It's hilarious you have to do this but even when it says "in real terms" or "2022 constant dollars" someone will pop in and say "yeah well this isn't inflation adjusted"
Yeah but it's not adjusted for *actual socioeconomic class*, e.g. high-income is much higher than $100K. The divisions used in this chart are designed to make it appear as if people are doing better than they actually are. If you use the official Census Bureau numbers for class divisions, you see the exact *opposite* trend.
TL;DR: This chart is lying.
Why does that matter though? The 100k threshold is used consistently from 1960-present in the chart, I’m sure if you use any other threshold it’ll show a similar story - but the levels will be different.
Costs of goods don't uniformly inflate with the dollar and the cut off to have a comfortable life is not 1:1 with CPI.
The person you are replying to is arguing that while people have more inflation adjusted money on average in the upper bucket the impact has been felt differently on the actual lives of people and the percent in the upper class is not being reflected well here.
I'm sure it was very reassuring to Americans in 2009 that there were twice as many households making 100k as there were in 1970. What a booming economy!
The originally posted chart ignores purchasing power, which is why $100k doesn't feel like it's worth $100k anymore.
https://www.bls.gov/cpi/factsheets/purchasing-power-constant-dollars.htm
These charts show purchasing power, which is a much better comparison tool for quality of life. The 2010 to 2021 charts show that, even as incomes have increased, their equivalent ability to purchase goods has declined.
No, it doesn't. Inflation and purchasing power are two similar, but different things.
Think about something like the Alaska purchase. $7.2 million in 1867 adjusted in inflation to an "equivalent" to $129 million in 2023. Even without knowledge of the gold or oil and assuming it's still mostly undeveloped, would $129 million be able to buy Alaska today?
The answer is that you would not, of course, because the purchasing power equivalent of $7.2 million in 1867 is now equal to about $2.5 BILLION dollars for something this size.
https://www.measuringworth.com/dollarvaluetoday/?amount=14500176&from=1867
Pick a better example. There is no way for me to guess at the value of Alaska absent what we know now about Alaska, our transportation capabilities, the infrastructure adds since then, etc.
If it’s so prevalent, I don’t know why you’d have to use this example.
From my vantage point, almost everything has gotten ridiculously cheaper. Even new cars, which you’d see a chart showing an above-inflation increase in price, actually got a lot cheaper if you compared the *same car features* over that time period.
Most of your crowd conflates standard of living increases, which are supposed to cost more, with inflation / loss of purchasing power.
The measure of inflation used would matter A LOT though. The CPI is what the government uses for cost of living adjustments for Social Security as well as other government and private benefits that go up if CPI increases, so there's an incentive to keep it as low as possible. Also this chart is saying that two 50k jobs, ($25/hr) is "high income."
\*bane voice\* "Do you feel high income?"
How much that weighting is is very relative. Reading this at face value would suggest that family homes are affordable today to a larger proportion of people than they were in the 1970's - this simply isn't the case.
The weighting’s for CPI are publicly available, I believe 30% goes towards housing. Obviously, YMMV - but this is for society as a whole.
> suggest that homes are affordable today
Not necessarily, just that *overall* everything is more affordable relative to income. So housing may have increased, but food - clothes - tech etc have declined, more than countering any rise in housing.
Yes, because I can live inside a cheap pair of jeans and need to buy 10 microwaves (that somehow last way less) instead of a house, car, and food.
Median household income in 1967 was 7200. Median house price was 22700. The median household income today is 75k and the median house price is 420k. So the home price is 5.6 times the salary now, and was about 3.1 back in 1967. That is a huge difference. A new car cost around 3,200 then, it's like 45k today. That is 44% of your salary vs 60% today. These are differences on the biggest purchases most people make in their lives.
But yes, outsourcing, sweatshop labor and some technological innovation did make clothes and basic electronics cheaper than they were before.
Way to miss the point entirely. Let’s assume housing costs have shot up. That doesn’t change the fact that **food is less expensive**, that your software subscriptions and tech purchases are less expensive, among other things.
Overall, the declines in other categories reduce the impact of higher housing costs on budgets.
But they don't, that's the point. I need extra several 100k for a house and you're telling me I should be happy because I can buy some headphones for $20 instead of $30? Again, the biggest purchases, like real estate or automobiles are WAY more expensive than whatever I save on some food, clothes, and electronics that became relatively cheaper.
And these things became cheaper because of technology and scales of magnitude (and of course cheap foreign labor). They become cheaper everywhere from Afghanistan and Uganda to London and San Francisco. You don't get economy brownie points because humanity overall is technologically in a better place.
Hilarious of you to mention software subscriptions, crazy how those prices are way lower than all those 1967 software costs, right?
I really don’t understand your argument. The data is clear that other categories (think food, again) have deflated so much so that it **compensates** for the rise in home prices. This is despite the fact that housing is weighed 30% (the largest by far) in CPI.
An individual’s budget is not 100% housing, I don’t see why this is so hard to understand.
It doesn't compensate. The numbers simply dont add up. You can draw all kinds of graphs with data, displaying data to fit a narrative is a whole artform.
People who chose the weights and cutoffs they chose them for a reason. It sounds like you have a narrative and found a graph that fits that narrative.
The prices I wrote are real, you can look them up. How you think cheaper electronics are supposed to compensate for a house that costs magnitudes higher than it has before is beyond me.
Nobody in Syria had cell phones in 1980. Everyone has one in 2024. Does that mean Syria (or pick any other failed state) economically progressed over this time? Of course not, it's just a different technological age. I'm sure the first light bulbs were very expensive. The fact that they are now cheaper than candles doesn't mean the US is improving economically.
This. 35k in 2022 is not middle class in most metros the same way it may have been in the 60s.
In reality the upper and lower tiers have both grown and the middle has shrunk. Which hasn't helped the whole divided nation problem.
Which inflation? Inflation of housing? food? medical care? What about income per person per job? House hold income could mean several people working several jobs out of desperation, or people taking in room mates because wages are low. It is not a good depiction of actual wages that people are earning. This is cherry picking to get the data you want.
All of it. All of those categories are weighted for their importance (housing/food/care being the largest weights).
Just as a FYI, the household size has actually *shrunk,* and since 1980 the dual earner percentage has been stable.
If you are renting that second place out.
Owner occupied places are accounted for with owners equivalent rent which is what it would cost to rent the place if you were renting. This is because cpi cares about the cost of shelter and not the investment value of your home.
Sorta.
Under Regan mortgage and interest rates were removed.and replaced with rental stuff.
This is one of the reasons Trump.says inflation under Biden was 50% because he included interest rates and home price increases.
So as a typical Republican remove numbers that make you look bad but bring them back to make someone else look bad. Keep it classy.
As a percent of the overall money, does it show that the wealthy just control more money? It doesn't mean the number of wealthy households is growing that much.
This chart shows annual income, not net worth. This makes it look like things are OK, but the concentration of wealth is the problem. The concentration of wealth shows a clear elimination of the middle class.
This is exacerbating the housing shortage because there are so many more cash buyers. Not saying it’s bad to have more millionaires but combined with a massive housing shortage, the class division based on property ownership is becoming much more pronounced and painful for the non-owning class.
The solution, of course, is to build more housing where people want and need it.
Those aren't costless though- the housing value is real wealth but also a symptom of an inefficient housing market that is becoming the primary expense for most Americans
It's relevant but cloaks that especially some older people may have to sell their house to cover unexpected expenses.
Which may be relevant since what a millionaire means has changed as the value of money has changed
You can rent like the people who have a million dollars in stock and no house do.
Does a million dollars in stock not count if you don’t own a house since where am I supposed to live? A tent?
Yes, because your $9000 - $10,000(on your $1M rental) covering that owner’s payment, property taxes and Insurance will out-pace your $1M investment. Unless you live in a tent.
And then get a Time Machine and buy a mansion with that million dollars! Now if you don’t have a Time Machine you either downsize or just buy a similar home.
Did you know you can sell stock at any time and only pay tax on the gains? It’s like “liquid” or something, kinda similar to money, and yet very dissimilar to a residence. You may have “equity” but it’s tied up and costly to extract. If your credit score is bad, it’s impossible.
Your stock in your business can be costly to extract too, friend.
And that's only for public companies which is about 0.0000001% of firms, otherwise making it "liquid" is even harder than your "equity" (I don't know why you started using random quotes but now I am)
You seem to be missing the point. This post is saying how great it is that people are millionaires. But it’s largely on paper (equity) and not in a “liquid form”. It’s not the same as “stocks” in the “markets”.
Well there are taxes and some cost of living. So you are probably only saving 10-40k a year.
Then you are definitely putting that money in an investment account so your money should be growing exponentially
Nobody is talking about the asset boom of the last decade, which includes adding stocks onto the property ownership you mentioned (since those have skyrocketed too).
But you're absolutely right, that's the clear division right now. It's not about income as much, but whether you owned appreciating assets before 2020 (2018ish really). Everybody who did has seen their net worth skyrocket, but their peers without homes or investments have remained flat.
Home ownership rate is near record highs, and that’s despite the average house hold size declining (I.e., it’s harder to buy a house with one income than two, but there’s way more one person households nowadays).
Oh I’m very vocal about the needed changes that will eventually solve the housing shortage.
I’m pretty optimistic those things will happen, though it’s frustrating that NIMBY arguments are still so popular. Change never comes soon enough, but it will come.
That won’t actually move the needle on housing prices. Having adequate housing supply makes housing a less attractive investment.
In general, stifling demand is counter productive when the problem is lack of supply. Prices go up as a natural way of stifling demand.
Blaming hedge funds, billionaires, or “greedy developers” are just excuses to perpetuate NIMBYism, which is why we’re in this mess.
There wouldn't be a lack of supply if hedge funds and landlords weren't allowed to buy all the homes. Like, yes, build more houses, but when blackrock buys all the new ones, and nobody can afford $2500 a month for rent, plus utilities, we're just gonna be right back where we started.
Facts do not support your assertion. The % of homes owned by corporate or foreign investors is very small, therefore banning those purchases wouldn’t really change much.
Sadly, you have bought into a NIMBY left narrative that sounds nice and convenient but is in fact, unfortunately, bullshit.
How do you increase supply? There is no money to be made in “affordable / workforce housing”. Land and development costs are out of control. The national builders create a monopoly on land and build according to their investors’ interests alone. The government has to get involved, but that’s leftist, socialist, communist, or whatever working for the collective benefit is these days.
I'm a nimby (whatever that is) because I understand how buying and selling works?
When homes are built, they need to be bought. In a system of buying and selling, whoever has the most money, gets to buy the product. And trust fund baby landlords and hedge fund managers have more money than a would be first time home buyer. So, a new house gets built, and goes on the market. A person who plans to actually *live* in the house, could afford to offer, say, $30,000. A landlord, who already has a shitload of money (usually from inheritance), can afford to offer $300,000, so *they* get the house. From there, they want to recoup their investment and make a profit. For a $300,000 house, the average mortgage would be roughly $1,800, and on top of recouping the cost, the landlord wants to make a profit, so they offer a renting price, double the mortgage, at $3,600. The first time buyer had no other options, because this same landlord already owns the last three homes that were on the market, and there are no more in the area because they were already bought years ago by people who are living in them and don't want to sell. So, they now sink all the money they had saved to buy a home into rent, are never able to afford a home, and people like you cream themselves over the idea of rich guys Nickle and diming the little man while we (and you) get to own nothing and be happy.
Good point! I wonder what is happening to real cost per kid though. If that is going up significantly, it could counterbalance the effect of having fewer kids.
That should be accounted for in the inflation adjustment, though, right? Maybe the cost of kids are going up faster, but that would be balanced by other things becoming cheaper.
I would imagine childcare is becoming more expensive, but toys are becoming cheaper (and food, aside from the past few years).
It is possible that the cost of having kids is increasing significantly more than CPI. That could mean the cost of having a family is the same or more than 50 years ago, but living without kids is significantly better economically. In fact, couples are spending more per kid compared to 1960: $259k v $300k inflation adjusted. https://usafacts.org/articles/how-much-does-it-cost-to-raise-a-child/#:~:text=In%201960%20(when%20this%20data,expenditures%20had%20increased%20to%20%24300%2C322. However, I don’t know how much of that is from costs of raising a child increasing and how much is from parents just spending more per kid because they are having fewer kids.
I think fewer kids would actually help this. Easier to work long hours and get promotions when you don’t have kids events to go to, and relocation for a job is simpler when you don’t have to move the kids.
Not sure on any stats about people being single longer/more frequently, because using marriage rates hides people cohabitating long term, although technically I guess they would still be separate “households” for tax purposes. I think census doesn’t care about that though, they look at income of everyone in the physical home.
Here’s an article addressing that. The tldr is: some but not all.
https://economistwritingeveryday.com/2022/06/22/us-households-have-a-lot-more-income-than-1967-and-its-probably-not-just-because-of-the-rise-of-dual-income-households/
Probably also add in the decline in birth rates, so people are prioritizing family less over career growth. Easier to work long hours or transfer anywhere in the country if you don’t have kids to relocate.
The issue is how many income earners are there per household to make this happen? You are richer with a 90k HHI with one worker than 110k with two many times.
Household size has been shrinking in America in recent decades. Pairing that with increasing household income means that individuals are increasingly wealthier.
https://www2.census.gov/programs-surveys/demo/tables/families/time-series/households/hh4.xls sorry for non-graph data source but see the rightmost column
The information that stands out to me the most on this graph is the rate of change.
13 to 37. 24 percentage points over that period of time.
22 to 13. -9 percentage points.
What this says is that the growth rate of the upper class is more than twice as fast as the rate at which we are decreasing poverty.
I don't think this is an optimistic graph. Lots of conclusions can be drawn so it's probably a neutral graph. But what I am seeing is that we are changing the class makeup of society and driving a wider gap between the poor and wealthy.
Despite what some people say about how this is amazing and the opposite of what they hear in the media... Imma call those people out as people who can't read data. It tells exactly that story.
I'm with you here.
Wealth inequality is terrible, and this graph is showing just that.
In fact, imo, having more upperclass citizens than lower class citizens is a huge problem. It's the upper class (not the 1%) that dictate prices for everyone. And when you get a big upper class, more and more can compete and raise the prices.
This is a huge reason why house prices are terrible. Yes, a lack of building is the main issue, but you also have the fact that you have a huge percentage of people who can still buy... This is why house prices keep going up.
A shrinking middle class is never good.
I believe you meant to say 32 to 23, not 22 to 13.
You’re comparing the changes as if they’re absolute but I believe they should be compared as relative numbers. Meaning looking at %X differences instead of +/- X differences. If both 100k and 35k lines decrease by say 20% over that graph, the 100k line will have gone down more in absolute terms but that doesn’t necessarily mean relative inequality increased.
Idk my math tools aren’t on my right now
Sure, I appreciate you challenging me to look at this again. Nah I think what you said is right, but we are both looking at percentages. I was pointing out the rates of change over time
Edit: oh and yes btw you caught my mistake I meant to describe the start and endpoints of the low income line
Yep the middle class is primarily shrinking because so many people are leaving the middle class for the upper middle class.
Leftwing Redditors constantly obfuscate this point, and pretend it’s because they are becoming poorer.
Whining about the current economy is hardly left-leaning. If anything it's center, or very slightly right-leaning. Blue collar and rural workers *will not* stop blaming "the economy" and "coastal elites" for their problems. Plus the entire Great Reset movement is entirely far-right
Income doesn't equate to wealth. It would be nice to see a chart (inflation adjusted) on day to day large item expenses like mortgage payments, heath care, other insurance, child care, education, utilities, etc...
1 in 8 Americans is a millionaire. And there’s a major age effect too - when you’re older and have had decades to build wealth, the numbers are even better.
Its not particularly hard to build wealth.
According to [statista](https://www.statista.com/chart/30671/number-of-millionaires-and-share-of-the-population/), the number of millionaires in the US went from **7.64mil to 22.71mil (!)** solely from 2020 to 2022... just two years. That is due to inflation of assets and not due to income increases.
It is hard to build wealth if one doesn't have enough income to cover expenses.
The jump in millionaires can be attributed to the jump in home prices over the past 5 years. It's not due to people having enough assets to invest. It's due to the people that already invested in a home decades ago.
I got ya though. I won't bother trying to make the same point over and over again. It's not worth the time.
The problem for them is their politics is impossible if capitalism is making life better for people so broadly (of course it is, it always has—with adjustments to be fair).
The chart is lying.
For example, the upper class doesn't start at $100K. Whoever made this chart completely changed the income levels for socioeconomic classes to make it appear as if everyone's getting richer. If you use the official Census Bureau numbers, you see the *opposite* trend.
I’m curious how this balances with size of home, and children staying in their parents house longer.
I’m pretty sure census data looks at all income in the physical house, not the separate tax filers, so an adult child living at home could boost household income and hide problems.
Overall really interesting and good content, but I think it oversimplifies things and needs a bit more context to really understand what it tells you. That’s really the problem with and simplified data plot though.
Really not sure you can pitch this as positive to nearly this degree at all. Yo do so you have to implicitly make the claim that wealth classes like this are dollar denominated like this which is pretty absurd on its face.
What it takes to live a middle class life has grown almost as much as this growth and inflation adjustment will not fix that when it only looks at income like this.
Much more meaningful to the relative abundance of upper vs middle classes is the difference in the income of fixed percentile brackets. If that gap is widening the middle class is not growing, society is just becoming more stratified. If the money required to attain an upper class life is growing faster than the income then you are still behind no matter how much lipstick you try to slap on the pig.
While attempting to fact-check this information, I noticed the chart comes from the American Enterprise institute, a libertarian think tank. I wasn't able to actually fact check the numbers, but it's obvious that this image has had the AEI logo removed.
The same exact chart from a few years earlier, can be seen here (with the AEI logo intact): https://www.aei.org/carpe-diem/three-charts-based-on-todays-census-report-show-that-the-us-middle-class-is-shrinking-because-theyre-moving-up/
What makes this feel hard to believe for many people is that more is expected from our lives now than in the past. People used to live in small rural towns, cook almost all their meals, not get medical care for most ailments (ailments not even discovered yet), didn’t go to college (most jobs didn’t used to require it), didn’t have streaming subscriptions, and much more.
Now we’re expected to live in cities, go to college for a mediocre job, eat out, and keep up on movies/games/music. If you move to a rural town, have cheap ways to entertain yourself like fishing, and cook your meals, you’ll feel richer. But there’s less jobs in rural towns and who really wants to live there?
I have lived in a remote, rural, low income areas for about 30 years. Jobs are tougher and it can be a challenge, but I work as a biologist on government contracts. There’s no way I could afford my standard of living in a bigger city market, even though my salary is above average.
Many of the things people consider necessities are really just luxuries. Streaming subscriptions, games, music, those are all things I refuse to pay for and get secondhand or free. There’s less sense of consumerism and keeping up with the Jones’s here. My house is literally half the cost compared to the nearest city. A popular overpriced tourist town is 2.5 hours away, this is the less popular unnoticed town with the same access to mountains between us. Entertainment - nearby National Park 45 minutes away, world class fly fishing, backpacking, skiing, small town festivals, forest wilderness and desert depending on the direction I go. Flights are more expensive and I deal with more flight changes with a longer drive tacked on.
It takes some adjustment, your network is smaller, but many working professionals here swear they will never go back to a city.
Yes, and the median home size, median number of cars owned, number of vacations taken (especially due to the cost of air travel) was less back then.
We live in larger spaces, own more cars, take more vacations and have two people in the house working… lifestyle inflation has forced everyone into the boat that they “have to” have two income households…however, the level of precarity was much less… it could be one father/husband work for $50k (in real dollars) worked with little chance of being unemployed, now both parents have to work because they could lose their jobs with much greater frequency.
I’d like to see it by generation.
Also let’s remember that this upper class is not the real upper class. There’s the “upper class” and then there’s billionaires. The upper class is the new middle class.
Im just not sure how helpful that would be in terms of seeing the circumstances of each generation - obviously your average Gen Zer (who is in college or just entering the workforce) is not going to have the income of a boomer who’s risen up the career ladder over the course of 50 years of employment.
Biggest problem with this is that $100,000 is hardly “high income” anymore
$100,000 household income today buys you about the same lifestyle as $50-$60,000 household income, did just 10 years ago
It’s adjusted for inflation, meaning that this is not directly comparing the number of people making $100,000 in 1990 or 1975 to today - it’s comparing those making the *equivalent* of $100,000 adjusted for inflation. This isn’t a problem with the graph, it’s a problem with your ability to understand it
I understand what it reports to be and I’m telling you that the inflation adjustment used isn’t accurate
Aside from the fact that the inflation index is broken anyway. Some products follow the rate of inflation, but other products such as housing have outstripped inflation several by times and school has outstripped inflation by a full order of magnitude
You're right, the originally posted chart ignores purchasing power, which is why $100k doesn't feel like it's worth $100k anymore.
https://www.bls.gov/cpi/factsheets/purchasing-power-constant-dollars.htm
These charts show purchasing power, which is a much better comparison tool for quality of life.
Thankfully US average rent is $9,600/yr. Oh no wait it's $20400/yr. Raising a single child in the US on average costs $15,000/yr. Average household cost of food $9,300/yr.
Total average annual expenditure in US household, based solely on rent, childrearing, and food and nothing else: $44,700
You can add whatever you want to that number, but the debt defaults and delinquencies don't lie. A ton of Americans are worse off, while a smaller portion are far better off. This is not an improvement. It's a recipe for disaster.
Couple things about this
1.) many more households are dual income which might sound fine, but it means the household is collectively working double the hours.
2.) while it might be inflation adjusted. There are many costs of living that have outpaced inflation.
This graph shows the "percent shares of US housholds by total money income" in fixed dollars. The percent for 100k or above increased from 13 to 37 percent.
Is this the percent of households that earn this amount of 2022 dollars in that year, or is this the percentage of total income that falls within each category?
Those are two VERY different measures with very different narratives.
Housing, food, and health care costs have risen much faster than the general inflation rate, and these happen to be the core goods and services need to support families. Of course, stop having families, and the consumer will get by better, but that creates a host of other problems for society, the economy, and ultimately us all.
This is income. Which has increased. But the price of assets has increased much, much more.
So the middle class in 1967, although earning less, had cheaper housing costs.
So yes. The middle class were better off in the 60's
That is theoretically what inflation adjusted means the problem is that the inflation index is broken
The cost of some goods and services rises pretty much in line with the inflation index, but other things such as housing have far out paced that inflation index and school has done so by a full order of magnitude
Exactly this. The average earnings to house prices went from like 4-5x to 9-10x.
People in the high earner brackets now live in a houses your average middle class wagie was buying decades ago
The median income last year was just over $40,000 the median income in 1967 when this chart starts when adjusted for inflation was over $70,000. The median house price now is over $400,000 in the median income in 1967 when this chart starts when adjusted for inflation was just over $200,000 People are making 40% less and housing cost twice as much
The vast majority of people are not better off now. Back in the 60s and 70s it was completely normal for a single earner household to have two cars and take a multi week vacation every year in addition to owning a house.
Housing makes up roughly a third of the CPI because that’s approximately how much people spend on housing. It’s not like housing is the only expense, it can go up relative to other expenses but can be negated by the other 66% of expenses going down.
That final note is unproven and anectodal. I can “disprove” it by going outside and finding random anectodal examples.
Despite that, housing still on average only makes up a third of consumer spending (as of 2022) [https://www.bls.gov/opub/reports/consumer-expenditures/2022/home.htm#chart2B](https://www.bls.gov/opub/reports/consumer-expenditures/2022/home.htm#chart2B)
Though I do agree with the study you posted, so I'm wondering why there's a contrast. Houses today are larger so I'm not entirely sure it's people downgrading [https://www.census.gov/content/dam/Census/programs-surveys/ahs/working-papers/Housing-by-Year-Built.pdf](https://www.census.gov/content/dam/Census/programs-surveys/ahs/working-papers/Housing-by-Year-Built.pdf)
No problem
For a specific example relating to housing: right now the median Home price in the United States is about $420,000. The median Home price in 1967 (the year this chart starts) was $22,700, which works out to be $214,000 when adjusted for the inflation index.
By that simple metric alone, houses are twice as expensive as they used to be.
Then we add the wage disparity. Last year, the median income was $48,000 a year. While in 1967 the median household income was $8200 a year which adjusted for inflation works out to be $77,000 a year.
So houses cost almost twice as much, and people are making about 40% less
Or we can do college: today a for your degree costs anywhere from about $25,000 to about $100,000 depending upon in-state out-of-state specific school, etc. In 1969 (the farthest back I could find reliable numbers for in-state and out-of-state public and private higher education) the cost was approximately $1300 to approximately $6000 depending upon the same factors, which when adjusted for inflation works out to be about $11,000 to about $50,000
So, regardless of what this chart says, Americans are making less money and stuff we need costs significantly more
Here’s an article about the cost of housing specifically https://www.thezebra.com/resources/home/housing-trends-visualized/
I like this sub and I find a lot of the information posted here to be very interesting and very heartening however, lately I have noticed that most of the financial stuff posted here seems to be pure propaganda
Always that one guy, why is it so hard for redditors to understand what inflation adjustment is. This data is adjusted for increases in assets! “Constant 2022 dollars means it’s relative to cost of living! Read the graph!
You’re squarely in upper middle class.
You theoretically have no worry about bills, own a newish car, can travel 1-3 times a year, eat out frequently, can buy a house anywhere outside of the most expensive cities in the US (can rent anywhere), contribute to retirement accounts, and have non-free hobbies.
I would 100% agree with you that 200K is upper middle class for a single person. However, I broke down the math for a couple with 2 kids and, as you can see, it is barely middle class. You can barely afford the average home, average meals, average college for the kiddos, average savings for retirement, ect. In fact, my math did not even include many things that I would consider middle class, such as: a modest vacation or two, some fun money, ect. I don’t even think included car payments. Lol. Give the math in the other comment a look and tell me where I went wrong and how I am actually not middle class. If there is a way I can be upper middle class, I am all ears. Lol
At 200k you make between 120k in California and 140k in Texas take home (state taxes and shit). Assuming you’re the sole provider, and your spouse somehow doesn’t provide childcare and doesn’t bring in money.
The average house at the current mortgage rate is ~26000 a year. 36k if you’re at 3k due to renting or a medium sized city owning. Food at 9000 in groceries and 3000 eating out. Utilities 5k. Generous 12k car payment. 5k car insurance. 2500 on gas. 8.5k health insurance. 5k on hobbies. 10k on vacations. 18k child care costs. Max out 401k of 23k, and 10k into a 529.
You scrape by at 138k in most states. Having everything anyone wants, pissing away money on a car, vacations, eating out and hobbies. All while guaranteeing a comfy retirement. Not the most wholistic accounting, but being spending conscious widens your room by a ton.
Current average mortgage is kind of useless because the majority of homeowners bought at either much lower interest rates, much lower prices, or both. I also do not think that includes: taxes, insurance, HOA, maintenance, ect.
For a family of 4 with two working adults, you need two vehicles. $1000 per month is still fair for 2 vehicles though. $500 per month per vehicle is fine.
You budgeted only $1000 per month for a family of four? And that includes eating out 1-2 times per week at a moderately priced restaurant like a middle class person? That is $8 per person per day. I am sorry, but that is not reasonable. Even shopping a discount grocery stores.
No dental insurance? No clothes for the adults or kids? No medical expenses besides insurance premiums? Even with insurance, healthcare aint cheap!
You budgeted $26 per week per working adult, which I don’t think is reasonable assuming a modest 30 minute commute to work and 30 minutes back plus running errands, seeing friends and family, ect. Half a tank per person per week for all that?
No car maintenance what so ever? No home maintenance whatsoever?
For health insurance: $800 per month for 2 adults ($400 each) and $600 per month for 2 kids ($300 each). So, just over $13K for insurance, not $8K.
$15K on vacations and hobies is reasonable.
Only $18K on the kids per year for 2 children? Day care alone is more than that. $800 per month per kid = 19,200 dollars. What about: braces, their first cars, clothes/diapers, college fund, ect? Do they get NOTHING for christmas? Lol
Your car insurance budget is reasonable.
The amount needed for retirement is reasonable.
Even if we assume all of your budgeting is spot on and ignore all of the costs that you did not consider, you said yourself that I would “scrape by” in most states while having a typical house, each adult having a typical car, taking 2 typical vacations per year, eating a typical diet, and not splurging on really thing extravagant at all.
That sounds pretty middle class to me.
When I think of upper middle class, I think of each adult having a new german car (not a lambo or anything), having a very nice home (but not a mansion, maybe a $750K-$800K home), sending the kids to a private school (albeit, a reasonably priced one, not top notch), vacationing 3-4 times per year at slightly nicer locations than average, maybe buying some decent jewelry from time to time (but not $1M diamonds or anything), and having a retirement that allows you to do more than be “comfy” (like doing some extra traveling to see the world before death and stuff).
I just don’t see $200K being upper middle class. Solid middle class lifestyle. Assuming a family of 4 that is. Single? Absolutely upper middle class.
Someone posted earlier about the difference between optimism and being delusional is numbers. I believe that to be correct. People who ignore numbers are delusional for sure.
Nah, maybe ever so slightly above average cost of living here. I broke down the math in a deep dive with lots of details in other comments if you are interested to see how it breaks down 👍🏼
I make less than 100k in one of the wealthiest parts of the country, a suburb of DC, and feel perfectly fine with money to even go on vacation. I feel like people don’t realize how much “lifestyle creep” is a real thing. Most people even in LA don’t even make 6 figures and yet they manage
I didn’t say I am uncomfortable or stressed out about $. I am comfy with money, but I don’t feel upper class.
Let’s do some quick maths to see if $200K is upper class. Let’s see how much $ is left over after doing typical middle class stuff to see if $200K would cover upper class activities or not.
Take home pay is $116K assuming you live in a place with 7% state tax (a lot higher in many states). So, about $9600 per month.
Average home price is around $400K, which is about $3K in mortgage, taxes, insurance, ect per month.
That leaves us with $6600 per month.
Let’s assume we are a married family with two kids. Both parents work to make the $200K.
It costs about $16K per year to raise a child, $32K for both. So, $2600 per month for the kiddos.
That leaves us with $4K per month.
Let’s assume each parent wants to save $1K per month for retirement.
Now we have $2K per month.
Food for a family of four that goes out to eat once or twice a week at a reasonably priced restaurant costs about $500 per week (probably more honestly).
BOOM! Zero remaining dollars per month. $200K per year gone.
We have not even discussed vacays, fun money, unexpected expenses such as replacing an AC unit.
So ya, $200K per year is 100% not upper class based on simple math. It is honestly barely middle class for a family. If you are single, I am sure it is different.
On an optimistic note, I can reasonably expect our income to double next year, so maybe then I will be upper class. Lol.
In typical reddit fashion, I am downvoted when presenting a logical math based explanation for my reasoning without explanation. Lol. Would anyone care to explain how $200K is upper class based on math for a family of 4? I would love to see where the extra funds come from for upper class activities. Maybe I can implement it.
I'm not going to do a bunch of tax math so I'll take your word on the take home income although when I look this up it seems well below normal. Even in NYS you take home 135k on a 200k salary so I'm not sure what you're talking about here. 135-145k average takehome on 200k is what I'm finding.
Your numbers throughout seem to all be well above average and worst case scenario. The average us mortgage payment is 2390, you're paying 3000. Idk what you're calculating for childcare but spending 2600 a month on two kids is well above average. Your retirement amounts are also hilarious. Idk anyone that's putting away 2k a month in retirement realistically. If you can, you're in an amazing financial position. $2000 a month in going out to eat is also hilariously bad money management if you're claiming to be running out of money
No offense but your problem isn't your income it's your money management and decision making skills
Ok. Let me address each of those one by one to demonstrate that my numbers not on the high end, but are actually either average or low end (as well as not even considering some necessary items)
1. Take home pay. This is extremely simple elementary school math. 32% federal tax. Since you brought up new york, we will use their state income tax, which is 6% (slightly more, but we will use 6% for easy math). That is a total of 38% in income tax. Which comes out to $124K in take home pay. So, ya, almost half to big brother.
2. The average US mortgage payment includes boomers that bought their home in 1974 for 46 raspberries. Hell, even people who bought 5 years ago are paying drastically less than recent buyers. So, average mortgage is honestly kind of useless. A better example is looking at what it cost to buy an average house TODAY. Which is $3K per month including taxes and insurance and excluding maintenance and HOA fees (just look up the average cost of a house ($400K+), interest rates for an FHA mortgage (7%), and average cost of taxes, insurance, ect).
3. Next up is child care. You think $1300 per month per kid is too much? Day care alone costs $900 per month per child. That leaves $400 per month for EVERYTHING else: sports, college savings, healthcare, dental, buying their first car, grooming, ect (food is another category, so we won’t count that). So ya, $1300 per month is definitely on the low end of cost per child per month (remember, the example is 2 kids). We aren’t even talking about anything extra like private school or anything. Just basic middle class stuff like braces and daycare. Lol.
4. You said $2000 per month for a family of four to earn is “hilariously bad money management “? That is less than $17 per day per person. In what world is spending $17 per day on food per person hilariously bad money management? For it to be hilariously bad, I would assume you mean it should be half as much or less? Aside from eating ramen noodles and baloney sandwiches for breakfast lunch and dinner, how are you spending like $8 per day on food? How is $17 per day per person hilariously bad? I am genuinely confused. I shop at discount grocery stores and $17 per day per person is still tough. Please explain. I am all ears and curious.
5. Let’s talk retirement savings. Let’s say you only need $60K a year to retire today (you probably need more), lets assume inflation is 2.5% per year (it will probably be more), you have 30 years to invest (you are 35 and want to retire at 65), and you need to survive 30 years after retirement. That means you need to save at least $1280.14 per month to retire. You said $1000 per month per person is “hilarious” ($2000 total, $1000 per income earner). However, it is mathematically not even enough (even by conservative estimates). Feel free to point out anywhere that my math is incorrect. I double checked.
6. There are many things I did not even consider. 2 car payments, two car insurances, 4 health insurances, vacations, clothes, fun money, ect. Even without considering ANY of those things, you are still living paycheck to paycheck as a family of 4 making $200K. I know $200K sounds like a ton. I thought I would be BALLING making $200K, but that just isn’t the case unfortunately. I do think I can double our income though, so that is optimistic.
I am not offended by you saying my money management is bad. I would love to improve it, so if you have any specific recommendations, I would love to hear them. Just make sure to be specific and show the math behind it if you are going to say my money management is “hilariously bad”.
I'm not going to counter every point with you but I'll take your word for most of it. The reality is that you make more than 88% of other US households and are paycheck to paycheck. That imo indicates poor money management. My wife and I have a household income of around 125k in a MCOL(around 7% cheaper than the national average) area and I'm involved in quite a bit financially, and have a couple thousand going outbound to a close family member these past two years. Plenty of excess money to go on vacation, have decently costly hobbies.
However, we only do that because we only go to eat once a month, buy used cars, are not smokers or huge drinkers, don't gamble, and just generally don't get involved with a ton of long term money sinks. That allows a lot of wiggle room. We do not have children but we are making 70k a year less than you are. Say I didn't have anyone to watch the kids so I had to pay full time daycare plus other child expenses. Let's use your $1300 per child figure. That's around 30k for the year for both children while they need daycare for a few years. So even adjusted for your children you're still making around 40k more gross. My point is that if you're making 200k with a family of four in an average cost of living area you should have plenty of excess cash if you've made good financial choices along the way, again, imo.
Ya, I don’t expect you to go through every point like my financial advisor or something lol.
However, since you said my money management was “hilariously bad” I guess I did expect some specific example of how it is bad. I mean, if it is that bad, it should be glaringly obvious and easy to point out right?
I know you mentioned several things, but I specifically broke down the math demonstrating how I am being frugal on those things and not over spending.
It seems like when we get down to nitty gritty, all the people who say $100K (much less $200K) is above middle class can not demonstrate any math or logic behind why that is the case. If they do, they are always either drastically under estimating real costs of categories or leaving out necessities (or both).
I am numbers guy. The numbers just don’t add up regarding $100K being above middle class (the numbers don’t add up for $200K either). Saying things like “that is more than most people” or “my household income is less and I live a middle class lifestyle” with no math at all, demonstrably incorrect math, or budgets that I proved were not reasonable is simply not sufficient to say things like my money management is “hilariously bad”. If it actually is bad, I would love to know exactly how it is bad so I can change my ways (I don’t wanna be the guy who is bad with money). Otherwise, it is not really helpful in any way.
Well in all fairness you being a numbers guy means you know why I can't really give any exact thoughts on specifics, it's because I don't have any. I would literally need your paystubs and all bank/cash transactions to get a real idea of what's going on. We've been talking about broad rounded numbers here. I think the reality is that if someone in the top 12% of income is not able to save any money they are over leveraged with expenses which could mean a ton of different things. Some people buy way too expensive of a house, some people have a crazy amount of mandatory debt payments, some people gamble, some people just waste money on all kinds of random shit every time they have any to spare. I simply can't guess what is going on with yours lol.
Maybe your wife has a spending habit you're not aware of or something lol. Also earlier when I said hilariously bad I did think you said that you spent $500 a week going out to eat. When I re-read it, it seems like you were talking about overall food expenditure which is still a bit high but not anywhere near as insane.
I’m in Canada but I have a hard time believing 100k is top tier in either country. In most big cities it’s a pittance, but even outside the big cities you are very middle class here with well over a $100K salary. The dollars may have been adjusted for inflation, but what counts as high income hasn’t been.
Idk why we are getting downvoted for stating the obvious? Lol. I even thorough broke down the math for demonstration and even though the demonstration was for $200K, an average middle class lifestyle, and did not include any luxuries whatsoever, it still came out to middle class. I have asked for a demonstration of why I am wrong, and all I get is downvotes with no explanation. Typical reddit. Lol.
PSA: “Constant 2022 dollars” means it is **ADJUSTED FOR INFLATION**
It's hilarious you have to do this but even when it says "in real terms" or "2022 constant dollars" someone will pop in and say "yeah well this isn't inflation adjusted"
tHE DoLaRS aRE adjUSTed oKay bUT ARe The PeRCEnTaGeS?
Every. Time.
Redditors gonna redditor
https://www.reddit.com/r/OptimistsUnite/s/LhTLZPSb0q
Yeah but it's not adjusted for *actual socioeconomic class*, e.g. high-income is much higher than $100K. The divisions used in this chart are designed to make it appear as if people are doing better than they actually are. If you use the official Census Bureau numbers for class divisions, you see the exact *opposite* trend. TL;DR: This chart is lying.
Why does that matter though? The 100k threshold is used consistently from 1960-present in the chart, I’m sure if you use any other threshold it’ll show a similar story - but the levels will be different.
Costs of goods don't uniformly inflate with the dollar and the cut off to have a comfortable life is not 1:1 with CPI. The person you are replying to is arguing that while people have more inflation adjusted money on average in the upper bucket the impact has been felt differently on the actual lives of people and the percent in the upper class is not being reflected well here.
I'm sure it was very reassuring to Americans in 2009 that there were twice as many households making 100k as there were in 1970. What a booming economy!
My issue is that a household in 1967 doesn't look the same as in 2022. Less people live in a house, there are likely less children, etc.
That amplifies the effect. There are more high income households with less people in them making them even more relatively richer.
The originally posted chart ignores purchasing power, which is why $100k doesn't feel like it's worth $100k anymore. https://www.bls.gov/cpi/factsheets/purchasing-power-constant-dollars.htm These charts show purchasing power, which is a much better comparison tool for quality of life. The 2010 to 2021 charts show that, even as incomes have increased, their equivalent ability to purchase goods has declined.
“Constant 2022 dollars” means it’s adjusted the decline in purchasing power of the dollar…
No, it doesn't. Inflation and purchasing power are two similar, but different things. Think about something like the Alaska purchase. $7.2 million in 1867 adjusted in inflation to an "equivalent" to $129 million in 2023. Even without knowledge of the gold or oil and assuming it's still mostly undeveloped, would $129 million be able to buy Alaska today? The answer is that you would not, of course, because the purchasing power equivalent of $7.2 million in 1867 is now equal to about $2.5 BILLION dollars for something this size. https://www.measuringworth.com/dollarvaluetoday/?amount=14500176&from=1867
Pick a better example. There is no way for me to guess at the value of Alaska absent what we know now about Alaska, our transportation capabilities, the infrastructure adds since then, etc. If it’s so prevalent, I don’t know why you’d have to use this example. From my vantage point, almost everything has gotten ridiculously cheaper. Even new cars, which you’d see a chart showing an above-inflation increase in price, actually got a lot cheaper if you compared the *same car features* over that time period. Most of your crowd conflates standard of living increases, which are supposed to cost more, with inflation / loss of purchasing power.
It would not because the **real** value of Alaska is greater, not just because the purchasing power of the dollar is lower.
The measure of inflation used would matter A LOT though. The CPI is what the government uses for cost of living adjustments for Social Security as well as other government and private benefits that go up if CPI increases, so there's an incentive to keep it as low as possible. Also this chart is saying that two 50k jobs, ($25/hr) is "high income." \*bane voice\* "Do you feel high income?"
Good idea. Instead of a widely used and accepted index, we'll go with feelings instead 👍
Two $25/hr incomes are high income? Do the math with your "feelings."
I would agree that's not a high income but that doesn't have anything to do with inflation its just a poor definition of "high income"
I think the trouble is that many costs like housing and education have risen waaay more than official inflation.
The inflation index is a weighted index, and both those categories carry a greater weight than others.
How much that weighting is is very relative. Reading this at face value would suggest that family homes are affordable today to a larger proportion of people than they were in the 1970's - this simply isn't the case.
The weighting’s for CPI are publicly available, I believe 30% goes towards housing. Obviously, YMMV - but this is for society as a whole. > suggest that homes are affordable today Not necessarily, just that *overall* everything is more affordable relative to income. So housing may have increased, but food - clothes - tech etc have declined, more than countering any rise in housing.
Yes, because I can live inside a cheap pair of jeans and need to buy 10 microwaves (that somehow last way less) instead of a house, car, and food. Median household income in 1967 was 7200. Median house price was 22700. The median household income today is 75k and the median house price is 420k. So the home price is 5.6 times the salary now, and was about 3.1 back in 1967. That is a huge difference. A new car cost around 3,200 then, it's like 45k today. That is 44% of your salary vs 60% today. These are differences on the biggest purchases most people make in their lives. But yes, outsourcing, sweatshop labor and some technological innovation did make clothes and basic electronics cheaper than they were before.
Way to miss the point entirely. Let’s assume housing costs have shot up. That doesn’t change the fact that **food is less expensive**, that your software subscriptions and tech purchases are less expensive, among other things. Overall, the declines in other categories reduce the impact of higher housing costs on budgets.
But they don't, that's the point. I need extra several 100k for a house and you're telling me I should be happy because I can buy some headphones for $20 instead of $30? Again, the biggest purchases, like real estate or automobiles are WAY more expensive than whatever I save on some food, clothes, and electronics that became relatively cheaper. And these things became cheaper because of technology and scales of magnitude (and of course cheap foreign labor). They become cheaper everywhere from Afghanistan and Uganda to London and San Francisco. You don't get economy brownie points because humanity overall is technologically in a better place. Hilarious of you to mention software subscriptions, crazy how those prices are way lower than all those 1967 software costs, right?
I really don’t understand your argument. The data is clear that other categories (think food, again) have deflated so much so that it **compensates** for the rise in home prices. This is despite the fact that housing is weighed 30% (the largest by far) in CPI. An individual’s budget is not 100% housing, I don’t see why this is so hard to understand.
It doesn't compensate. The numbers simply dont add up. You can draw all kinds of graphs with data, displaying data to fit a narrative is a whole artform. People who chose the weights and cutoffs they chose them for a reason. It sounds like you have a narrative and found a graph that fits that narrative. The prices I wrote are real, you can look them up. How you think cheaper electronics are supposed to compensate for a house that costs magnitudes higher than it has before is beyond me. Nobody in Syria had cell phones in 1980. Everyone has one in 2024. Does that mean Syria (or pick any other failed state) economically progressed over this time? Of course not, it's just a different technological age. I'm sure the first light bulbs were very expensive. The fact that they are now cheaper than candles doesn't mean the US is improving economically.
the point is that it doesn't matter how many pizza rolls someone can buy if they can't afford to pay rent.
This. 35k in 2022 is not middle class in most metros the same way it may have been in the 60s. In reality the upper and lower tiers have both grown and the middle has shrunk. Which hasn't helped the whole divided nation problem.
Which inflation? Inflation of housing? food? medical care? What about income per person per job? House hold income could mean several people working several jobs out of desperation, or people taking in room mates because wages are low. It is not a good depiction of actual wages that people are earning. This is cherry picking to get the data you want.
All of it. All of those categories are weighted for their importance (housing/food/care being the largest weights). Just as a FYI, the household size has actually *shrunk,* and since 1980 the dual earner percentage has been stable.
This is great. Shows the ‘death’ of the middle class is because everyone is becoming “high-income.” Remind me - is rent/mortgage part of CPI?
Yes, called shelter
Huh so if I have a second home with mortgage that is being included? Thought there were exclusions for buying
If you are renting that second place out. Owner occupied places are accounted for with owners equivalent rent which is what it would cost to rent the place if you were renting. This is because cpi cares about the cost of shelter and not the investment value of your home.
Your personal actions do not factor into CPI, so no.
Sorta. Under Regan mortgage and interest rates were removed.and replaced with rental stuff. This is one of the reasons Trump.says inflation under Biden was 50% because he included interest rates and home price increases. So as a typical Republican remove numbers that make you look bad but bring them back to make someone else look bad. Keep it classy.
And yet somehow people think we are living in unprecedented times of suffering. People are so limited in their POV.
People are animals
100k is middle class
You can choose any income threshold you want and the trend will look the same.
As a percent of the overall money, does it show that the wealthy just control more money? It doesn't mean the number of wealthy households is growing that much.
It doesn’t show that. I would search for wealth based info if that’s what you are looking for.
This chart shows annual income, not net worth. This makes it look like things are OK, but the concentration of wealth is the problem. The concentration of wealth shows a clear elimination of the middle class.
That’s exactly what it’s showing. People here think it’s the total number of households that make each tier of income
It’s percent share of households making each tier.
That’s not what the title says.
Yes it is. I don’t know how you could interpret it any other way.
That's interesting. I always assumed the economy is doing terrible. It's a 'vibes based' economy.
This is exacerbating the housing shortage because there are so many more cash buyers. Not saying it’s bad to have more millionaires but combined with a massive housing shortage, the class division based on property ownership is becoming much more pronounced and painful for the non-owning class. The solution, of course, is to build more housing where people want and need it.
Something like 1 in 10 Americans is a millionaire now…
1 in 8 now.
Millionaire in net worth due to inflated housing values. Take away home equity and what’s the percentage? Real question.
Why take it away? You can tap the equity, and you can sell it any time you want and get $1M cash if you’d like.
Those aren't costless though- the housing value is real wealth but also a symptom of an inefficient housing market that is becoming the primary expense for most Americans It's relevant but cloaks that especially some older people may have to sell their house to cover unexpected expenses. Which may be relevant since what a millionaire means has changed as the value of money has changed
Sure, at 9%. That’s expensive to use your “own money”. Also, are you going to live in a tent?
You can rent like the people who have a million dollars in stock and no house do. Does a million dollars in stock not count if you don’t own a house since where am I supposed to live? A tent?
Yes, because your $9000 - $10,000(on your $1M rental) covering that owner’s payment, property taxes and Insurance will out-pace your $1M investment. Unless you live in a tent.
And then get a Time Machine and buy a mansion with that million dollars! Now if you don’t have a Time Machine you either downsize or just buy a similar home.
Cars are only useful because they have wheels. Take away the wheels and what's left?
Salvage value? A coral ref? Micro-housing? Art installation? Non-sequitur?
Yeah are you going to take away all the people's stock that qualify them to be billionaires?
Did you know you can sell stock at any time and only pay tax on the gains? It’s like “liquid” or something, kinda similar to money, and yet very dissimilar to a residence. You may have “equity” but it’s tied up and costly to extract. If your credit score is bad, it’s impossible.
Your stock in your business can be costly to extract too, friend. And that's only for public companies which is about 0.0000001% of firms, otherwise making it "liquid" is even harder than your "equity" (I don't know why you started using random quotes but now I am)
You seem to be missing the point. This post is saying how great it is that people are millionaires. But it’s largely on paper (equity) and not in a “liquid form”. It’s not the same as “stocks” in the “markets”.
Right. What’s your point?
I would hope so If you make 100k a year, and work for 40 years, that's $4 million
Well there are taxes and some cost of living. So you are probably only saving 10-40k a year. Then you are definitely putting that money in an investment account so your money should be growing exponentially
… if you have no expenses
Nobody is talking about the asset boom of the last decade, which includes adding stocks onto the property ownership you mentioned (since those have skyrocketed too). But you're absolutely right, that's the clear division right now. It's not about income as much, but whether you owned appreciating assets before 2020 (2018ish really). Everybody who did has seen their net worth skyrocket, but their peers without homes or investments have remained flat.
The solution on housing supply is land value tax and a reformed planning and zoning system.
Yes. Those things are important for allowing and encouraging the constriction of housing where people want and need it.
Home ownership rate is near record highs, and that’s despite the average house hold size declining (I.e., it’s harder to buy a house with one income than two, but there’s way more one person households nowadays).
Being an optimist, which I am, does not mean cherry picking facts to ignore real problems.
There’ll always be shortcomings, correct. We can work to remedy and have hope of remedying them though. Optimism baby
Oh I’m very vocal about the needed changes that will eventually solve the housing shortage. I’m pretty optimistic those things will happen, though it’s frustrating that NIMBY arguments are still so popular. Change never comes soon enough, but it will come.
That or make it illegal for hedge funds to buy residential property, and force them to give back the properties that currently have.
That won’t actually move the needle on housing prices. Having adequate housing supply makes housing a less attractive investment. In general, stifling demand is counter productive when the problem is lack of supply. Prices go up as a natural way of stifling demand. Blaming hedge funds, billionaires, or “greedy developers” are just excuses to perpetuate NIMBYism, which is why we’re in this mess.
There wouldn't be a lack of supply if hedge funds and landlords weren't allowed to buy all the homes. Like, yes, build more houses, but when blackrock buys all the new ones, and nobody can afford $2500 a month for rent, plus utilities, we're just gonna be right back where we started.
Facts do not support your assertion. The % of homes owned by corporate or foreign investors is very small, therefore banning those purchases wouldn’t really change much. Sadly, you have bought into a NIMBY left narrative that sounds nice and convenient but is in fact, unfortunately, bullshit.
How do you increase supply? There is no money to be made in “affordable / workforce housing”. Land and development costs are out of control. The national builders create a monopoly on land and build according to their investors’ interests alone. The government has to get involved, but that’s leftist, socialist, communist, or whatever working for the collective benefit is these days.
I'm a nimby (whatever that is) because I understand how buying and selling works? When homes are built, they need to be bought. In a system of buying and selling, whoever has the most money, gets to buy the product. And trust fund baby landlords and hedge fund managers have more money than a would be first time home buyer. So, a new house gets built, and goes on the market. A person who plans to actually *live* in the house, could afford to offer, say, $30,000. A landlord, who already has a shitload of money (usually from inheritance), can afford to offer $300,000, so *they* get the house. From there, they want to recoup their investment and make a profit. For a $300,000 house, the average mortgage would be roughly $1,800, and on top of recouping the cost, the landlord wants to make a profit, so they offer a renting price, double the mortgage, at $3,600. The first time buyer had no other options, because this same landlord already owns the last three homes that were on the market, and there are no more in the area because they were already bought years ago by people who are living in them and don't want to sell. So, they now sink all the money they had saved to buy a home into rent, are never able to afford a home, and people like you cream themselves over the idea of rich guys Nickle and diming the little man while we (and you) get to own nothing and be happy.
And also to slow down our population growth.
It’s already slowed down and continues to do so. Human population peak will within 50 years and then start falling precipitously.
This doesn't fit the narrative the media likes to portray.
I wonder what part of this effect is due to women’s increasing participation in the workforce, bringing up the percentage of dual income households.
Counterbalancing that, though, households are becoming smaller. More single people and fewer kids. And still, household incomes are going up.
Good point! I wonder what is happening to real cost per kid though. If that is going up significantly, it could counterbalance the effect of having fewer kids.
That should be accounted for in the inflation adjustment, though, right? Maybe the cost of kids are going up faster, but that would be balanced by other things becoming cheaper. I would imagine childcare is becoming more expensive, but toys are becoming cheaper (and food, aside from the past few years).
It is possible that the cost of having kids is increasing significantly more than CPI. That could mean the cost of having a family is the same or more than 50 years ago, but living without kids is significantly better economically. In fact, couples are spending more per kid compared to 1960: $259k v $300k inflation adjusted. https://usafacts.org/articles/how-much-does-it-cost-to-raise-a-child/#:~:text=In%201960%20(when%20this%20data,expenditures%20had%20increased%20to%20%24300%2C322. However, I don’t know how much of that is from costs of raising a child increasing and how much is from parents just spending more per kid because they are having fewer kids.
I would guess that the cost of kids is increasing more than CPI, but that means other things are increasing less.
I think fewer kids would actually help this. Easier to work long hours and get promotions when you don’t have kids events to go to, and relocation for a job is simpler when you don’t have to move the kids. Not sure on any stats about people being single longer/more frequently, because using marriage rates hides people cohabitating long term, although technically I guess they would still be separate “households” for tax purposes. I think census doesn’t care about that though, they look at income of everyone in the physical home.
Here’s an article addressing that. The tldr is: some but not all. https://economistwritingeveryday.com/2022/06/22/us-households-have-a-lot-more-income-than-1967-and-its-probably-not-just-because-of-the-rise-of-dual-income-households/
Excellent article! Thanks for sharing.
Kind of outdated since the Great Resignation was largely women leaving the workforce, largely due to childcare costs outstripping pay
Probably also add in the decline in birth rates, so people are prioritizing family less over career growth. Easier to work long hours or transfer anywhere in the country if you don’t have kids to relocate.
It's a lot easier to have two $50,000 earners than one $100,000 earner, but it's also a lot more expensive and more work, with daycare and whatnot.
Love to see it
The issue is how many income earners are there per household to make this happen? You are richer with a 90k HHI with one worker than 110k with two many times.
Household size has been shrinking in America in recent decades. Pairing that with increasing household income means that individuals are increasingly wealthier. https://www2.census.gov/programs-surveys/demo/tables/families/time-series/households/hh4.xls sorry for non-graph data source but see the rightmost column
The information that stands out to me the most on this graph is the rate of change. 13 to 37. 24 percentage points over that period of time. 22 to 13. -9 percentage points. What this says is that the growth rate of the upper class is more than twice as fast as the rate at which we are decreasing poverty. I don't think this is an optimistic graph. Lots of conclusions can be drawn so it's probably a neutral graph. But what I am seeing is that we are changing the class makeup of society and driving a wider gap between the poor and wealthy. Despite what some people say about how this is amazing and the opposite of what they hear in the media... Imma call those people out as people who can't read data. It tells exactly that story.
I'm with you here. Wealth inequality is terrible, and this graph is showing just that. In fact, imo, having more upperclass citizens than lower class citizens is a huge problem. It's the upper class (not the 1%) that dictate prices for everyone. And when you get a big upper class, more and more can compete and raise the prices. This is a huge reason why house prices are terrible. Yes, a lack of building is the main issue, but you also have the fact that you have a huge percentage of people who can still buy... This is why house prices keep going up. A shrinking middle class is never good.
I believe you meant to say 32 to 23, not 22 to 13. You’re comparing the changes as if they’re absolute but I believe they should be compared as relative numbers. Meaning looking at %X differences instead of +/- X differences. If both 100k and 35k lines decrease by say 20% over that graph, the 100k line will have gone down more in absolute terms but that doesn’t necessarily mean relative inequality increased. Idk my math tools aren’t on my right now
Sure, I appreciate you challenging me to look at this again. Nah I think what you said is right, but we are both looking at percentages. I was pointing out the rates of change over time Edit: oh and yes btw you caught my mistake I meant to describe the start and endpoints of the low income line
Yep the middle class is primarily shrinking because so many people are leaving the middle class for the upper middle class. Leftwing Redditors constantly obfuscate this point, and pretend it’s because they are becoming poorer.
Whining about the current economy is hardly left-leaning. If anything it's center, or very slightly right-leaning. Blue collar and rural workers *will not* stop blaming "the economy" and "coastal elites" for their problems. Plus the entire Great Reset movement is entirely far-right
Income doesn't equate to wealth. It would be nice to see a chart (inflation adjusted) on day to day large item expenses like mortgage payments, heath care, other insurance, child care, education, utilities, etc...
1 in 8 Americans is a millionaire. And there’s a major age effect too - when you’re older and have had decades to build wealth, the numbers are even better. Its not particularly hard to build wealth.
According to [statista](https://www.statista.com/chart/30671/number-of-millionaires-and-share-of-the-population/), the number of millionaires in the US went from **7.64mil to 22.71mil (!)** solely from 2020 to 2022... just two years. That is due to inflation of assets and not due to income increases. It is hard to build wealth if one doesn't have enough income to cover expenses.
Well, a whole bunch of people seem to be able to save enough income to have enough assets to invest.
The jump in millionaires can be attributed to the jump in home prices over the past 5 years. It's not due to people having enough assets to invest. It's due to the people that already invested in a home decades ago. I got ya though. I won't bother trying to make the same point over and over again. It's not worth the time.
The problem for them is their politics is impossible if capitalism is making life better for people so broadly (of course it is, it always has—with adjustments to be fair).
The chart is lying. For example, the upper class doesn't start at $100K. Whoever made this chart completely changed the income levels for socioeconomic classes to make it appear as if everyone's getting richer. If you use the official Census Bureau numbers, you see the *opposite* trend.
Hmm. This is... very different than what I'm used to hearing. Big if true! Anyone have a link to other format(s) of these data?
Lol
BUT THE SHRINKING MIDDLE CLASS. Shrinking because Americans are getting rich
I’m curious how this balances with size of home, and children staying in their parents house longer. I’m pretty sure census data looks at all income in the physical house, not the separate tax filers, so an adult child living at home could boost household income and hide problems. Overall really interesting and good content, but I think it oversimplifies things and needs a bit more context to really understand what it tells you. That’s really the problem with and simplified data plot though.
Multi generational households were fairly common back in the day, so that would’ve been counted back then too.
True. I wonder if this could somehow be controlled for with per-capita or per-adult numbers.
Hasn't the median age gotten older as well? People generally save for retirement so unless this is controlled for age it will be misleading.
Really not sure you can pitch this as positive to nearly this degree at all. Yo do so you have to implicitly make the claim that wealth classes like this are dollar denominated like this which is pretty absurd on its face. What it takes to live a middle class life has grown almost as much as this growth and inflation adjustment will not fix that when it only looks at income like this. Much more meaningful to the relative abundance of upper vs middle classes is the difference in the income of fixed percentile brackets. If that gap is widening the middle class is not growing, society is just becoming more stratified. If the money required to attain an upper class life is growing faster than the income then you are still behind no matter how much lipstick you try to slap on the pig.
While attempting to fact-check this information, I noticed the chart comes from the American Enterprise institute, a libertarian think tank. I wasn't able to actually fact check the numbers, but it's obvious that this image has had the AEI logo removed. The same exact chart from a few years earlier, can be seen here (with the AEI logo intact): https://www.aei.org/carpe-diem/three-charts-based-on-todays-census-report-show-that-the-us-middle-class-is-shrinking-because-theyre-moving-up/
What makes this feel hard to believe for many people is that more is expected from our lives now than in the past. People used to live in small rural towns, cook almost all their meals, not get medical care for most ailments (ailments not even discovered yet), didn’t go to college (most jobs didn’t used to require it), didn’t have streaming subscriptions, and much more. Now we’re expected to live in cities, go to college for a mediocre job, eat out, and keep up on movies/games/music. If you move to a rural town, have cheap ways to entertain yourself like fishing, and cook your meals, you’ll feel richer. But there’s less jobs in rural towns and who really wants to live there?
I have lived in a remote, rural, low income areas for about 30 years. Jobs are tougher and it can be a challenge, but I work as a biologist on government contracts. There’s no way I could afford my standard of living in a bigger city market, even though my salary is above average. Many of the things people consider necessities are really just luxuries. Streaming subscriptions, games, music, those are all things I refuse to pay for and get secondhand or free. There’s less sense of consumerism and keeping up with the Jones’s here. My house is literally half the cost compared to the nearest city. A popular overpriced tourist town is 2.5 hours away, this is the less popular unnoticed town with the same access to mountains between us. Entertainment - nearby National Park 45 minutes away, world class fly fishing, backpacking, skiing, small town festivals, forest wilderness and desert depending on the direction I go. Flights are more expensive and I deal with more flight changes with a longer drive tacked on. It takes some adjustment, your network is smaller, but many working professionals here swear they will never go back to a city.
In 1967, the mean number of persons contributing to a household income was probably significantly lower than in 2022.
Yes, and the median home size, median number of cars owned, number of vacations taken (especially due to the cost of air travel) was less back then. We live in larger spaces, own more cars, take more vacations and have two people in the house working… lifestyle inflation has forced everyone into the boat that they “have to” have two income households…however, the level of precarity was much less… it could be one father/husband work for $50k (in real dollars) worked with little chance of being unemployed, now both parents have to work because they could lose their jobs with much greater frequency.
I’d like to see it by generation. Also let’s remember that this upper class is not the real upper class. There’s the “upper class” and then there’s billionaires. The upper class is the new middle class.
Im just not sure how helpful that would be in terms of seeing the circumstances of each generation - obviously your average Gen Zer (who is in college or just entering the workforce) is not going to have the income of a boomer who’s risen up the career ladder over the course of 50 years of employment.
Yeah but they often do it “as of a certain year of life” as the x axis or something. Might be a complicated plot
Biggest problem with this is that $100,000 is hardly “high income” anymore $100,000 household income today buys you about the same lifestyle as $50-$60,000 household income, did just 10 years ago
It’s adjusted for inflation, meaning that this is not directly comparing the number of people making $100,000 in 1990 or 1975 to today - it’s comparing those making the *equivalent* of $100,000 adjusted for inflation. This isn’t a problem with the graph, it’s a problem with your ability to understand it
I understand what it reports to be and I’m telling you that the inflation adjustment used isn’t accurate Aside from the fact that the inflation index is broken anyway. Some products follow the rate of inflation, but other products such as housing have outstripped inflation several by times and school has outstripped inflation by a full order of magnitude
You're right, the originally posted chart ignores purchasing power, which is why $100k doesn't feel like it's worth $100k anymore. https://www.bls.gov/cpi/factsheets/purchasing-power-constant-dollars.htm These charts show purchasing power, which is a much better comparison tool for quality of life.
This is probably why things are more expensive. People have more money
Correct!!
The middle class is shrinking!!!! Yes. So is the lower class.
Thankfully US average rent is $9,600/yr. Oh no wait it's $20400/yr. Raising a single child in the US on average costs $15,000/yr. Average household cost of food $9,300/yr. Total average annual expenditure in US household, based solely on rent, childrearing, and food and nothing else: $44,700 You can add whatever you want to that number, but the debt defaults and delinquencies don't lie. A ton of Americans are worse off, while a smaller portion are far better off. This is not an improvement. It's a recipe for disaster.
Couple things about this 1.) many more households are dual income which might sound fine, but it means the household is collectively working double the hours. 2.) while it might be inflation adjusted. There are many costs of living that have outpaced inflation.
$100k as the cutoff for middle to high seems off to me.
We are a very rich country.
The real issue is purchasing power. What does that money buy you then vs. what it does now. And what you get for free vs. what you do now.
This graph shows the "percent shares of US housholds by total money income" in fixed dollars. The percent for 100k or above increased from 13 to 37 percent. Is this the percent of households that earn this amount of 2022 dollars in that year, or is this the percentage of total income that falls within each category? Those are two VERY different measures with very different narratives.
but not purchasing power adjusted
Looks like more people have more money. The size of the pie has been increasing.
Middle class definitely shrank but for the opposite reason most suspect
$100,000 isn’t “high income” in a lot of places. It’s “barely getting by” income where I am
Source link?
If you wanna tell me 35-55 a year is "middle income", I'm sorry that's simply incorrect.
The chart says 35k-100k is middle income, which sounds about right.
Housing, food, and health care costs have risen much faster than the general inflation rate, and these happen to be the core goods and services need to support families. Of course, stop having families, and the consumer will get by better, but that creates a host of other problems for society, the economy, and ultimately us all.
https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/
High income with high cost of living just moves the bell curve.
Bitch wtf do you think “inflation” means????
This is income. Which has increased. But the price of assets has increased much, much more. So the middle class in 1967, although earning less, had cheaper housing costs. So yes. The middle class were better off in the 60's
Not trying to argue with you but isn’t that what “inflation adjusted” means? Perhaps I’m misunderstanding your comment.
That is theoretically what inflation adjusted means the problem is that the inflation index is broken The cost of some goods and services rises pretty much in line with the inflation index, but other things such as housing have far out paced that inflation index and school has done so by a full order of magnitude
Exactly this. The average earnings to house prices went from like 4-5x to 9-10x. People in the high earner brackets now live in a houses your average middle class wagie was buying decades ago
The inflation index is weighted (housing is the largest %), but despite these certain categories going up faster- we’re still better off.
The median income last year was just over $40,000 the median income in 1967 when this chart starts when adjusted for inflation was over $70,000. The median house price now is over $400,000 in the median income in 1967 when this chart starts when adjusted for inflation was just over $200,000 People are making 40% less and housing cost twice as much The vast majority of people are not better off now. Back in the 60s and 70s it was completely normal for a single earner household to have two cars and take a multi week vacation every year in addition to owning a house.
Housing makes up roughly a third of the CPI because that’s approximately how much people spend on housing. It’s not like housing is the only expense, it can go up relative to other expenses but can be negated by the other 66% of expenses going down. That final note is unproven and anectodal. I can “disprove” it by going outside and finding random anectodal examples.
https://listwithclever.com/research/home-price-v-income-historical-study/
Despite that, housing still on average only makes up a third of consumer spending (as of 2022) [https://www.bls.gov/opub/reports/consumer-expenditures/2022/home.htm#chart2B](https://www.bls.gov/opub/reports/consumer-expenditures/2022/home.htm#chart2B) Though I do agree with the study you posted, so I'm wondering why there's a contrast. Houses today are larger so I'm not entirely sure it's people downgrading [https://www.census.gov/content/dam/Census/programs-surveys/ahs/working-papers/Housing-by-Year-Built.pdf](https://www.census.gov/content/dam/Census/programs-surveys/ahs/working-papers/Housing-by-Year-Built.pdf)
Thanks for clarifying.
No problem For a specific example relating to housing: right now the median Home price in the United States is about $420,000. The median Home price in 1967 (the year this chart starts) was $22,700, which works out to be $214,000 when adjusted for the inflation index. By that simple metric alone, houses are twice as expensive as they used to be. Then we add the wage disparity. Last year, the median income was $48,000 a year. While in 1967 the median household income was $8200 a year which adjusted for inflation works out to be $77,000 a year. So houses cost almost twice as much, and people are making about 40% less Or we can do college: today a for your degree costs anywhere from about $25,000 to about $100,000 depending upon in-state out-of-state specific school, etc. In 1969 (the farthest back I could find reliable numbers for in-state and out-of-state public and private higher education) the cost was approximately $1300 to approximately $6000 depending upon the same factors, which when adjusted for inflation works out to be about $11,000 to about $50,000 So, regardless of what this chart says, Americans are making less money and stuff we need costs significantly more Here’s an article about the cost of housing specifically https://www.thezebra.com/resources/home/housing-trends-visualized/ I like this sub and I find a lot of the information posted here to be very interesting and very heartening however, lately I have noticed that most of the financial stuff posted here seems to be pure propaganda
Always that one guy, why is it so hard for redditors to understand what inflation adjustment is. This data is adjusted for increases in assets! “Constant 2022 dollars means it’s relative to cost of living! Read the graph!
Idk man, my household income is $200K plus and I feel middle class.
You’re squarely in upper middle class. You theoretically have no worry about bills, own a newish car, can travel 1-3 times a year, eat out frequently, can buy a house anywhere outside of the most expensive cities in the US (can rent anywhere), contribute to retirement accounts, and have non-free hobbies.
lol damn thats so spot on
I would 100% agree with you that 200K is upper middle class for a single person. However, I broke down the math for a couple with 2 kids and, as you can see, it is barely middle class. You can barely afford the average home, average meals, average college for the kiddos, average savings for retirement, ect. In fact, my math did not even include many things that I would consider middle class, such as: a modest vacation or two, some fun money, ect. I don’t even think included car payments. Lol. Give the math in the other comment a look and tell me where I went wrong and how I am actually not middle class. If there is a way I can be upper middle class, I am all ears. Lol
Yall will do anything to feel oppressed 💀
I do not feel oppressed? Middle class is not oppressed? Lol. I feel blessed and optimistic about cracking into upper class and retiring early.
At 200k you make between 120k in California and 140k in Texas take home (state taxes and shit). Assuming you’re the sole provider, and your spouse somehow doesn’t provide childcare and doesn’t bring in money. The average house at the current mortgage rate is ~26000 a year. 36k if you’re at 3k due to renting or a medium sized city owning. Food at 9000 in groceries and 3000 eating out. Utilities 5k. Generous 12k car payment. 5k car insurance. 2500 on gas. 8.5k health insurance. 5k on hobbies. 10k on vacations. 18k child care costs. Max out 401k of 23k, and 10k into a 529. You scrape by at 138k in most states. Having everything anyone wants, pissing away money on a car, vacations, eating out and hobbies. All while guaranteeing a comfy retirement. Not the most wholistic accounting, but being spending conscious widens your room by a ton.
Current average mortgage is kind of useless because the majority of homeowners bought at either much lower interest rates, much lower prices, or both. I also do not think that includes: taxes, insurance, HOA, maintenance, ect. For a family of 4 with two working adults, you need two vehicles. $1000 per month is still fair for 2 vehicles though. $500 per month per vehicle is fine. You budgeted only $1000 per month for a family of four? And that includes eating out 1-2 times per week at a moderately priced restaurant like a middle class person? That is $8 per person per day. I am sorry, but that is not reasonable. Even shopping a discount grocery stores. No dental insurance? No clothes for the adults or kids? No medical expenses besides insurance premiums? Even with insurance, healthcare aint cheap! You budgeted $26 per week per working adult, which I don’t think is reasonable assuming a modest 30 minute commute to work and 30 minutes back plus running errands, seeing friends and family, ect. Half a tank per person per week for all that? No car maintenance what so ever? No home maintenance whatsoever? For health insurance: $800 per month for 2 adults ($400 each) and $600 per month for 2 kids ($300 each). So, just over $13K for insurance, not $8K. $15K on vacations and hobies is reasonable. Only $18K on the kids per year for 2 children? Day care alone is more than that. $800 per month per kid = 19,200 dollars. What about: braces, their first cars, clothes/diapers, college fund, ect? Do they get NOTHING for christmas? Lol Your car insurance budget is reasonable. The amount needed for retirement is reasonable. Even if we assume all of your budgeting is spot on and ignore all of the costs that you did not consider, you said yourself that I would “scrape by” in most states while having a typical house, each adult having a typical car, taking 2 typical vacations per year, eating a typical diet, and not splurging on really thing extravagant at all. That sounds pretty middle class to me. When I think of upper middle class, I think of each adult having a new german car (not a lambo or anything), having a very nice home (but not a mansion, maybe a $750K-$800K home), sending the kids to a private school (albeit, a reasonably priced one, not top notch), vacationing 3-4 times per year at slightly nicer locations than average, maybe buying some decent jewelry from time to time (but not $1M diamonds or anything), and having a retirement that allows you to do more than be “comfy” (like doing some extra traveling to see the world before death and stuff). I just don’t see $200K being upper middle class. Solid middle class lifestyle. Assuming a family of 4 that is. Single? Absolutely upper middle class.
Don’t bother. These people are delusional. I am in the same boat and wholeheartedly agree with you.
Someone posted earlier about the difference between optimism and being delusional is numbers. I believe that to be correct. People who ignore numbers are delusional for sure.
What area do you live in? I imagine 200k feels middle class in a high cost of living area.
Nah, maybe ever so slightly above average cost of living here. I broke down the math in a deep dive with lots of details in other comments if you are interested to see how it breaks down 👍🏼
I make less than 100k in one of the wealthiest parts of the country, a suburb of DC, and feel perfectly fine with money to even go on vacation. I feel like people don’t realize how much “lifestyle creep” is a real thing. Most people even in LA don’t even make 6 figures and yet they manage
I didn’t say I am uncomfortable or stressed out about $. I am comfy with money, but I don’t feel upper class. Let’s do some quick maths to see if $200K is upper class. Let’s see how much $ is left over after doing typical middle class stuff to see if $200K would cover upper class activities or not. Take home pay is $116K assuming you live in a place with 7% state tax (a lot higher in many states). So, about $9600 per month. Average home price is around $400K, which is about $3K in mortgage, taxes, insurance, ect per month. That leaves us with $6600 per month. Let’s assume we are a married family with two kids. Both parents work to make the $200K. It costs about $16K per year to raise a child, $32K for both. So, $2600 per month for the kiddos. That leaves us with $4K per month. Let’s assume each parent wants to save $1K per month for retirement. Now we have $2K per month. Food for a family of four that goes out to eat once or twice a week at a reasonably priced restaurant costs about $500 per week (probably more honestly). BOOM! Zero remaining dollars per month. $200K per year gone. We have not even discussed vacays, fun money, unexpected expenses such as replacing an AC unit. So ya, $200K per year is 100% not upper class based on simple math. It is honestly barely middle class for a family. If you are single, I am sure it is different. On an optimistic note, I can reasonably expect our income to double next year, so maybe then I will be upper class. Lol.
In typical reddit fashion, I am downvoted when presenting a logical math based explanation for my reasoning without explanation. Lol. Would anyone care to explain how $200K is upper class based on math for a family of 4? I would love to see where the extra funds come from for upper class activities. Maybe I can implement it.
Obviously live in one of the most expensive areas of the country then.
Nope. Just an average cost of living area. I broke down the math in a different comment if you are interested to see how I determined that.
I'm not going to do a bunch of tax math so I'll take your word on the take home income although when I look this up it seems well below normal. Even in NYS you take home 135k on a 200k salary so I'm not sure what you're talking about here. 135-145k average takehome on 200k is what I'm finding. Your numbers throughout seem to all be well above average and worst case scenario. The average us mortgage payment is 2390, you're paying 3000. Idk what you're calculating for childcare but spending 2600 a month on two kids is well above average. Your retirement amounts are also hilarious. Idk anyone that's putting away 2k a month in retirement realistically. If you can, you're in an amazing financial position. $2000 a month in going out to eat is also hilariously bad money management if you're claiming to be running out of money No offense but your problem isn't your income it's your money management and decision making skills
Ok. Let me address each of those one by one to demonstrate that my numbers not on the high end, but are actually either average or low end (as well as not even considering some necessary items) 1. Take home pay. This is extremely simple elementary school math. 32% federal tax. Since you brought up new york, we will use their state income tax, which is 6% (slightly more, but we will use 6% for easy math). That is a total of 38% in income tax. Which comes out to $124K in take home pay. So, ya, almost half to big brother. 2. The average US mortgage payment includes boomers that bought their home in 1974 for 46 raspberries. Hell, even people who bought 5 years ago are paying drastically less than recent buyers. So, average mortgage is honestly kind of useless. A better example is looking at what it cost to buy an average house TODAY. Which is $3K per month including taxes and insurance and excluding maintenance and HOA fees (just look up the average cost of a house ($400K+), interest rates for an FHA mortgage (7%), and average cost of taxes, insurance, ect). 3. Next up is child care. You think $1300 per month per kid is too much? Day care alone costs $900 per month per child. That leaves $400 per month for EVERYTHING else: sports, college savings, healthcare, dental, buying their first car, grooming, ect (food is another category, so we won’t count that). So ya, $1300 per month is definitely on the low end of cost per child per month (remember, the example is 2 kids). We aren’t even talking about anything extra like private school or anything. Just basic middle class stuff like braces and daycare. Lol. 4. You said $2000 per month for a family of four to earn is “hilariously bad money management “? That is less than $17 per day per person. In what world is spending $17 per day on food per person hilariously bad money management? For it to be hilariously bad, I would assume you mean it should be half as much or less? Aside from eating ramen noodles and baloney sandwiches for breakfast lunch and dinner, how are you spending like $8 per day on food? How is $17 per day per person hilariously bad? I am genuinely confused. I shop at discount grocery stores and $17 per day per person is still tough. Please explain. I am all ears and curious. 5. Let’s talk retirement savings. Let’s say you only need $60K a year to retire today (you probably need more), lets assume inflation is 2.5% per year (it will probably be more), you have 30 years to invest (you are 35 and want to retire at 65), and you need to survive 30 years after retirement. That means you need to save at least $1280.14 per month to retire. You said $1000 per month per person is “hilarious” ($2000 total, $1000 per income earner). However, it is mathematically not even enough (even by conservative estimates). Feel free to point out anywhere that my math is incorrect. I double checked. 6. There are many things I did not even consider. 2 car payments, two car insurances, 4 health insurances, vacations, clothes, fun money, ect. Even without considering ANY of those things, you are still living paycheck to paycheck as a family of 4 making $200K. I know $200K sounds like a ton. I thought I would be BALLING making $200K, but that just isn’t the case unfortunately. I do think I can double our income though, so that is optimistic. I am not offended by you saying my money management is bad. I would love to improve it, so if you have any specific recommendations, I would love to hear them. Just make sure to be specific and show the math behind it if you are going to say my money management is “hilariously bad”.
I'm not going to counter every point with you but I'll take your word for most of it. The reality is that you make more than 88% of other US households and are paycheck to paycheck. That imo indicates poor money management. My wife and I have a household income of around 125k in a MCOL(around 7% cheaper than the national average) area and I'm involved in quite a bit financially, and have a couple thousand going outbound to a close family member these past two years. Plenty of excess money to go on vacation, have decently costly hobbies. However, we only do that because we only go to eat once a month, buy used cars, are not smokers or huge drinkers, don't gamble, and just generally don't get involved with a ton of long term money sinks. That allows a lot of wiggle room. We do not have children but we are making 70k a year less than you are. Say I didn't have anyone to watch the kids so I had to pay full time daycare plus other child expenses. Let's use your $1300 per child figure. That's around 30k for the year for both children while they need daycare for a few years. So even adjusted for your children you're still making around 40k more gross. My point is that if you're making 200k with a family of four in an average cost of living area you should have plenty of excess cash if you've made good financial choices along the way, again, imo.
Ya, I don’t expect you to go through every point like my financial advisor or something lol. However, since you said my money management was “hilariously bad” I guess I did expect some specific example of how it is bad. I mean, if it is that bad, it should be glaringly obvious and easy to point out right? I know you mentioned several things, but I specifically broke down the math demonstrating how I am being frugal on those things and not over spending. It seems like when we get down to nitty gritty, all the people who say $100K (much less $200K) is above middle class can not demonstrate any math or logic behind why that is the case. If they do, they are always either drastically under estimating real costs of categories or leaving out necessities (or both). I am numbers guy. The numbers just don’t add up regarding $100K being above middle class (the numbers don’t add up for $200K either). Saying things like “that is more than most people” or “my household income is less and I live a middle class lifestyle” with no math at all, demonstrably incorrect math, or budgets that I proved were not reasonable is simply not sufficient to say things like my money management is “hilariously bad”. If it actually is bad, I would love to know exactly how it is bad so I can change my ways (I don’t wanna be the guy who is bad with money). Otherwise, it is not really helpful in any way.
Well in all fairness you being a numbers guy means you know why I can't really give any exact thoughts on specifics, it's because I don't have any. I would literally need your paystubs and all bank/cash transactions to get a real idea of what's going on. We've been talking about broad rounded numbers here. I think the reality is that if someone in the top 12% of income is not able to save any money they are over leveraged with expenses which could mean a ton of different things. Some people buy way too expensive of a house, some people have a crazy amount of mandatory debt payments, some people gamble, some people just waste money on all kinds of random shit every time they have any to spare. I simply can't guess what is going on with yours lol.
Maybe your wife has a spending habit you're not aware of or something lol. Also earlier when I said hilariously bad I did think you said that you spent $500 a week going out to eat. When I re-read it, it seems like you were talking about overall food expenditure which is still a bit high but not anywhere near as insane.
I’m in Canada but I have a hard time believing 100k is top tier in either country. In most big cities it’s a pittance, but even outside the big cities you are very middle class here with well over a $100K salary. The dollars may have been adjusted for inflation, but what counts as high income hasn’t been.
Idk why we are getting downvoted for stating the obvious? Lol. I even thorough broke down the math for demonstration and even though the demonstration was for $200K, an average middle class lifestyle, and did not include any luxuries whatsoever, it still came out to middle class. I have asked for a demonstration of why I am wrong, and all I get is downvotes with no explanation. Typical reddit. Lol.
Canada is in a much worse financial situation though. Housing and COL is significantly higher than most areas of the US.