I think the problem for most workers is the lifetime of toil, not the meaninglessness of the work.
I'd happily dig ditches for 8-12 hours a day for 3 years if I knew I was completely financially independent with millions in the bank that. Actually, I'd rather do that than write code. At least I'd be getting a workout.
As it is now, I write proprietary software for much less than those featured in the article, work is miserable, and I've still got maybe 10-15 years to go.
Am I in the minority here?
Suddenly your $300k house/apartment is too small, and you aim for one that's 5-10 times more expensive.
Then your cars get more expensive.
You start looking at a summer home.
You get a couple of kids...and they turn out to be extremely expensive:
- Private tutors
- Prestigious Universities
Because you want to maximize their chances of success, and have planned their academic life for the next 15-20 years.
It all adds up. And since you're surrounded with peers that live the same lifestyle, you get conditioned that this is all normal.
Here's a personal example, and one that I never, EVER, thought I'd fall for:
I bought my first "real" suit after graduation, and paid $1000 for it. I felt like a real baller, but was also anxious about wearing it. What if I got stains on it, what if some douchebag with a cig bumped into me, what if, etc. I could afford it, sure, but it felt like A LOT of money for a piece of clothing.
Years later, and I'm buying suits 5-6-7 times more expensive. The old $1.5k ones don't feel right - the fabric isn't nice enough, the fit isn't as good, the small details are lacking.
Internally, I rationalize and convince myself that all these small differences are truly making the price (premium) worth it. And since I make good money, it doesn't mater.
But, what if I lost my income? Or had to settle with a "normal" job, making $45k a year? There's no way in hell I could afford spending 10% of my income on one thing. But at the same time, downgrading from luxury like that, and all the way down - it's not even like going from 3-ply to 1-ply TP, it's like going from 3-ply to newspaper.
And that's just for something as trivial as a men's suit. When I was a student, I didn't even own a suit - and had absolutely zero interest or care about wearing one. But then you get put in an environment, and ridiculous things start to get normalized.
I know people that swore to the shittiest of shit lite-beers, but now obsessively shop wine bottles worth tens of thousands. It doesn't happen overnight - but is rather a very gradual process.
I used to think of myself as a very minimalist no-frivolous-spending kind of guy. I would do meticulous research on products to maximize the quality to price ratio (with strict upper bounds on price of course). Nowadays I just don't bother. I think you're right that the process is gradual. When a culture built around consumerism surrounds you, there is no choice but to become more consumerist.
At one extreme I know people who save every penny, even though they make a fortune. One person I know spends maybe 10-20 dollars a week on food by never drinking, receiving farm deliveries of vegetables, etc. and etc. At the other extreme, as per this article, you have Real Housewives-types scoffing at making less than a million, perhaps living extravagant lifestyles.
Maybe this should be called "lifestyle inflation." Through social pressure, greed, trendiness, or perhaps stupidity, people piss all their money away and need more.
There's a balance there, but yes, at the end of the day the goal is to have free time, right?
In my mind, this is key. My parents barely saved for retirement, mostly because they didn't make much money. The net effect of that is that I've maxed my 401k since day one of my professional life.
In contrast, my father also died at 46 (I'm 42, going on 43), so all of the life experiences he'd deferred to a more financially prudent time never happened.
I work hard to try to find the balance so that I'm not left without an emergency fund or a paid-for retirement, but I also don't fret over every penny and "waste" money from time to time. My motto is to plan for tomorrow, but minimize any regrets that could arise if tomorrow never comes.
It is: https://www.investopedia.com/terms/l/lifestyle-inflation.asp
There's also a lack of education teaching people to value and strive for something beyond material goods, fashion, and whatever the mainstream media happen to be hyping at the moment.
I can appreciate that you might need a wardrobe with nice suits, a respectable looking car, and a few stories about places you've been and things you've done. It doesn't seem like it would super hard to craft that image without spending a lot of money.
How'd you get into the management consulting world? Is there a 500k/yr salary just waiting for me if I fake like I'm a Wall St guy from the 80s?
That probably sounds slightly crazy but how many people actually do end up leaving and doing something else? Not many. They end up in those jobs because they want the lifestyle, the status, and being "the guy" is critical to their self-image. Faking it would be pointless (it would probably lead to severe unhappiness).
And if you are an employer, your job is to feed into that. I don't think it happens consciously but most of these places have working environments where the stick and carrot are used quite heavily. If you "win", the rewards in status are huge. If you "lose", you will be crucified. And most people who do exit, exit because they lose. Not because they win and decide they have had enough...no-one does that.
I was lucky in that I had my CS qualifications. I left 6 months in, and got a better paying job. Only gave them a weeks notice.
Straight from undergrad. I went to a tech-focused school, majored in math and CS, and did a financial course series as a requirement for a scholarship. That, and I guess I'm a good interviewer / have people skills?
> I can appreciate that you might need a wardrobe with nice suits, a respectable looking car, and a few stories about places you've been and things you've done. It doesn't seem like it would super hard to craft that image without spending a lot of money.
This is not difficult. I wore mostly hand me downs I had tailored. Worked in a big city, so lack of car was not a problem. I also had my fair share of 'stories' (mainly because being student body president at my college exposed me to a world of very rich people).
The difficult part is that you enter in 'classes'. You and thirty other people who just graduated start at the same time, and you are put through the grinder together. There is an expectation you do all your socializing in this group. For me, part of the problem was that I was engaged and planning our wedding, so I had to take time off to do that and not partake. The group would collectively decide to do things every single weekend. If you did not attend, you were ostracized. These were not things like playing board games together or even clubbing (although there was a lot of clubbing). These were things like, 'so and so has a birthday, let's go to Cabo!' or 'let's rent a boat' or 'let's rent a mansion'. These things cost a lot of money, and the company does not pay. However, if you do not invest in maintaining these relationships, you will face issues later on.
The company encourages this by throwing extravagant parties every few months. And I really mean extravagant.
For example, before we accepted the offer, we were all flown out for a weekend filled with free booze, clubs, etc. We were all 'beautiful people' so to speak (although, I personally think I was the ugliest person there). The company provides enough of an exposure to a lifestyle that it whets the appetites of status-seeking 22 year olds, who then seek to accomplish the same 'epicness' on the non-company-sponsored weekends.
> Is there a 500k/yr salary just waiting for me if I fake like I'm a Wall St guy from the 80s?
No. The salary is piss poor. Starting undergrads in 2014 made $75k/year in San Francisco at my firm. The big bucks only roll in after you've been there for many years (and thus have that large debt hanging on your neck).
As my first manager said, "you can wait until you're 30 to have a family and free time." She told me that the week before I quit.
I wonder if there's an alternate track for someone already established in another field. Could an established software developer somehow transition to getting a "big bucks" management position? Or does it all flow through that class system, and if you didn't enter at the bottom, you're not able to get to the top?
There are also career changers who start out as something else (like a software developer) and go to the best MBA school they can get into, in order to try to "sneak in to the back door of the club" that way. I actually tried (and failed) to walk this path. My jaded view, after blowing more $ than I care to admit on B-school and literally dozens of interviews that went nowhere, is that these employers are looking for people already in the in-crowd, pre-blessed as elite, and are in general not welcoming to working class career changers. Investment banks are primarily looking for pedigreed former bankers, and management consulting firms are primarily looking for pedigreed former management consultants, and good luck if you're not already in one of those clubs.
Unless you are bringing in substantial expertise in the strategy side of technology (and most importantly, have a rolodex full of rich potential clients), it is unlikely that you would be hired. Outside of the traditional hiring rounds from undergrad and biz school, it is exceedingly rare to be given an employment offer.
And a clarification, I'm not thinking it'd be because you're around wealthier people which would make you want to spend more to compare to them, but rather having more security, if your passion requires more money.
I'd also rather be outside again all day, working with and alongside people, physically and towards goals we can visualize, doing tasks that we all understand well and can articulate in an accurate way, and cultivating a genuine sense of camaraderie. Not the sort of weird brogrammer nonsense that is frequently encountered in our industry and which is oftentimes confused with camaraderie.
I pull a lot of my previous lives experience in to my work today and I spend a lot of time working very closely with my colleagues, but it's not the same. I don't end a day with the same sense of purpose or belonging that I experienced with physically demanding jobs. I got close, once, but it was a shared experience between myself and one colleague, as opposed to a team, and it was because of circumstances that aren't exactly repeatable in a meaningful way.
edit/ Of course, the above is making some assumptions that probably don't hold. There is genuinely something that I miss from physically demanding work that can't be found or replicated with the work that I do today (or, perhaps it's just that I have failed to find or replicate it). But, I'm also dramatically better compensated and live a nearly fully autonomous life today, too. These are just the trade-offs that we make, I suppose.
I think there is a market for a large, physically demanding computer keyboard. The keyboard 'keys' would require pressure from a full hand to activate, and the return and backspace keys could have a different type of lever action (pull to the side maybe). The operator would have to stand, which seems like a trend these days, and the PRO-version could come with a large inverted water bottle. Not joking about the keyboard, only half-joking about the bottle.
I suspect that years of meaningless work just shuffling money around for wealthy people and institutions has a similar effect on the psyche, even if it is obscenely compensated.
Also, sitting all day does breaks your body.
- Longshoreman (manually unloading 45 - 120 lbs of frozen boxes, non-stop, for up to 20 hours a day)
- Worked on construction sites, carrying cement/concrete bags up and down - for hours and hours - often in sweltering heat during the summer.
- Dug ditches all day long .
- Manually emptied trailers for appliances (fridges, ovens, dryers, washing machines, etc.) all through the night.
and some more.
Either way, they all sucked. Some were absolutely terrible, and made fresh workers quit only an hour or two into it (longshoreman), while others were more bearable (emptying trailers).
But all these jobs share a couple of things:
- The majority of workers lack formal education, and take the jobs because they have to.
- They are all in it because of the cash
- Almost no one over 40. 90% of the guys are in their 20's.
- Injuries are extremely common. In fact, that's why I took those jobs: There "regular" crews were always short of people because of injuries or recovery, and would let anyone (with a fitting physique/strength) try for the spots. And on larger jobs, they would call in extras.
A lot of office workers seem to romanticize these types of jobs - like some kind of honest "manly" work where you get to be outside and enjoy the nature, while staying in shape.
Yeah, no, most of these jobs just suck.
Doing it for 1 hour might be OK, but when you're 12 hours into the shift, sore from the previous days, and know it'll be the same tomorrow, next week, next year, etc. you really start to question your life choices.
The only thing you look forward to is to lie down and rest - but even then, you're getting anxious because you know it's only X hours 'til your alarm goes off, and another day of grueling work. It gets to the point where you have actual nightmares, and will wake up depressed.
Of course, YMMV, and not all of these hard labors jobs are the same - people are different. But the above is based on my own experience, and what the other guys would say.
I'd still do it for a million a year though.
Brutal and back breaking. I couldn't get enough to eat, my body was always sore and tired.
I would do it if I had to, I suppose, but even though my cushy desk job coding pays a lot less--a very much lot less--than a million a year, I would take it every time.
I enjoy what I do, but I'd go back to it in a heart beat if there was even a chance for comparable earning potential. Hard work feels really really good at the end of the week. I think the one reason I enjoy software is because it gives you that similar high of being able to see something you've built with your own hands, that didn't exist before.
It was a much more creative & rewarding job in many respects.
My hypothesis is that most very high paying roles are incentive-based, and incentives can be addicting: meet a goal, get a million dollar dopamine hit. I don’t think these people hate their jobs as much as they might say they do.
That's why things like UBI are a pipe-dream. Any Fortune-500 executive could live a life of leisure with 2-3 years of planning. They tend to not make that choice.
If the problem is that people need purpose, what better than a system that allows people to find purpose, rather than one that keeps them trapped doing work they hate?
The point I'm making here is that we shouldn't play the naive game twice. Give people free money and an extra ~10 hours a day with no obligations to anybody. This isn't going to bring in some utopia of people pursuing wonderful new interests and ideas they always really wanted to, but were just held back by socioeconomic obstacles.
So let's think about realistic predictions. I mean I do agree with you people would be looking for purpose. Companies would be quick to try to provide this purpose by providing the most addictive, immersive, and life destroying games ever -- even the most hardcore WoW player would blush at what we'd have in store there. We'd also probably see people finding purpose similar to how we already do online. Imagine Twitter outrage mobs. Except now since people have no obligations and really nothing to do, there's a very good chance this would spill into the streets and likely in quite high numbers. 'Hey let's come protest against [xyz] in LA on the 17th!' 'Whoa, sounds like fun. Btw, no idea what [xyz] is, fill me in then?' 'Sure, not so clear myself tbh!'
Ooo and then the inevitable happens. There'd be another group, also looking for purpose, that now decides to counter protest. And these 'meetings' would be immense. There'd suddenly be thousands to millions of people with nothing to do and no obligations showing up to face off against each other to try to find some sort of purpose and meaning in life. No worries. I'm sure they'll just come together, spread and share ideas, and bring knowledge and information to one another.
Well at least everybody could come together in nonstop protests demanding that the basic income should be increased.
 - http://www.rasmussenreports.com/public_content/politics/gene...
TL;DR with the good comes the bad.
It's politics all the way down.
Do you have any evidence of that? All the studies I have seen, imply or play out the opposite. The poor stay poor and disinclined to achieve. Survival is hard enough at the bottom rung.
People need support to thrive. Throwing a few bucks at people doesn’t nurture them by itself.
Would you rather be the worst lover in the world but everyone think you are the best? Or the best lover in the world but everyone think you are the worst?
For most people, work is their identity, it is status, it is the ability to abuse underlings terribly with no consequences. Constructing your self-image this way leads to, imo, a great deal of emotional vulnerability. If I leave my job, what will other people think? I am not the boss anymore. I am just another normal person.
And btw, if you feel that you are doing whatever you are doing until you reach $X in the bank. Then that is the same.
The point of the article is that you can be happy working a shitty job for no money. But you have to understand what makes you happy, what is fulfilling to you, etc. Although it is true that some jobs/working environments are just shitty.
But yes, saving a couple million and moving somewhere in expensive, buying a house cash and living off of interest is totally doable if you're into that kind of thing.
Still absolutely doable.
This means that as long as you're willing to cut back on expenses if the market dips soon after you retire, 4% is fine, and it's probably not worth the extra X years of your life to try to get that number lower.
Add medical, and you need a hell of a lot more than 2.5M$ . Remember, it's the US. We don't care about your health.
That’s a great number for retiring at 65. But this thread is talking about working hard for 5 years and retiring super early.
Yes inflation will eat away at the value of that 100k over time, but that's less of a problem if you own your home and have something left over each year to reinvest.
Right. So my question is how much can you withdraw to indefinitely draw the same inflation adjusted value?
Despite all the skepticism above, the 4% claims are true. Not 100% chance of indefinite success, but close enough to be actionable. You can also google the "trinity study" for more info.
So pretty likely. But not guaranteed. And for sure not indefinite. Not if you pull the same 4% during down years.
My dream is 5,000,000 and a paid off house. I can live off 3% of that for sure.
It’s my only question.
Continue this to break thoroughly break him down. This is done without giving him any particular reason why he is doing it for...
Boss Paul: That ditch is Boss Kean's ditch. And I told him that dirt in it's your dirt. What's your dirt doin' in his ditch?
Luke: I don't know, Boss.
Boss Paul: You better get in there and get it out, boy.
If you dislike the current job a lot why not change it? For example, some people might only consider programming in functional programming languages. The number of job openings might be smaller but they are really passionate about the technology and they can be much happier on the job.
I think a lot of people marry someone who did so with an understanding that the gravy train continues indefinitely.
Also, I like how people bring up gardening sometimes when passion is discussed. To me, passion is coupled with expression and allows you to take on an identity in some other "world". You can be passionate about music, you can have your musical identity. You can be passionate about mathematics, you can have your way of reasoning about problems. But gardening? Is there a difference between things you really like to do and a passion?
Almost anything can be approached in an artistic manner and therefore considered art.
'High status' jobs in many ways entail a 'high status' lifestyle.
Example: they got the jobs in the first place as the result of their parents ability to pay for private school, and Ivy League. So in that lifestyle context, you're going to be doing the same thing, it's part of the cycle. Very expensive.
Partners in law firms or consultancies are really in sales. They are using their business relationships to position themselves as thoughtful, successful, excellent pedigree etc..
For the same reason that real estate salespeople who drive people around a lot tend to drive nice cars, many folks in high end careers have no choice but to live that lifestyle.
When you go out for dinner with business associates, you're not going to talk about the deal you got at the dollar store, rather, your golf game, the new club you got, your trip to Pebble beach. If there is any chance anyone will see you in your car, it cannot be jalopi. Telling people about your trip to Davos would be more than ideal.
There are very few fields where high end folks can get away with not quite living that lifestyle. Some doctors, dentists, business owners can do that. People in tech, of course can life alt-lifestyles.
It's not to say that a Director of trading at some big bank couldn't really skimp in stuff either, but it's hard to avoid the expectations of lifestyle.
'Career progress' in may of these fields entails a lot of signalling, and such signalling can be expensive. "I have three kids, so proud they all made it into Ivy League". That's a very powerful signalling statement, and a massively expensive one!
Taxes on regular income are high, and expenses add up - and having a 'fairly comfortable retirement' is not cheap.
I'm not entirely sympathetic to these people, because they do make choices - my point is that they are not living a 'regular lifestyle', their careers often have expensive lifestyles 'baked in' to the process.
Also: "They talked about missed promotions, disaffected children and billable hours in divorce court. They complained about jobs that were unfulfilling, tedious or just plain bad."
I think maybe we all have this, and when the numbers, cars and suits get nicer, those problems don't go away. In many ways, the risks are bigger.
If your company falls flat it can ruin you. A carpenter can usually get work, as can most decent devs.
That has happened before certainly throughout history as "gentry" have had their delusions of superiority and even relevance shattered in spite of their abundantly privileged start.
But all of this is a distraction - at the end of the article, the author speaks about the people who are happy and satisfied in their careers - and broadly it seems like people who have autonomy and a sense of purpose in what they do. I run a small business and broadly enjoy working, so things like the Financial Independence movement don't really make sense to me. More money, less money - this is not the crux of the issue. Engagement and autonomy are some of the keys to a fulfilling work life.
In the major coastal metros, living in a great school district or paying for an equivalent-quality private school is a tremendous expense. Parents also feel pressure to save enough to send their children to the best college or university that they can get into, which can be a $300,000+ expense.
For many parents, these expenses are non-negotiable - "downsizing" in this area is off the table.
I think there's a fair case that these parents are locked in a society-wide arms race: everyone would be better off if the kids were under less pressure to get the "best" education credentials possible, but almost everyone thinks they would be worse off if they unilaterally "disarmed".
Saving for college is a thing, but one year at this income is enough to sock away an entire college education.
Look, it's not that I don't have any sympathy. My household makes about as much as this guy and live in a similar situation, although apparently I like my job much more. Doesn't mean my life is without problems. Doesn't mean I don't get sad sometimes. But there are ways to mitigate the downside we have access to which most families simply don't, because they don't have the excess income.
Also 99.9% chance this guy actually spends a ton more than he really needs to and therefore has trapped himself. Again, I'm not without sympathy, but this is one problem no social program will ever target. If you're to dig out of your spending habits you really will have to do it by your own bootstraps. Find a therapist, cut up your credit cards, whatever is necessary. If someone making $1M per year really wants to get out from under, there are in the best possible position to do so.
That sounds like the case Elizabeth Warren made in "The Two Income Trap".
Frankly, I think you're getting a below-average education if you're spending tens of thousands a year on it (before college). Private school, getting a seat at a public school in an expensive suburb - fuuuuuuuuck that. Those experiences are nowhere close to worth all that money, and honestly prevent the students involved from learning about the real world in important ways that they'll pay dearly for later.
Honestly, this is insane. Those parents are spending tens, hundreds of thousands of dollars on making their children worse-off. I know they'd probably disagree with me.
but like most such situations, i suspect wealthy families are not simply buying better instruction, but rather exclusivity and esteem. the treadmill they're on is an attempt to maintain and improve their (apparent) social status.
money doesn't buy you a ticket off the treadmill. even the richest people jockey with each other for status. jumping off the treadmill means social isolation and most folks can't stand that.
> Engagement and autonomy are some of the keys to a fulfilling work life.
Isn't the second point exactly what most Financial Independence proponents are seeking FI for? I imagine most work (Mr Money Mustache, a prominent FI spokesman, certainly still engages in activities that would qualify)..
Most people are living paycheck to paycheck, but those are not the people who are saving for FI.
There's a degree of freedom that comes from knowing your cost of living can essentially be utilities and food if your income was suddenly interrupted.
Suddenly you feel like you have to have a fancy car, to live in a fancy neighborhood and get a $5 soy detox tea every morning and $300 a month crossfit/hot yoga/dance pilates classes or something like that
Have not found that job offer yet, but if you know of it, E-mail in profile :-) I won't hold my breath.
The one where you lock into a mortgage and a car that assumes a $1.2M salary to keep ahead of.
It's really easy to let your lifestyle expenses balloon, especially in a high-COL city where minor increases in living space/amenities can end up costing large amounts of money.
Also don't give a damn what people think about you. Typically people get trapped in that mouse wheel because "look what they have."
Source: I sold a company and quadrupled my spend on housing. Something stupid that I regret. But I also spent money on high quality stuff that is still lasting almost a decade later.
The challenge there is it's hard to ramp those down once you lock in. Downsizing on housing means having to move and possibly sacrificing social life and opportunities along the way. Pulling your kids out of private school has consequences for their long term prospects and their socialization. And so on.
I respectfully disagree. Luxury goods are often flimsy or expensive to maintain (e.g., Toyotas vs Porches) so research is still required.
As for private school and housing, these are exactly the expenses I'm talking about not getting wound up in. I went to private school almost my whole life, and I understand what it is to not want to be pulled away from a community, but the reality is that $500k—let alone $1m—is more than enough to afford a good private school and a good home in any city. The struggle to live on $500k / year is an artificial, self-sabotaging one.
One breath of scandal—
—his spirits plunged even lower. One breath of scandal, and not only would the Giscard scheme collapse but his very career would be finished! And what would he do then? I'm already going broke on a million dollars a year! The appalling figures came popping up into his brain. Last year his income had been $980,000. But he had to pay $21,000 a month for the $1.8 million loan he had taken out to buy the apartment. What was $21,000 a month to someone making a million a year? That was the way he had thought of it at the same—and in fact, it was merely a crushing, grinding burden—that was all! It came to $252,000 a year, none of it deductible, because it was a personal loan, not a mortgage. (The cooperative boards in Good Park Avenue Buildings like his didn't allow you to take out a mortgage on your apartment.) So, considering the taxes, it required $420,000 in income to pay the $252,000. Of the $560,000 remaining of his income last year, $44,400 was required for the apartment's monthly maintenance fees; $116,000 for the house on Old Drover's Mooring Lane in Southampton ($84,000 for mortgage payment and interest, $18,000 for heat, utilities, insurance, and repairs, $6,000 for lawn and hedge cutting, $8,000 for taxes). Entertaining at home and in restaurants had come to $18,000.
It goes on. The guy needs Mr. Money Mustache.
Besides the fact that if you're earning $1.2M salary, you're taking home other bonus/stock that are comparable. Getting locked into this sort of lifestyle is a choice not driven by need. A drug dealer in "low cost" Detroit or Sinaloa might make the same claims...
If you have a family, a $1.5m house (which barely gets you a shabby 3-bedroom in a high cost city) will, assuming you put $300k down, be around $8-$10k/month in mortgage + property taxes + insurance + any hoa/maintenence, which is by itself 40% of your monthly take home.
Uh... median house price in Seattle is less than half that. $1.5 million for a house in Seattle will get you an extremely nice house. Extremely nice.
If you disagree, it's because you have incredibly high standards for what constitutes "nice". That's fine, but it makes it more than a bit silly to complain that you "can't afford" a different lifestyle.
You're just making bad choices at that point.
Honestly, if you're regretting your life choices so severely but you're unwilling to live anywhere but NYC/SF, you're either not really regretting your life choices that much, or you're just really bad at making good decisions with your life.
Suppose he lives on the UWS in a 2000 square foot 3-4 bedroom condo which he bought for $4mm and has a $3mm mortgage. With a 30year fixed mortgage, that's maybe $180k a year. Don't forget the $60+k a year in condo fees and taxes. Throw in anywhere from $40-80k for nanny/childcare/preschool for the 1-2 kids he may have and you already have nothing left over if he went to a $600k comp.
I'm not saying he can't choose to live more conservatively, but when you're used to making $1.2mm a year, it's not hard to imagine how he got here. High cost of living does play a part, especially in NYC.
And this dude bought that shit despite hating his professional life. Hard to feel bad for him.
If you sold your company, aren't working at FB/goog/etc and are sitting on a ton of stock holdings, your income is going to show as near $0
Yes, there is capital income from stocks and other market investments, but appreciation for those comes under capital gains, which are calculated (and taxed) separately, and don’t count as employment income, for good reason: You can’t use stock options vesting in 4 years to buy food tomorrow or pay mortgage next month.
It is pretty crazy how little extra money buys you. E.g. in NYC, the only differences between a $2,000 month apartment and a $20,000 a month apartment are going to be things like location, granite countertops, a well-designed bathroom, and better windows. But in most cases the actual floor space and layout is going to be almost identical.
Clearly those things are worth something, but it's easy to see how the work and stress of paying for those accents is to result in a net negative happiness for many if not most people.
Where did you get 1-2k sq/ft 2 bed 1 bath shithole from?
For those who don't feel like clicking the link: most are very large (5-6 br) apartments, in expensive neighborhoods, in nice new buildings.
> vacation properties
I'm glad there's a "stupid tax" for wealthy people too.
My personal hunch as to what causes the demographic transition is that we have an evolved system for determining whether we are doing well or doing poorly and that system calibrates itself by examining the people around us. But, because our current economic and social system sorts people by income and status (talented people migrated into the cities from farms, even more talented people moved into more expensive neighborhoods, etc.), and because advertising constantly shows us higher levels of consumption to aspire to, even people who are, in an absolute sense, raking in obscene amounts of money are surrounded by a peer group that are roughly at their level. So it never really feels like you're rich; even though you live in a $3 million dollar home, you live on a street with $8 million dollar homes; even though your kid goes to a $30k/year private school, you can't afford to spend $200k vacationing in France during the summer like some of their peers, etc.
Interestingly, this parallels my own experience. As a senior developer, I'm now making roughly 3x what I made before becoming a programmer. Back then I would have imagined that all of my wants would be satisfied by 3xing my income. Yet somehow I still yearn to make more.
Why isn't it? Afaik in biology, healthy populations tend to be stable populations.
Populations that shrink or grow too fast are often a sign for something going very wrong, usually having to do with sustainability.
That's why I think people in rich nations having fewer children is a feature and not a bug. It's the result of increasing living standards because when you have very low child-mortality rates you don't need to "try" several times to get one into adult age, just like the availability of contraception allows for more reliable family planning.
The same applies to having a social security net: Without that, you have to depend on your offspring to take care of you when you get too old to work/sick.
In a situation like that, more off-spring is always better, as long as you get them through childhood into productive adulthood. Each child is a future potential care-taker and each one of them could end up being a big earner. In that context, a whole lot of people treat getting children like playing the lottery.
This is not correct. Rich people in rich nations have more kids than middle-income people in rich nations. What matters is your comparative purchasing power.
Fertility actually increases with income, even for women with education; this is mostly due to rich being able to afford the costs of child care, and feeling secure enough to invest into all of their children as much as they feel they need to. (whereas a middle-class, educated woman would only feel secure investing into 1 child)
What isn't correct based on what?
But if you go even further, you'll see that fertility actually declines with income in developed nations. It's not until you get to the top several percent of income that fertility starts rising again.
Yes, that's what I meant. You could argue about the significance of the top percentage rise in fertility, but if anything, it shows that fertility is constrained by lack of resources in a significant way as well as education specifically.
I didn't say it is constrained by lack of resources, I said it's also constrained by lack of resources.
What I'm saying, though, is that if you look at the fertility curve you'll see that many middle class families could eliminate one earner and still have 2-3x the income as poor families that have more children. But people are choosing not to do that (well, secular people are choosing not to do that; intensely religious people often do exactly that).
That's what's interesting to me.
Animals evolved using competition as a mechanism to select the best mates. Advertising is not the cause, it's the nature of all animals to project power. There might be some people here and there who are satisfied or whatnot, but even without advertising, people would be competing.
tl;dr Not a root cause, but a powerful multiplier.
My great grandmother gave birth to 16 children (this is my mom's mom's mom) who lived to adulthood. She (with my great grandfather) had no trouble housing them, feeding them, clothing them and ensuring they got educations to at least 8th grade, most to 12th grade. Does the CPI accurately reflect the changing costs of each of the things that were then easy to afford? How much would it cost to raise 16 children now? In theory, we are much more wealthy now than my great-grandparents were in the period 1880 to 1910, and yet they were able to afford something that nowadays would take a great deal to afford. Why is that?
Another thing that the CPI does not capture is how some new expenses have arisen that have become essential. In particular, automobiles. In much of the USA, having an automobile is non-optional.
We should think about those changes in lifestyle that make comparisons difficult across time. My great-grandparents raised 16 children in a dense town where transportation was dominated by walking. If you were trying to recreate that lifestyle in a USA suburb, some odd questions come up. Can you fit 16 children in one car? Do you get multiple cars? Who drives them? These questions point out how difficult it is to make direct comparisons.
Nor is it correct to simply say "No one needs to live in the suburbs in the USA, they can, if they wish, continue to live in a dense urban center". But the USA economy is a cohesive whole, and the existence of the suburbs effects the price of things in the urban core, as well as the focus of transportation infrastructure. Over the last 100 years, most USA urban centers have built significant transportation infrastructure to help workers in distant suburbs come into jobs in the urban core, and then go home at night. The money spent on those infrastructure projects could have been spent on some other priority, but instead were spent as they were because of the existence of the suburbs.
So it is very difficult to make direct comparisons, because some lifestyle changes make direct comparisons blurry. But in that blurriness, we can argue that in important ways our standard of living has not increased as much as the CPI seems to suggest. In particular, for those people who have a strong craving to have a large family, one can reasonably argue that their standard of living has actually decreased over time.
Maybe early on a Sunday morning? Or maybe if you're stopping the clock as soon as you get to the other side of the GWB?
On a weekday morning, you'd be lucky if you can get from Secaucus to the Manhattan side of the Lincoln Tunnel in 30 min.
New York City
Private school tuition - $50k/kid/year
Additional activities such as tutoring, sports, etc - $10-20k/kid/year
Mortgages+fees or rent for a 1,500 square foot apartment in a doorman building in East 80's - $75,000-150,000/year
Mortgage or rent for country home in Hamptons or Litchfield County - $40,000-100,000/year
Literally half of his income is going to be taxed as an NYC resident. So he's got $600k of cash flow and if he has 2 or 3 kids, the very basic fixed costs of housing and schooling are likely taking up about half of that. With the remaining half he has to pay for food, vacations, cars, clothing, etc, and anything left after that will get saved.
To be clear, nobody is making this guy do this. Nobody's forcing him to "summer" anywhere, nobody's forcing him to enroll his daughters at Spence when PS 6 is free. But at the same time, this is a guy who came up through a system in which preppy affluence was the chosen lifestyle of his "me 10 years from now" role models. As easy as it is to mock the concept of anyone being "trapped" when they make 1.2mm a year, the truth is that stopping his current job would be profoundly disruptive and stressful for this guy, his wife and their kids. So I get where his wife is coming from when she laughs at his mention of the startup.
I dunno, his wife did laugh at his startup job offer and divorce is expensive. Not that I feel bad for the guy, but it is often something like that.
That might be a small example, but it shows the way the wealthy lead their lives. Luxury cars, high end electronics, multiple homes ... they all add up.
After all, it's not like wealthy bachelors were common during the recession.
There are many ways to go through your career and your 'wealth' cycle. What worked for me was that when ever I got a raise or "extra" money (bonus, stock vesting, etc) I always adjusted my savings rate so that my take home pay was unchanged relative to inflation. The company gave me a 10% raise and inflation was 3%? I added 7% of that raise to my savings rate. As a result, my savings grew and my lifestyle didn't change, I could always "live on" a much more modest salary than I was being paid. That gave me tremendous flexibility in being able to take jobs that had a 'pay cut' but had other aspects that made them desirable (learning something new, opportunities to develop a new skill, more fun, Etc.) And after a while the amount of money your "savings" is kicking off gets to be more and more significant. If you're lucky, then one day the number your savings is kicking off is the same amount you're paying yourself out of your own paycheck and then you can walk away at anytime, keep your life style, and never have to work again. That gives you a tremendous amount of flexibility in how you spend your time.
The same one where a dev making $160k can't give up a job they hate because they can't afford to take a job paying $80k.
Everything is relative. To many Americans and $80k desk job is the lap of luxury. To many devs, that pay would be insulting.
City + State + Federal taxes are around 50%.
So $600k. Private School per kid is $50k. Assume two kids so about $100k.
Okay, now a 4 bedroom apartment in NYC is like $25k/month (on Zillow, eyeballing it), or about $300k/year.
You're down to $100k-$200k for food, vacations, clothes, cars etc.
Oh, the humanity.
I'm just explaining why the move would feel tough for a family.
People inside tech having anxiety about it?
Seems to me the anxiety has far less to do with tech than with the nature of the economy and employment in general.
But to most people who actually make $1.2 million per year, it means giving up all kinds of status symbols and creature comforts. Many of which they are locked in to via mortgages, leases, etc.
Many people could retire after one year at 500k or 1M because their cost of living is such that they would be able to save almost all of it, and this would spread across their retirement..
Thinking about retirement savings at all is kind of a luxury.
but it's possible, is my point - the difference on whether it is possible or not possible is the lifestyle one chooses to lead with it.
It just take a lot more to retire than the average person realizes, and not eat Alpo.
I estimate the top sales people are the highest compensated people in a company. It is true meritocracy, however. You are judged on a single metric more or less and the bottom of the group is dismissed without second thought.
You can make a great living on the engineer side of the operation and it's steady but you'll never see the highs of the top sales people even when you're at a point with stock and salary being many hundreds of thousands.
It's not a life for me but I have nothing but respect for the effort, time and relationship building great sales people put in. It's a hard, competitive ladder but if you make it work you'll hit high 6 figures and at times 7 figures for many years.
Ok, looks like it was actually New York, but under the same principle: golden handcuffs.