Married couples where only the husband works make almost twice as much now, in
constant dollars, as they did in 1950. Married couples where both spouses work
make almost three times as much as they did in 1950.

I see some comments in this thread along the lines of "back in the day, middle
class people could afford a house, two cars, college for their kids, and
vacations." I think this view is more based on mistaken notions of what middle
class families could actually afford in 1950. Partly, this is the byproduct of
the fact that media always dramatically overstates the living conditions of
people at any given income level.

Take, for example, "Leave it to Beaver" which is portrayed as archetypal of a
1950's middle class family with stay at home wife. But the Cleavers are an
upper class family! Both parents attended college; the husband drives a top of
the line car and has a white collar job. In the show, they have a nice
colonial home, a small TV, and one nice car. Today, they'd be a dual-income
couple with a McMansion, a couple of BMWs, and several flat screen TVs.

~~~
zzalpha
Why are you using 1950 as the baseline? My understanding is that concerns
about middle class stagnation are due to flat or declining incomes starting in
the late 1970s to the early 1980s.

------
howeyc
I think the disconnect is that these people have an Upper Class salary
nationally (the student linked at the top), but choose (and I stress the word
choose) to live a middle class lifestyle locally.

For instance, with that upper class salary they could likely get a home
outside the city with a pool, park a couple expensive bmw cars out front and
go on expensive vacations, buy the latest toys, etc.

Or, they can live close to work/coast/lake/whatever and be house-rich, but
poor everywhere else.

Middle-class people don't have such an option. Their salary leads to
outskirt/suburb house without pool, without bmw, etc. And no option to live
close to what they desire. People in the bracket sniffing the upper-class
usually buy token "I'm rich" status items (designer clothes/phones/etc) which
they can't really afford except maybe sporadically.

Poor people are worse off, they live in location with an x-block radius they
rarely leave.

~~~
rhino369
While this is something to this, you also can't separate cost of living from
salary comparisons. People making a lot, but having to spend a lot, working in
the Bay area, NYC, DC, LA, etc. etc., don't have the options of keeping their
salary and moving to a Cleveland suburb for the lower cost of living.

Even if there were enough jobs for people do it, they wouldn't pay enough.

They are essentially getting a premium salary because they have to pay a
premium COL. It's not really a choice because the premium salary only comes if
you work on the premium area.

So it's not really accurate to call a developer who make 130k in Palo Alto
"upper class" and call a developer who makes 70k in Arlington Heights, IL
middle class. They probably lead similar lifestyles.

~~~
chaqke
This is true, but the developer in Palo Alto has the option to scale back her
lifestyle and bank a lot of cash, whereas the developer in Arlington Heights
will bank much less cash if he scales back his lifestyle.

Not arguing, just adding more "shape to that curve" :-)

------
cpitman
Does it matter how much money they make? My understanding is that the
difference between middle class and upper class isn't how much they make, it
is how they make that money. The upper class is the only class that makes the
majority of its income from investments, while lower and middle class make
their income from wages and salaries.

In other words, the "job" of the upper class is to manage their wealth.

~~~
malyk
I don't believe that there is any true definition of classes here in the
states. Some look only at the numbers, some look at how money is made, some
look at the type of work, etc.

To me the distinction is all about quality of life. The "middle class"
software engineering DINK couple in the bay area making $250,000 is absolutely
in the upper class despite the fact that they still have to work every day.

~~~
logfromblammo
My personal definitions for class boundaries are as follows:

    
    
      -Poor: Can't afford basic necessities without assistance.
      -Lower: Can't afford leisure time or discretionary spending.  May work multiple jobs.
      -Lower-middle: Earns an hourly wage.  Works at least 40 hours per week, and receives overtime premiums for more.
      -Upper-middle: Earns a weekly salary.  Expected to work 40 hours per week or less, and additional hours are compensated appropriately.
      -Upper: Works only to the extent needed to pay for luxuries.  Never fears the loss of a job.
      -Rich: Never needs to work: is completely secure financially.
    

Those are somewhat subjective, but they work for me. That DINK couple is
solidly upper-middle class, but that is the class with the most potential for
individually motivated upward mobility. If they voluntarily limited annual
expenses to $50k, got annual raises of 1%, experienced annual expense
inflation of 5%, and earned 6% on their investments, they could meet expenses
without working after 6 years. Their investment income would exceed their
working income after 17 years. They could retire in the 18th year, and would
never _need_ to work again. Practically speaking, they would likely continue
working, for additional self-worth, savings, and social status, but with the
confidence that only "go to Hell money" can imbue.

(Of course, income taxes make such a rapid rise impossible. With an income of
$250k, you're likely paying at least $100k in taxes alone. Ignore that for
this thought experiment.)

They won't be rich. They wouldn't buy a nice house without a loan, for
instance, but they would surely get the most favorable interest rate
available. They could still be threatened by a market crash. They wouldn't be
VCs, but they could be angels or entrepreneurs.

~~~
ryandrake
I think those definitions are over-thought-out. There's little fundamentally
different among those first five. To me, if you depend on someone else (have
to work, or get assistance) to live the way you want to live, you're in one
class, and if you don't, you're in the other one. Everyone in those first five
groups are N paychecks away from $0, the only difference is what that number N
is.

------
chollida1
I think the issue here is that both sides are talking past each other.

Middle class used to mean 2 separate things.

1) You made a certain income.

and

2) you were able to support a particular life style on that salary( detached
house, 2 cars, vacations, able to put your kids through school), or what every
your definition of middle class was.

The problem is that with inflation on some of these things, notably houses and
university, someone who is middle class by definition 1 ins't middle class by
definition 2.

Here is the original piece that the article is commenting on:

[http://www.nytimes.com/2015/01/29/upshot/why-obamas-
proposal...](http://www.nytimes.com/2015/01/29/upshot/why-obamas-proposal-
for-529s-had-no-chance.html?rref=upshot&abt=0002&abg=1)

For what its worth I tend to agree with the original article.

With Montessori (private school) for 2 kids, a nice house in a good
neighborhood in a big city, and the fact that I reinvest all my money back
into my company it certainly feels like I'm living a middle class lifestyle.

I also completely agree that you can't use just salary as your measure of
middle class. It looses meaning when comparing small town to a city like NY.

~~~
danielweber
[https://soundcloud.com/mia-riker-norrie/classical-rap-pdq-
ba...](https://soundcloud.com/mia-riker-norrie/classical-rap-pdq-bach)

From the early 90's, a take on how hard is it live on six figures on the Upper
West Side. (I coincidentally happened to listen to an old cassette tape with
this, and then read this thread.)

------
bradleyjg
ITT and every similar conversation in the US, people desperately redefining
middle class such that they are comfortably in it. In Lake Woebegone all
children are above average but their parents are definitely middle class.

It would be a harmless cultural quirk but for the fact when it comes to
talking about taxing the rich (or other means testing) it turns out that there
aren't any.

------
hacknat
I'm sick to death of hearing about salary in connection to the middle class.
How much money you have put away in the bank is of far greater consequence
than how much you made last year.

I have two friends, one is a Public Defender and one is a Software Engineer.
The Public Defender comes from money and has no problem going to nice
restaurants, she drives a nice car, etc; her father pays for her to go home
for visits (she's a sweet girl, but she's rich). The Software Engineer is
paying off his loans from an Ivy League school and has to pay for all of his
flights back home.

Edit: What I was trying to say is that salary is a poor indicator of wealth.

~~~
danielweber
Don't try to enter a profession dominated by trustafarians. (I have not heard
of PD as such a profession, BTW, and you may not have been saying it was.)
Life is hard enough without fighting uphill on Maslow's hierarchy of needs.

------
SloopJon
One thing a Bay area friend of mine pointed out is that Amazon charges the
same price regardless of your cost of living (modulo sales tax, in some
cases). Stuff just doesn't seem as expensive making $100,000 in SF as it does
making $60,000 in Ann Arbor.

House? Yes. Bar of soap at a Sacramento St. boutique? Yes. LEGOs on Amazon?
Not so much.

~~~
sliverstorm
That's hardly unique to Amazon. It applies to any nationwide company, and most
any nationwide product.

~~~
mvc
I assume that part was implied.

------
Isamu
This is actually a nice summary of data, not an opinion piece.

In contrast I hate hyperbolic statements like "the middle class is vanishing"
which pretty much has to be literally untrue but I can appreciate as an
attempt to express something true about the objective difficulties of the
middle. I just don't think it helps much to hammer on a rhetoric that is
calculated to fog the brain.

Good short summaries like this are I think easy to understand and contribute
better to a national dialog.

~~~
enraged_camel
>>In contrast I hate hyperbolic statements like "the middle class is
vanishing" which pretty much has to be literally untrue

Why does it have to be "literally untrue"?

~~~
mrec
If you took a strictly income- or wealth-based definition of "middle class",
which I don't, I suppose the existence of a middle class is tautologous in the
same way as "half our schoolchildren are below average".

------
metasean
>About the data: We used the family income data from the 2013 American
Community Survey. This counts only families, which the government defines as
households with two or more people related by birth, marriage or adoption.

I find the fact that the data doesn't include data from single adults
interesting and a potentially large gap in the data.

------
ChuckMcM
Interesting discussion. I don't know if I have ever read a serious definition
for segregating the income streams. There are people who are 'oor', people who
are 'not poor', and people who are 'rich'. I've always assumed the people who
were 'not poor' and 'not rich' were the folks being referred to as 'middle
class'. If you read pg's essay on money he discusses "wealth" versus "money".

That difference, for me, explains why you need a bigger salary in the Bay Area
to cover basic expenses rather than say El Paso, so a $150K salary in the Bay
Area might make you exactly as "wealthy" as a $50K salary in El Paso.

So then the question for me is, does wealth define rich/middle/poor ? Someone
with two houses rich? one house middle? no houses poor? transportation? food?

~~~
atwebb
>so a $150K salary in the Bay Area might make you exactly as "wealthy" as a
$50K salary in El Paso.

So, kind of an aside, the Bay Area example _can_ work out much better for you,
if you're a property owner. Since, while you're paying a lot, you're also
getting a lot of equity compared to most other places and that equity
(assuming a bubble doesn't burst) is the same anywhere you take it. I've met
many CA/NY transplants who have brought a lot of equity with them and driven
up housing prices because not only are they used to paying a higher % of
salary, they also have CA housing equity, I guess what I'm saying is the
inflated cost of housing isn't necessarily a sunk cost/equalizer in the long
run if you can plan accordingly.

It's making lower and middle class areas into upper and middle class areas
rather quickly (not the only reason of course).

~~~
ChuckMcM
That is a good point.

Through the multiplying effects of leverage a 10% gain on your house here is a
much bigger advantage in purchasing a house elsewhere.

------
delucain
Taking a subset of statistical average income is not the proper way to define
the "Middle Class." It's better defined by what you can achieve with a
specific income. Can you afford higher education both for you and your
offspring? Can you afford to own your home? Can you afford reasonable and
convenient means of transportation for your area (multiple family cars in
rural areas, but maybe one or even none in urban ones)? Can you afford
occasional leisure activities? Can you afford to have a savings and retirement
account? Do medical expenses not worry you?

Meeting most or all of these requirements is what sets people into the middle
class. I agree with the article that this number is different as you need to
take into account local cost of living, but a lot of these requirements are
not tied to local costs. I also think this probably puts this number at a
higher point than many people think. I have many friends that think, "Oh, I
make $20/hr. I'm middle class now!" And I don't agree. You're still going to
struggle with bills at that level of income. Middle class is about being above
that struggle most of the time. There's a freedom that comes with not having a
loan for your education, vehicles, emergency spending (credit cards), etc. And
a middle class family should have that freedom.

I don't know that I can see $250k being middle class still, but I do think in
the SF Bay area, a family making $150k is quite reasonably still middle class.
The upper bound of the middle class is I think harder to define than the lower
bound. Once you always have the option of not working for long stretches of
time (more than several months) that might be a good indicator of upper class.

I think throughout the last 40 years or so we've gradually become so
accustomed to the diminishing size of the middle class. We don't realize what
it used to mean. We forget that a time existed where a family with a good
budget could live on one income and still afford a house, two cars, college
funds for the kids, vacations, and savings.

~~~
twoodfin
_I think throughout the last 40 years or so we 've gradually become so
accustomed to the diminishing size of the middle class. We don't realize what
it used to mean. We forget that a time existed where a family with a good
budget could live on one income and still afford a house, two cars, college
funds for the kids, vacations, and savings._

The middle class has "diminished" in large part because more households rose
into higher income levels[1][2].

Many households could still live on one income, but choose not to because the
opportunity cost of not working is too high: Mom and dad would both rather
have the money, go on international vacations, eat out more often, take yoga
classes, buy more gizmos... All stuff that people did much less of 40 years
ago.

[1] [http://www.cnbc.com/id/48754974](http://www.cnbc.com/id/48754974)

[2] [http://www.aei.org/publication/yes-the-middle-class-has-
been...](http://www.aei.org/publication/yes-the-middle-class-has-been-
disappearing-but-they-havent-fallen-into-the-lower-class-theyve-risen-into-
the-upper-class/)

------
MattGrommes
This is interesting but not super useful since there's a vast difference even
within cities. I live in San Diego and know the areas right along the coast
are above even the top of that income distribution but the homes are so
expensive even to rent that those people are still probably middle-class.

~~~
lelandriordan
This does not make them middle class. They are choosing to live in the
expensive area and thus paying heavily for it. They could move 20 miles
outside of the city, commute longer, keep the same high paying job and live in
a mansion. The fact that they have a choice is what makes them not in the
middle class. They see value in paying the extra cost to live in the expensive
area and thus they choose to pay the premium.

People in the true middle class would not have the luxury of choice. They have
no option to live in the wealthy area because they are not wealthy.

~~~
svachalek
When I think of upper class, I think of well-dressed gents and ladies who
cruise around the world finding the next humble village that needs their
charity.

Driving an hour each way to some kind of desk job to finance a McMansion in
the exurbs, eh... maybe it's me but there's just no way I can line that up
with any definition of "upper class".

