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Ugh - while I agree with the conclusion, the statistical definitions here don't have any connection with reality. $125,000 is "upper class", you say, regardles

Ugh - while I agree with the conclusion, the statistical definitions here don't have any connection with reality. $125,000 is "upper class", you say, regardless of location? <explodes into laughter> Let's translate that into the real world, shall we? $125,000 Household Income.... Who makes it: - IT manager or Senior Dev with stay at home spouse - Mid-level Dev ($90K) married to a K-12 teacher ($40K) - Two junior software developers (co-habituating) Location matters, incidentally - if you're in CA / NY / Northeast Coast, this is barely enough to buy a house (and I hope you like driving / riding the train for a few hours). A better analysis would be to draw the line somewhere in the the $200,000 - $500,000 range (based on salary + bonus, no equity boost) and include passive income. This is the point where you get a meaningful change in social options from the income (eg. top tier housing, private schools, accredited investor status, second home, ample emergency funds, etc.). Also incorporate some view of regional costs - since the "Social Freedom" point is much higher in NY / CA than in rural Alabama. Sad to say, there are many areas of the country where living on $125,000 still definitely sucks.

dragonwriter 10y ago
> $125,000 is "upper class", you say, regardless of location? If you click through to the source report, the locality-based breakdowns are, in fact, based on income criteria adjusted from the national definition using metro-area-specific cost of living.
- sixtypoundhound 10y ago
  Thank you - missed that. The $125,000 line still doesn't make sense though, even in flyover country (where I live). That's barely enough to buy a 2nd/3rd tier home in a strong school district where I live. Would think that easy access to good schools and good housing are table-stakes for being "upper class".
  - dragonwriter 10y ago
    Again, as I've posted several other places on this thread, the report is addressing a multiplier based region around the median income, a kind of "middle income tier". It has (despite the title) very little to do with "middle class", except insofar as the use of that term is drifting, at least in the US, to refer to various definitions of middle income tiers. > Would think that easy access to good schools and good housing are table-stakes for being "upper class". Honestly, I'd say that access to good public schools and good housing are typical for middle class; if you are upper class your housing is probably beyond "good" and you probably aren't concerned, except from a political or philanthropic perspective, with the quality of the public schools. But this article is (language aside) really about income tiers, not class
  - antisthenes 10y ago
    So what exactly is a 1st tier home by your standards? I've never seen anyone use that classification before. Most people are just happy to have a roof over their heads.
  - kevinnk 10y ago
    Suppose you spend 30% of your pre-tax income on housing. A 125k income then supports a $3125/month payment, which works out to about a ~660k house. That's enough to buy the median house in every state in the country and all but 4.8% of zip codes[1]. Let's be a little more conservative. Suppose you spend 25% of your post-tax income on housing. A 125k income supports a $1750/month payment, which works out to a ~370k house. That gets you a median house in all but 3 states: Hawaii (556k), DC (550k), and California (462k) - the next state up is Massachusetts (343k). You could also buy the median house in all but 16% of zip codes. I couldn't find that much data on school districts, but just as a point of comparison, 370k is enough to buy the median single family home in 7 of the top 10 school districts in Michigan[2]: 1. 350k, Bloomfield Hills Schools 2. 411k, Birmingham Public Schools 3. 219k, Okemos Public Schools 4. 429k, Novi Community Schools 5. 343k, Ann Arbor Public Schools 6. 276k, Saline Area Schools 7. 370k, Troy School District 8. 285k, Grosse Pointe Public Schools 9. 335k, East Grand Rapids Public Schools 10. 429k, Northville Public Schools If you bumped up your payments to about $2023/month (~29% of post tax income in Michigan) you would be able to afford a median single family home in every top school district (~430k). Also, anecdotally, I grew up in Michigan and a 400k home was solidly upper-middle class even in nice areas like Ann Arbor and Bloomfield Hills. In Ann Arbor, a 600k home would be either a mansion or a family home in an extremely desirable area. [1] http://www.zillow.com/research/data/ http://www.zillow.com/research/data/ [2] https://k12.niche.com/rankings/public-school-districts/best-overall/s/michigan/ https://k12.niche.com/rankings/public-school-districts/best-...
qsymmachus 10y ago
> Sad to say, there are many areas of the country where living on $125,000 still definitely sucks. Only by truly decadent standards could an income of $125,000 be said to "definitely suck". $125k is 2.4x median income and puts you in the 97th percentile of all American workers.
- nugget 10y ago
  I always found median income a little bit frustrating in these class and lifestyle discussions. Median income doesn't expose people who don't work because they receive passive income nor does it capture wealth very well. Let's say I am working 60 hours/week to bring in $125k and $4k/month of that goes to rent. My neighbor has $2 million in SPY yielding $40k/year and minimal overhead because his parents bought him a house free and clear (and, with no job, he has the free time to exercise, cook his own food, and enjoy a higher quality of life). These are extreme examples (although increasingly more common in SF, LA, and NYC) but demonstrate how median income can be misleading.
- ArkyBeagle 10y ago
  So $125k is much more likely in one of the big cities where cost of living is dominated by real estate. Since we tax labor and we don't tax land, this raises the suck factor. $125k in Northern Alabama probably means a darn good living. In SanFran? Probably not. Also, Dallas used to be the place where land was cheap(er) and jobs paid relatively well, but that ended after Enron.
- deleted 10y ago
  [deleted]
- sixtypoundhound 10y ago
  Attempting to answer the question a different way... I presented three fictional "couples" and their career choices that would easily get you to the $125,000 point in today's labor market. None of these pairing would be considered "highly compensated" or upper class. Middle class would be a more appropriate designation. With regards to the "suck" factor - try running a household in SF, LA, or NYC (with kids and spouse) on that amount. I don't think owning my own home and having good schools is a particularly decadent expectation. Or having good access to health care and support services. Nor should I be expected to leverage myself to the eyeballs to buy a starter home. Would think that the expectation of a professional earning that amount is that they are providing their kids with an environment where their kids can replicate their success.
bubbleRefuge 10y ago
Gr8 point. Also, cost of living is not adjusted for in federal taxes especially if one falls into the standard deduction. Living in the bay area as a renter on 125K, you probably end of paying about 20K in Federal taxes and 30K in rent.
- douche 10y ago
  That does give you a free-and-clear net income of 75k, which is better than a lot of households make before taxes and housing in other parts of the country.
  - dragonwriter 10y ago
    Yeah, $75K is nearly 1.5 times median household income. So its substantially more than most households make.
    - odonnellryan 10y ago
      Yeah. Making over $100k is not "roughing it." It's weird to see people say that.
    - tostitos1979 10y ago
      Well .. 18.5K goes into the 401K, leaving 57K. Even if we saved 50% of what we earn, we'll barely be able to save 250K over a decade. Given the pace of house price increases, it seems like a hopeless situation :(
      - monknomo 10y ago
        At the end of your 40 year career, with your numbers, not accounting for inflation, raises or the potential for investing, you would have $1.14 million in cash and $740k in 401k principal. At the end of most people's career they have social security... I'd call it pretty well off for having done nothing with the money. Retire to Nebraska, live like a king.
pyrrhotech 10y ago
Qualifying 125k as upper class is indicative of a gross misunderstanding of capitalism and wealth concentration. Upper class are business owners, old money heirs, celebrities and the like who find it odd that other people go into work 9-5 for 40 hours of their lives for 40 years. They are less than 1 percent of the population and have incomes from investments of generally over 500k/year and net worths of 10 million+. This is a much more accurate description of the various levels of upper class from Economist Felix Dennis: $2-4 million: The comfortable poor $4-10 million: The comfortably off $10-30 million: The comfortably wealthy $30-80 million: The lesser rich $80-150 million: The comfortably rich $150-200 million: The rich $200-400 million: The seriously rich $400-800 million: The truly rich $800 million - $1.998 billion: The filthy rich $1.998 billion and Above: The super rich citation: http://www.wallstreetoasis.com/blog/who-is-rich http://www.wallstreetoasis.com/blog/who-is-rich
- bowmessage 10y ago
  This scale is silly and meaningless.
  - pyrrhotech 10y ago
    That's because you and I have no idea what it's like to be part of the capitalist class. Perhaps studying the capitalist class is silly, but if we wanted to, this is an accurate description of it's members. Obviously 2-4 million isn't "poor" but it isn't quite capitalist class. More like upper-middle class saver. 10 million is entry level to capitalist class
ArkyBeagle 10y ago
Everybody who drives faster than you is crazy and everybody who drives slower is an idiot. ( George Carlin, I believe ) Everybody who makes more* than you is rich, and everybody who makes less* is poor. Same basic idea. *say twice as much or half as much or something...
odonnellryan 10y ago
> Northeast Coast, this is barely enough to buy a house (and I hope you like driving / riding the train for a few hours). That's not true, I live outside Manhattan and you can buy a very nice house for $250,000. I'm not in NYC (New Jersey) but close to the city. Well, it's a condo, not a house. Also, what's wrong with riding the train? More people should be riding the train. > A better analysis would be to draw the line somewhere in the the $200,000 - $500,000 range That's wild! No, that's approaching upper class. > Sad to say, there are many areas of the country where living on $125,000 still definitely sucks. Proof? I don't think this is true unless you have no idea how to manage your money. I can't imagine a single place where it would suck to live on ~$7,000 take home pay a month...

dragonwriter 10y ago

> $125,000 is "upper class", you say, regardless of location? If you click through to the source report, the locality-based breakdowns are, in fact, based on income criteria adjusted from the national definition using metro-area-specific cost of living.

sixtypoundhound 10y ago
Thank you - missed that. The $125,000 line still doesn't make sense though, even in flyover country (where I live). That's barely enough to buy a 2nd/3rd tier home in a strong school district where I live. Would think that easy access to good schools and good housing are table-stakes for being "upper class".
- dragonwriter 10y ago
  Again, as I've posted several other places on this thread, the report is addressing a multiplier based region around the median income, a kind of "middle income tier". It has (despite the title) very little to do with "middle class", except insofar as the use of that term is drifting, at least in the US, to refer to various definitions of middle income tiers. > Would think that easy access to good schools and good housing are table-stakes for being "upper class". Honestly, I'd say that access to good public schools and good housing are typical for middle class; if you are upper class your housing is probably beyond "good" and you probably aren't concerned, except from a political or philanthropic perspective, with the quality of the public schools. But this article is (language aside) really about income tiers, not class
- antisthenes 10y ago
  So what exactly is a 1st tier home by your standards? I've never seen anyone use that classification before. Most people are just happy to have a roof over their heads.
- kevinnk 10y ago
  Suppose you spend 30% of your pre-tax income on housing. A 125k income then supports a $3125/month payment, which works out to about a ~660k house. That's enough to buy the median house in every state in the country and all but 4.8% of zip codes[1]. Let's be a little more conservative. Suppose you spend 25% of your post-tax income on housing. A 125k income supports a $1750/month payment, which works out to a ~370k house. That gets you a median house in all but 3 states: Hawaii (556k), DC (550k), and California (462k) - the next state up is Massachusetts (343k). You could also buy the median house in all but 16% of zip codes. I couldn't find that much data on school districts, but just as a point of comparison, 370k is enough to buy the median single family home in 7 of the top 10 school districts in Michigan[2]: 1. 350k, Bloomfield Hills Schools 2. 411k, Birmingham Public Schools 3. 219k, Okemos Public Schools 4. 429k, Novi Community Schools 5. 343k, Ann Arbor Public Schools 6. 276k, Saline Area Schools 7. 370k, Troy School District 8. 285k, Grosse Pointe Public Schools 9. 335k, East Grand Rapids Public Schools 10. 429k, Northville Public Schools If you bumped up your payments to about $2023/month (~29% of post tax income in Michigan) you would be able to afford a median single family home in every top school district (~430k). Also, anecdotally, I grew up in Michigan and a 400k home was solidly upper-middle class even in nice areas like Ann Arbor and Bloomfield Hills. In Ann Arbor, a 600k home would be either a mansion or a family home in an extremely desirable area. [1] http://www.zillow.com/research/data/ http://www.zillow.com/research/data/ [2] https://k12.niche.com/rankings/public-school-districts/best-overall/s/michigan/ https://k12.niche.com/rankings/public-school-districts/best-...

qsymmachus 10y ago

> Sad to say, there are many areas of the country where living on $125,000 still definitely sucks. Only by truly decadent standards could an income of $125,000 be said to "definitely suck". $125k is 2.4x median income and puts you in the 97th percentile of all American workers.

nugget 10y ago
I always found median income a little bit frustrating in these class and lifestyle discussions. Median income doesn't expose people who don't work because they receive passive income nor does it capture wealth very well. Let's say I am working 60 hours/week to bring in $125k and $4k/month of that goes to rent. My neighbor has $2 million in SPY yielding $40k/year and minimal overhead because his parents bought him a house free and clear (and, with no job, he has the free time to exercise, cook his own food, and enjoy a higher quality of life). These are extreme examples (although increasingly more common in SF, LA, and NYC) but demonstrate how median income can be misleading.
ArkyBeagle 10y ago
So $125k is much more likely in one of the big cities where cost of living is dominated by real estate. Since we tax labor and we don't tax land, this raises the suck factor. $125k in Northern Alabama probably means a darn good living. In SanFran? Probably not. Also, Dallas used to be the place where land was cheap(er) and jobs paid relatively well, but that ended after Enron.
deleted 10y ago
[deleted]
sixtypoundhound 10y ago
Attempting to answer the question a different way... I presented three fictional "couples" and their career choices that would easily get you to the $125,000 point in today's labor market. None of these pairing would be considered "highly compensated" or upper class. Middle class would be a more appropriate designation. With regards to the "suck" factor - try running a household in SF, LA, or NYC (with kids and spouse) on that amount. I don't think owning my own home and having good schools is a particularly decadent expectation. Or having good access to health care and support services. Nor should I be expected to leverage myself to the eyeballs to buy a starter home. Would think that the expectation of a professional earning that amount is that they are providing their kids with an environment where their kids can replicate their success.

bubbleRefuge 10y ago

Gr8 point. Also, cost of living is not adjusted for in federal taxes especially if one falls into the standard deduction. Living in the bay area as a renter on 125K, you probably end of paying about 20K in Federal taxes and 30K in rent.

douche 10y ago
That does give you a free-and-clear net income of 75k, which is better than a lot of households make before taxes and housing in other parts of the country.
- dragonwriter 10y ago
  Yeah, $75K is nearly 1.5 times median household income. So its substantially more than most households make.
  - odonnellryan 10y ago
    Yeah. Making over $100k is not "roughing it." It's weird to see people say that.
  - tostitos1979 10y ago
    Well .. 18.5K goes into the 401K, leaving 57K. Even if we saved 50% of what we earn, we'll barely be able to save 250K over a decade. Given the pace of house price increases, it seems like a hopeless situation :(
    - monknomo 10y ago
      At the end of your 40 year career, with your numbers, not accounting for inflation, raises or the potential for investing, you would have $1.14 million in cash and $740k in 401k principal. At the end of most people's career they have social security... I'd call it pretty well off for having done nothing with the money. Retire to Nebraska, live like a king.

pyrrhotech 10y ago

Qualifying 125k as upper class is indicative of a gross misunderstanding of capitalism and wealth concentration. Upper class are business owners, old money heirs, celebrities and the like who find it odd that other people go into work 9-5 for 40 hours of their lives for 40 years. They are less than 1 percent of the population and have incomes from investments of generally over 500k/year and net worths of 10 million+. This is a much more accurate description of the various levels of upper class from Economist Felix Dennis: $2-4 million: The comfortable poor $4-10 million: The comfortably off $10-30 million: The comfortably wealthy $30-80 million: The lesser rich $80-150 million: The comfortably rich $150-200 million: The rich $200-400 million: The seriously rich $400-800 million: The truly rich $800 million - $1.998 billion: The filthy rich $1.998 billion and Above: The super rich citation: http://www.wallstreetoasis.com/blog/who-is-rich http://www.wallstreetoasis.com/blog/who-is-rich

bowmessage 10y ago
This scale is silly and meaningless.
- pyrrhotech 10y ago
  That's because you and I have no idea what it's like to be part of the capitalist class. Perhaps studying the capitalist class is silly, but if we wanted to, this is an accurate description of it's members. Obviously 2-4 million isn't "poor" but it isn't quite capitalist class. More like upper-middle class saver. 10 million is entry level to capitalist class

ArkyBeagle 10y ago

Everybody who drives faster than you is crazy and everybody who drives slower is an idiot. ( George Carlin, I believe ) Everybody who makes more* than you is rich, and everybody who makes less* is poor. Same basic idea. *say twice as much or half as much or something...

odonnellryan 10y ago

> Northeast Coast, this is barely enough to buy a house (and I hope you like driving / riding the train for a few hours). That's not true, I live outside Manhattan and you can buy a very nice house for $250,000. I'm not in NYC (New Jersey) but close to the city. Well, it's a condo, not a house. Also, what's wrong with riding the train? More people should be riding the train. > A better analysis would be to draw the line somewhere in the the $200,000 - $500,000 range That's wild! No, that's approaching upper class. > Sad to say, there are many areas of the country where living on $125,000 still definitely sucks. Proof? I don't think this is true unless you have no idea how to manage your money. I can't imagine a single place where it would suck to live on ~$7,000 take home pay a month...