Maybe part of it is just August — last year I had a poll on your least favorite month and August edged out January. I see that FunctionalAmbivalent is taking some time off to reconsider his blog.
Maybe an exciting new NewMexiKen poll would help.
At Saturday’s Saddleback Forum (NewMexiKen and family lived just down the road for 10 years), Senators Obama and McCain were asked to define “rich” with a number. They were asked the question in the context of taxes and so answered with an income number (though one could argue that rich is defined by net worth and includes much more than income).
Granted then, that like so much of our discourse, this is too simple to be very meaningful, but —
{democracy:38}
I love August — it’s my second favorite month of all, right behind July.
Someday I will live where it’s always summer. I say confidently.
Corporations aren’t even allowed to pay straight salaries of more than $1,000,000 a year.
So here’s my problem with the whole concept of “rich” as a function of income: Lots of people with high incomes are a couple of paychecks from financial disaster, and lots of people with low incomes are financially secure.
My own definition of rich, thus, hinges not on income but on wealth. If you have enough money to maintain your lifestyle forever without additional income, you’re rich. (At the upper reaches, perhaps the phrase should be “a reasonable lifestyle”, since someone living on $20 million a year who’s suddenly without income and with only, say, $10 million in the bank can’t maintain their profligate lifestyle, but they’re still rich.)
I, personally, want to get rich enough that I can work for minimum wage in a job I really want to do. The current fantasy is working in a tasting room in a Paso Robles winery. I figure I’ll have to have about $2 million to be able to afford that. So, $2 million is rich.
At the same time, while my wife and I have nowhere near $2 million, I feel pretty rich now. We have more money than we’ve ever had before. A couple of years ago, after several years of entrepreneurial misadventures, we were one financial misstep from disaster. Now, we’ve got some cushion. I used to think to myself that rich, for me, would be having enough money in the bank that I could get fired from my job and have viable options other than suicide. That standard is still significant to me, and by that standard I’m rich.
I think it was Neil Simon who said, “Rich is going from zero to $500 a week. Nothing else counts.” I believe that, too — adjusted for inflation.
It’s hard to say “rich in America” because $150k in, say, Albuquerque is a damn fine salary. $150k in the Bay Area is lower middle class, at best.
You can’t really give one round number for every geographic area.
Wouldn’t “rich” imply you could afford to live anywhere you please?
That is Karen, and I respect your newlywededness and all, but rich and “a damn fine salary” are not synonymous.
According to an article about marathoner Ryan Hall in The New Yorker (August 11 & 18, 2008), the average participant in the New York Marathon has an annual household income of $130,000.
While respecting the idea that the cost of living varies from place to place, the idea that a $150,000 salary qualifies one as “lower middle class” — even in the San Francisco Bay area — shows a stunning lack of perspective. The median household income in San Francisco, in 2006, was just under $66,000. Certainly, “lower middle class” must, by definition, fall below the median income level.
Explain to me how someone making $66k can afford to live in SF? Answer is either 1) they can’t, or 2) they share a small residence with many people.
A studio apartment costs $1400 to $1500 (reference, CraigsList). Not even a one bedroom. A studio.
So how does one live on $66k in the Bay Area? They live in the suburbs and commute. Oh, add in the high cost of California gasoline (30 cents or more tacked on JUST for California) and commuting is a tough perspective.
I have a friend who makes $120k a year. His wife makes $80k. They were unable to buy a modest two bedroom home in Sunnyvale (couldn’t afford the payments). She drives an old honda, he a several year old Acura.
To me, a middle class person can afford to buy a home and support a family.
At $150k a year, one *can* do that, but not in any kind of high style and certainly not in San Francisco proper.
And Ken, you are right…”rich” would imply living anywhere you want.
I’m just saying, if I make $150k in ABQ, I’d feel rich. I’d have a nice home, a new car, and lots and lots of disposable income (which is what makes me, personally, feel rich).
$150k here in the Bay Area would make me feel “comfortable” but worried about saving anything.
I make less than $150k. But more than $100k. Wedding debts notwithstanding….I’m struggling. I pay $1650 for a two bedroom apartment in a suburb, not SF. I have an 8 year old paid off car. I commute to work. But I do enjoy nice dinners and my husband and I take weekend trips. Am I rich? No. Comfortable? yes. Savings are a luxury which I cannot afford.
As I said, making enough to have lots of disposable income, regardless of where I live…well, that’s my definition of rich.
Just my opinion, doesn’t have to be yours.
I should also say to you, Tom, that my saying “lower middle class” is more of a gut feel/day to day living vs the actual statistics.
I respect your comment: “Certainly, “lower middle class” must, by definition, fall below the median income level.”
The $66k figure comes from the Census Bureau. I don’t know how a household can survive on that in San Francisco, but apparently many do.
And, while I don’t want to be sanctimonious about this because I’m still paying off restaurant tabs from the 1980s and have a basement full of ridiculously expensive wine, the idea that you have nice dinners and take weekend trips with your husband but find saving money a “luxury” you can’t afford says more about your priorities than it does about society as a whole.
Finally, the whole concept of “wedding debt” is, if it means what I assume it means, something I, personally, would not introduce were I attempting to demonstrate that times are hard. Seriously: you put yourself into debt to throw a wedding and then, after the fact, complain that you’re barely scraping by?
I think you’re illustrating my point rather than refuting it. Our whole concept of what middle class is has inflated to ridiculous proportions.
Geez Tom, the lady was just married. Be nice.
I wonder what percentage of San Franciscans have owned their own homes for say 15 years. That could make a big difference in quality of life on $66K. (Keeping in mind that 50% of San Francisco households apparently earned less than that in 2006.)
So where does middle end and rich begin?
I’m not meaning to be mean. Congrads on the marriage.
But my point is this: we’re ridiculous about our expectations, and that’s reflected in our definition of rich.
So…I thought the question was…at what income to you feel “rich in America”
Yes, you are right. Personal choices. I make them. I don’t feel rich.
If I could have more than a modest wedding, and vacations and dinners out AND have a booming savings (heck and even buy some of your high end wine, too!). Well hell…that’d be pretty close to feeling rich for me. And I don’t think that’s “ridiculous in (my) expectations”
(btw, not that it’s any of your business, but the wedding will be paid off by the end of the week…because we did actually save for it. I said above “wedding debt nothwithstanding” We could have gotten married by the justice of the peace for $75. We chose not to. I’m cool with that choice and the financial impact it has.)
$66k in San Francisco isn’t rich by anyone’s standards (Ken, you make a good point about owning homes for a while…that definately helps..and the run up in appreciation..wow)
I don’t see how anyone else can dictate to me at what point I personally feel rich? Isn’t it all in the eye of the beholder?
C’mon my other six readers, there must be some more thoughts than those of Karen and Tom, good as the give-and-take has been.
What does rich mean in America in 2008 as defined by income or some other standard?
I suggested some ideas here.
BTW, while fixing my lunch just now…I had another off topic thought..
The concept of wealth or being “rich” is a highly emotionally charged topic in our culture. I think people automatically look down on those that are wealthy preferring instead the “poor me” stance. I know I’m guilty of doing it.
I know folks at my company who have been here for 20 years. They own stock at $5 in large quantities. Their stock is now worth some 40 times that. If you look at assets, they are *truly* wealthy but will always demure on the topic.
Maybe this is some of Tom’s point…what people think or expect to “feel” rich is always just out of bounds. As in, there’s never enough? Which is a long spiral….
Tom’s point is not that you’ve made bad choices. Tom is, if Tom might say so himself, the poster boy of bad financial choices. I wasn’t kidding about the restaurant tab from the ’80s.
Tom’s point pertained to the way-back-when issue of, politically, when someone was defined as rich. The implications of the discussion in a political realm are that people who aren’t rich deserve some kind of break or even subsidy, while the rich should get soaked.
I marvel at the discussion because our concept of what rich is is so…well, rich. You, Karen, simply walked into it. I could have used myself as an example. Not that long ago, I was complaining about being broke while sending my children to private school. Having been, not long after, actually, terrifyingly broke, I think I have a better perspective now on what constitutes rich. Rich, to me, means not having to kill myself if I get fired.
But Karen: the idea that savings is a “luxury” is so very different than the common priority system a couple of generations ago it boggles my mind. There are people in the world who put savings first — before dinners out, weekends away, or weddings — and they die rich even though they haven’t had a lot of income. They live at a more sustainable level, a level that can be sustained not only by lower income but also, in retirement, lesser wealth.
You make decisions, I make decisions, everyone makes decisions. Where those decisions become of interest to others is in the political realm, where we start demanding things from the government — tax breaks, subsidies — based on our being economically on the edge.
I know you’re not asking anyone else to pay for your wedding. That’s not the point, and if it seemed like it was I apologize. My point is that we are an enormously wealthy nation whose expectations are set ridiculously high. And, to be honest, I was laughing at you a little because I really, really don’t get the Dream Wedding thing. Sorry about the laughing, and the personalization. But I think you’ve got to concede my point, at least as it relates to the current political debate.
One other thing, this time about housing prices in the Bay area. The reason prices are so high is that there is a shortage of housing, and the reason there’s a shortage of housing is that people who live in San Francisco already don’t want housing to be built for more people to move in. In order to preserve their Bay views, they zone in ways that make it almost impossible to build the high-density housing that would enable demand and supply to come into line, lowering prices to livable levels.
A view is a luxury that San Francisco has chosen to spend it’s money on. It’s paid for in the form of higher housing prices. Thus is is not reasonable to define “middle class” based on being able to buy a house, since the creation of an artificial shortage of housing is what has pushed the price of houses out of reach.
I, personally, am glad you’ve decided to do that. My wife and I are visiting San Francisco this fall, and we will enjoy the views immensely.
Normally I would define rich in terms of assets instead of income. If defined in terms of income I think that the income figure should include asset value increases
The question is posed in terms of income.
I would say when someone makes more in one year that the lowest paid members of society make in a lifetime.
The federal minimum wage is $6.55/hr and I think this figure should be after medical insurance which many minimum wage jobs don’t have. Assuming $300/month insurance,
I get $475,000. In the poll I put $150,000
($6.55hr*40hr/wk*50wk.yr-$300/mo* 12mo/yr)*50yr
I think your post on Denmark is relevant.
The Happiest Place on Earth Isn’t DisneyWorld — It’s Denmark
I suspect that median household size in San Francisco is pretty small. Probably lots of those living on $66K there are single, or are two person households who can comfortably live in a studio or one bedroom apartment.
I would also suggest that the class structure does not break out into equal groupings. Probably 20-25% of the general population is upper middle class or better off (defined as managerial/professional people who rely on their earned income to achieve a comfortable lifestyle). Perhaps 15% are in poverty (defined as unable to meet their basic needs without welfare). The lines between working class, lower middle class, and middle middle class, which collectively make up perhaps 60%-65% of the general population are eroding (these people can meet their basic needs without welfare but live less comfortable lives and do not have managerial/professional employment). Within the “upper middle class or better” grouping is another group of about 1% of the general population that are really well off and receive more income from wealth than from work.
One interesting factoid: about half of the value of publicly held stocks which owned by individuals are owned by 1% of households. Institutional investors make up much of the total.
Up until now, I’ve stayed out of the conversation, although I’ve been reading it with interest. I think if a person is in the top 1%, or even 5%, of the U.S. population for earnings, they are certainly rich. How they spend it is up to them. They could choose to live somewhat frugally and stash away their cash for a rainy day (or retirement), or they could spend it all as they go, living a good life day by day. Either way, they are still in the upper percentile, and we can certainly call them rich.
The common perception of rich, of course, is that a person can afford to have what they want when they want it. Be it a beautiful home, fancy autos, fine food in nice restaurants, world travel, etc., they can reach out and grab it without scraping together the spare change from under the sofa cushions, or maxing out their credit.
However, for me, “rich” is not about money, even though that is the premise of this discussion. Still, I finally decided to put in my two cents worth. (Or, is it two dollars now to account for inflation?)
I think rich is a state of mind. We Americans are rich in so ways many other people can only imagine. Not only do we have many personal freedoms, including the freedom to move about and live where we want, work where we want, etc., we have 50 states worth of majestic beauty to collectively enjoy. Most of us eat well, have shelter, are educated, etc.
My author friend, Byrd Baylor says it best in her book, The Table Where Rich People Sit. It’s a truly lovely story about a family that may have little in terms of finances, but they enjoy good health, family love, nature’s bounty, and so on. The kids think their parents should provide more material goods, until the parents explain all the wealth they do have. View the book on Amazon (linked to NMK)
http://www.amazon.com/Table-Where-People-Aladdin-Picture/dp/0689820089/ref=si3_rdr_bb_product
On a more personal level, my family has lived at the bottom rungs for more years than we have been in the middle class. We raised our sons without benefit of health insurance for much of their childhoods, and we bought a lot of our furniture and other possessions at yard sales. Our houses have never been fancy, but we did have the pride of building one of them ourselves, as frugal as it was. But what counts most is that we always had homes in the country; we’ve been surrounded by nature, with places to fish and explore; we’ve had good friends to share both our good and bad times with; and the boys always knew without a doubt that they were loved. We weren’t able to give them a college education, but they turned out to be good men, just the same. Regretfully, they sometimes missed the things we couldn’t afford, but now they realize that they had so much more than material goods, and I think they are finally able to be glad of it.
As I said, to be truly rich is a state of mind.
Dick Gregory, in his autobiography, made an important distinction. He said that his family had been broke, not poor. Broke means you don’t have any money. Poor means your spirit is broken.
Oh, and just as a point of reference, this paper estimates that the 2006 income for households in the top 1% is at least $382,600, and the top 5% is at least $148,400.
Karen moves the discussion in a different but interesting direction at her own blog, Oh Fair New Mexico.
Paul Krugman talks about levels of middle class and rich in Friday’s column.