5 ms·

> 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

> 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.
- pborowicz 10y ago
 I don't think owning my own home and having good schools is a particularly decadent expectation. To the GOP, your just greedy.
- qsymmachus 10y ago
 Obviously you are correct that $125k does not go in far in SF, LA, or NYC as it does in Cleveland. But these cities are extreme outliers, and my main point remains that you need a little more perspective about what "definitely sucks" in America. I make right around $125k and live in SF. I have the luxury of not having to think much about how I spend my money, and yet I still have $2000-$3000 left over every single month. For perspective, half of all Americans would not be able to afford a single unexpected $400 expense[1]. That's what definitely sucks, not the fact that I can't afford a house in Bernal Heights. [1] https://www.washingtonpost.com/news/the-fix/wp/2015/06/03/tnearly-half-of-americans-say-they-cant-afford-an-unexpected-400-expense/ https://www.washingtonpost.com/news/the-fix/wp/2015/06/03/tn...
- paulmd 10y ago
 What you are referring to is what the Wall Street Journal once called the "HENRYs" - High Earner, Not Rich Yet. Or in other words, "once I spend all of my money, I have nothing left!". This is an argument that can be made at virtually any income level. Consider the following article and this really charming infographic they put together: http://www.wsj.com/articles/six-figure-incomesand-facing-financial-ruin-1409936418 http://www.wsj.com/articles/six-figure-incomesand-facing-fin... http://si.wsj.net/public/resources/images/BF-AE118B_05WIc_G_20130104192101.jpg http://si.wsj.net/public/resources/images/BF-AE118B_05WIc_G_... (infographic from http://www.wsj.com/articles/SB10001424127887323689604578220132665726040 http://www.wsj.com/articles/SB100014241278873236896045782201...) After all - $400k isn't really that much, after you've paid taxes and put away $22k per year for retirement and the kids' college, and after you're done spending $87k per year on a mortgage, $25k per year on property taxes, $40k per year on maintenance and utilities, $30k per year on groceries, $21k per year on dining out, $26k per year on vacations, $24k per year on car expenses, $12k on country club dues, $10k per year on children's sports, and $9k per year on gifts and donations. Why in fact you're $10k in the hole! I don't quite know how to say this other than bluntly, but $125k is a long ways above median household income everywhere in the country. For comparison, the median household income for New York City is $50,711 and the median household income for the San Francisco Metro Area is $83,222. Most people live off less than $125k, don't pretend it's impossible. Expenses tend to find a way to encompass available income unless you make a deliberate effort to stop that - even for people making $400k per year. $125k isn't "rich" in the sense that you could quit working and live off the income from your investments or commute every weekend from your villa in the Caribbean, but it's vastly more than most people will ever see, and it's enough to be totally financially secure _if you choose to be_. This is really the distinction the article is getting at: some people use "lower/middle/upper" in the sense of income quantiles, other people use it in the sense of working-vs-rentier classes (i.e. proletariat-vs-bourgeois). But there's always been a group of HENRYs - Marx labelled them as the "petit bourgeois".
aianus 10y ago
This is not accurate, $125k household income only puts you in the 84th percentile according to the 2014 census. https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United..., link to actual census results in footer.
- qsymmachus 10y ago
  Thanks for the correction, my numbers must be older (or just wrong).
  - dragonwriter 10y ago
    Or, the income rank among "American workers" (which you referred to) and that among "American households" (which the person "correcting" you referred to) is different. Which is not merely plausible, but expected.
    - qsymmachus 10y ago
      Good point, I believe the 97th percentile is per capita, not per household.
TallGuyShort 10y ago
Location still matters, though. At a Silicon Valley software company you'd expect around $100k starting salary with a bachelor's degree and you could get a modest place to live. Working in the mid-west or the south you'd almost cut that figure in half and would end up living in a larger house with a nicer car. I graduated with the highest starting salary that I know of out of anyone in my class but I still ended up living in a very "low-class" area and struggling to make ends meet. I lived far more comfortably before with less than half the income while paying my own tuition in a different state.
geebee 10y ago
Yes, anyone attempting to say that living in a first world country on $125,000 "sucks" is open to this criticism. I'd probably avoid phrasing it this way. However, I'm generally in agreement with the post. I live in a relatively unfashionable neighborhood south of 280 in SF. Dumping and graffiti are common, front easements (yards) are paved over for extra parking or broken down car storage (illegally, but with extremely indifferent enforcement). Local schools aren't highly ranked in terms of test scores (though this doesn't matter all that much in SF, which is run by lottery much to the chagrin of people who live in higher performing districts). It would be very, very difficult to buy into this neighborhood in SF on $125k a year. You'd have trouble buying for much under a mil. On two incomes you can, but keep in mind, child care runs about $25k per year per kid, and even with kids in SFUSD ("free"), you have to pay extra for after care and summer camps, which will run you about 10k per kid per year even if you're doing things relatively cheaply (YMCA or SF park and rec run programs). At "upper class" incomes, you will lose the tax break for these things, so the second spouse needs to make a substantial salary before things get better financially. Does living here "suck" by global standards of poverty? No way, not even slightly. Is it the kind of "upper class" life you'd expect for a dual income household of highly educated and skilled workers living in ground zero for a severe labor shortage for wildly profitable companies? San Francisco is wonky, but keep in mind, the companies that say that there is a severe shortage of workers often do demand that their workers live out here, so the $125k salary really should be considered in the context of SF or NY level housing prices.

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.

pborowicz 10y ago
I don't think owning my own home and having good schools is a particularly decadent expectation. To the GOP, your just greedy.
qsymmachus 10y ago
Obviously you are correct that $125k does not go in far in SF, LA, or NYC as it does in Cleveland. But these cities are extreme outliers, and my main point remains that you need a little more perspective about what "definitely sucks" in America. I make right around $125k and live in SF. I have the luxury of not having to think much about how I spend my money, and yet I still have $2000-$3000 left over every single month. For perspective, half of all Americans would not be able to afford a single unexpected $400 expense[1]. That's what definitely sucks, not the fact that I can't afford a house in Bernal Heights. [1] https://www.washingtonpost.com/news/the-fix/wp/2015/06/03/tnearly-half-of-americans-say-they-cant-afford-an-unexpected-400-expense/ https://www.washingtonpost.com/news/the-fix/wp/2015/06/03/tn...
paulmd 10y ago
What you are referring to is what the Wall Street Journal once called the "HENRYs" - High Earner, Not Rich Yet. Or in other words, "once I spend all of my money, I have nothing left!". This is an argument that can be made at virtually any income level. Consider the following article and this really charming infographic they put together: http://www.wsj.com/articles/six-figure-incomesand-facing-financial-ruin-1409936418 http://www.wsj.com/articles/six-figure-incomesand-facing-fin... http://si.wsj.net/public/resources/images/BF-AE118B_05WIc_G_20130104192101.jpg http://si.wsj.net/public/resources/images/BF-AE118B_05WIc_G_... (infographic from http://www.wsj.com/articles/SB10001424127887323689604578220132665726040 http://www.wsj.com/articles/SB100014241278873236896045782201...) After all - $400k isn't really that much, after you've paid taxes and put away $22k per year for retirement and the kids' college, and after you're done spending $87k per year on a mortgage, $25k per year on property taxes, $40k per year on maintenance and utilities, $30k per year on groceries, $21k per year on dining out, $26k per year on vacations, $24k per year on car expenses, $12k on country club dues, $10k per year on children's sports, and $9k per year on gifts and donations. Why in fact you're $10k in the hole! I don't quite know how to say this other than bluntly, but $125k is a long ways above median household income everywhere in the country. For comparison, the median household income for New York City is $50,711 and the median household income for the San Francisco Metro Area is $83,222. Most people live off less than $125k, don't pretend it's impossible. Expenses tend to find a way to encompass available income unless you make a deliberate effort to stop that - even for people making $400k per year. $125k isn't "rich" in the sense that you could quit working and live off the income from your investments or commute every weekend from your villa in the Caribbean, but it's vastly more than most people will ever see, and it's enough to be totally financially secure _if you choose to be_. This is really the distinction the article is getting at: some people use "lower/middle/upper" in the sense of income quantiles, other people use it in the sense of working-vs-rentier classes (i.e. proletariat-vs-bourgeois). But there's always been a group of HENRYs - Marx labelled them as the "petit bourgeois".

aianus 10y ago

This is not accurate, $125k household income only puts you in the 84th percentile according to the 2014 census. https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United..., link to actual census results in footer.

qsymmachus 10y ago
Thanks for the correction, my numbers must be older (or just wrong).
- dragonwriter 10y ago
  Or, the income rank among "American workers" (which you referred to) and that among "American households" (which the person "correcting" you referred to) is different. Which is not merely plausible, but expected.
  - qsymmachus 10y ago
    Good point, I believe the 97th percentile is per capita, not per household.

TallGuyShort 10y ago

Location still matters, though. At a Silicon Valley software company you'd expect around $100k starting salary with a bachelor's degree and you could get a modest place to live. Working in the mid-west or the south you'd almost cut that figure in half and would end up living in a larger house with a nicer car. I graduated with the highest starting salary that I know of out of anyone in my class but I still ended up living in a very "low-class" area and struggling to make ends meet. I lived far more comfortably before with less than half the income while paying my own tuition in a different state.

geebee 10y ago

Yes, anyone attempting to say that living in a first world country on $125,000 "sucks" is open to this criticism. I'd probably avoid phrasing it this way. However, I'm generally in agreement with the post. I live in a relatively unfashionable neighborhood south of 280 in SF. Dumping and graffiti are common, front easements (yards) are paved over for extra parking or broken down car storage (illegally, but with extremely indifferent enforcement). Local schools aren't highly ranked in terms of test scores (though this doesn't matter all that much in SF, which is run by lottery much to the chagrin of people who live in higher performing districts). It would be very, very difficult to buy into this neighborhood in SF on $125k a year. You'd have trouble buying for much under a mil. On two incomes you can, but keep in mind, child care runs about $25k per year per kid, and even with kids in SFUSD ("free"), you have to pay extra for after care and summer camps, which will run you about 10k per kid per year even if you're doing things relatively cheaply (YMCA or SF park and rec run programs). At "upper class" incomes, you will lose the tax break for these things, so the second spouse needs to make a substantial salary before things get better financially. Does living here "suck" by global standards of poverty? No way, not even slightly. Is it the kind of "upper class" life you'd expect for a dual income household of highly educated and skilled workers living in ground zero for a severe labor shortage for wildly profitable companies? San Francisco is wonky, but keep in mind, the companies that say that there is a severe shortage of workers often do demand that their workers live out here, so the $125k salary really should be considered in the context of SF or NY level housing prices.