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I don't agree with the article's cut off point that $50k household pre-tax income is middle class. 2 parents, 2 kids making $50k is $36k after tax. Mortgage on

by bugsy 16y ago

I don't agree with the article's cut off point that $50k household pre-tax income is middle class. 2 parents, 2 kids making $50k is $36k after tax. Mortgage on a small house is $1800/month. Cars are expensive too, add $400 a month for payments on that. Food prices have doubled the last couple years. Average family can't afford health care ($12k/yr cost for 60% coverage plan for 2 parents 2 kids according to Congressional Budget Office), housing and food on that income.

joe_the_user 16y ago
Indeed, I don't think you can judge comfort level or disposable income by raw income level very well regardless. I have a friend who grew up in relative poverty. Her family had ten kids closely spaced together including twins. Her father made $150k/year with no benefits and her mother was a house-wife. I had things a good deal easier just because my parents only had two kid even though their income was less.
yummyfajitas 16y ago
Food prices have doubled the last couple years. No, they are up 6.7% since Jan 1 2008. http://research.stlouisfed.org/fred2/series/CPIUFDSL http://research.stlouisfed.org/fred2/series/CPIUFDSL
- michaelchisari 16y ago
  Food prices have risen twice as much as inflation. So, no, they haven't doubled, but their rate of increase has outpaced the rest of the economy. And with wages stagnating in relationship to inflation, this is a cause for concern.
  - yummyfajitas 16y ago
    Inflation over the same period was 4.1%. http://research.stlouisfed.org/fred2/series/CPIAUCSL http://research.stlouisfed.org/fred2/series/CPIAUCSL So no, not "double inflation" either. Wages and salaries went up 4.9% over the same period. http://research.stlouisfed.org/fred2/series/ECIWAG http://research.stlouisfed.org/fred2/series/ECIWAG
    - michaelchisari 16y ago
      So no, not "double inflation" either. Alright, 163% of inflation, if you prefer to be pedantic. Wages and salaries went up 4.9% over the same period. As always, this only shows part of the story. This is the average for wages and salaries for private industry workers. If you look at median household income, it's stagnated. http://economix.blogs.nytimes.com/2009/09/10/a-decade-with-no-income-gain/ http://economix.blogs.nytimes.com/2009/09/10/a-decade-with-n... Median household income in 1998 was $51,295 (adjusted). Median household income in 2009 was $50,303. So we are seeing a stagnation of income, adjusted for inflation. On top of that, food prices are increasing 163% faster than inflation. Now you can post links to isolated stats, and attempt to handwave away the issue, but it is an issue, and each year that food prices eclipse inflation builds towards increasing social and economic problems for those in lower income brackets.
      - yummyfajitas 16y ago
        If food prices increased 6.7% (which, BTW, is a lot less than 100%, the number bugsy claimed), but CPI only increased 4.1%, that means other goods and services must have increased less than 4.1%. You have now changed the reference period, and you are also looking at a different quantity. Wages and salaries have actually increased 28% since 2001 (data doesn't go back to 1998). See my previous timeseries. Household income is a separate quantity - it can be raised or lowered by a variety of factors. For example, it can go down as household size decreases or as per-household hours worked go down. That's not the same thing as a wage decrease. Also, your time period seems a bit cherry picked - you are comparing the top of the last bubble to the bottom of the current bubble.
        michaelchisari 16y ago
        In terms of income, I'm talking about medians, you're talking about means. If you want a solid indicator of how prices and wages affect people, I would suggest looking at the median values, which are not skewed by wealth disparities. Also, you have to take certain factors in to account, such as the utility of the purchases in determining the effects of food prices eclipsing inflation. DVD players may have gone down in price, but that doesn't help much when you need to eat. Also taking into account stratification in food quality (as mentioned above), availability, etc. is also important.
  - Duff 16y ago
    It depends on how you eat. In my efforts to lose weight and get more healthy in general, I shop mostly along the outer edges of the store (produce/meats). In these areas, prices have shot up way beyond 6.7%. Onions and potatoes are easily up 100% or more since 2006/7. "Cheap" cuts of meat like chicken, roasts, pork chops, skirt/flank steaks and beef briskets are easily up 15-20%. Milk is up. Butter up 150% of more since 2006/7. Beer is up 10%. If you eat processed stuff, those manufacturers can blunt price increases by using lots of subsidized commodities like corn and soy products.
    - michaelchisari 16y ago
      If you eat processed stuff, those manufacturers can blunt price increases by using lots of subsidized commodities like corn and soy products. I think this is an important factor to consider. In many ways, this stratification simply offsets the costs into health issues later in life.
- bugsy 16y ago
  Those feds number are cooked. They replace steak prices with hamburger prices and say it is the same thing to show there is no inflation, while they have the printing presses running 24/7. Food prices have doubled based on the receipts I enter into Excel. Everyone should do this and find that the Fed's numbers are totally fraudulent. Knowing this, you can then make better business decisions, such as to get rid of cash as fast as you can.
  - yummyfajitas 16y ago
    They replace steak prices with hamburger prices This seems like the sort of thing they can only do once. Just curious, do you know when they did this? As for my food expenses, month to month variation is bigger than any increase. Which is surprising, seeing as I've been actively trying to eat more for the past year. But I guess healthy food is cheaper than the crap I was eating two years ago.
    - stephenbez 16y ago
      I was curious so I googled it and found this: http://www.shadowstats.com/article/consumer_price_index http://www.shadowstats.com/article/consumer_price_index Apparently it happened early in the Clinton administration. Quoting: The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that.
      - bugsy 16y ago
        Right, the steak/hamburger is one of the well known examples and certainly not the only one nor is it an isolated example. It is the way things are done; cooking the books is the official state policy. The adjustments are done across the board and have resulted in massive "savings" (more money for war yay) regarding Social Security payments and such that are indexed to their official inflation rates.
bryanlarsen 16y ago
$50K is listed as the absolute lower bound for middle class. Any lower bound is debatable, but it's about right when there are almost as many that don't fit as do. Many households at $50K aren't middle class, as you demonstrated, but there are lots of households with $40K of income that could be considered middle class. Most single guys/ladies with $40K of income are probably solidly lower-middle class. And families with an $600 mortgage payment instead of an $1800 mortgage could also be considered middle class at $50k. And with current interest rates (3% floating), $600/month will buy half of the houses in the midwest because $140K is the median house price in the midwest.
roboneal 16y ago
Considering the article cites Census data broadly collected across the country - not sure where you are getting those mortgage/food price numbers? $1800 would buy you a 5 bedroom/2.5 bath/2400sf house in Houston. A "small" house for a couple making $50K gross would run easily under $1000/mo. While prices are higher, I'm not paying double over 2008 prices....otherwise I'd be paying $6 for a gallon of milk or $4 for a loaf of bread.
anamax 16y ago
> Mortgage on a small house is $1800/month. $1800/month is a >$300k 30 year mortgage. > Cars are expensive too, add $400 a month for payments on that. That's absurd. It's not hard to stay well under $20k new and used is even cheaper. Keep it for at least 7 years and $400/month is two cars and change.

by bugsy 16y ago

joe_the_user 16y ago

Indeed, I don't think you can judge comfort level or disposable income by raw income level very well regardless. I have a friend who grew up in relative poverty. Her family had ten kids closely spaced together including twins. Her father made $150k/year with no benefits and her mother was a house-wife. I had things a good deal easier just because my parents only had two kid even though their income was less.

yummyfajitas 16y ago

Food prices have doubled the last couple years. No, they are up 6.7% since Jan 1 2008. http://research.stlouisfed.org/fred2/series/CPIUFDSL http://research.stlouisfed.org/fred2/series/CPIUFDSL

michaelchisari 16y ago
Food prices have risen twice as much as inflation. So, no, they haven't doubled, but their rate of increase has outpaced the rest of the economy. And with wages stagnating in relationship to inflation, this is a cause for concern.
- yummyfajitas 16y ago
  Inflation over the same period was 4.1%. http://research.stlouisfed.org/fred2/series/CPIAUCSL http://research.stlouisfed.org/fred2/series/CPIAUCSL So no, not "double inflation" either. Wages and salaries went up 4.9% over the same period. http://research.stlouisfed.org/fred2/series/ECIWAG http://research.stlouisfed.org/fred2/series/ECIWAG
  - michaelchisari 16y ago
    So no, not "double inflation" either. Alright, 163% of inflation, if you prefer to be pedantic. Wages and salaries went up 4.9% over the same period. As always, this only shows part of the story. This is the average for wages and salaries for private industry workers. If you look at median household income, it's stagnated. http://economix.blogs.nytimes.com/2009/09/10/a-decade-with-no-income-gain/ http://economix.blogs.nytimes.com/2009/09/10/a-decade-with-n... Median household income in 1998 was $51,295 (adjusted). Median household income in 2009 was $50,303. So we are seeing a stagnation of income, adjusted for inflation. On top of that, food prices are increasing 163% faster than inflation. Now you can post links to isolated stats, and attempt to handwave away the issue, but it is an issue, and each year that food prices eclipse inflation builds towards increasing social and economic problems for those in lower income brackets.
    - yummyfajitas 16y ago
      If food prices increased 6.7% (which, BTW, is a lot less than 100%, the number bugsy claimed), but CPI only increased 4.1%, that means other goods and services must have increased less than 4.1%. You have now changed the reference period, and you are also looking at a different quantity. Wages and salaries have actually increased 28% since 2001 (data doesn't go back to 1998). See my previous timeseries. Household income is a separate quantity - it can be raised or lowered by a variety of factors. For example, it can go down as household size decreases or as per-household hours worked go down. That's not the same thing as a wage decrease. Also, your time period seems a bit cherry picked - you are comparing the top of the last bubble to the bottom of the current bubble.
      - michaelchisari 16y ago
        In terms of income, I'm talking about medians, you're talking about means. If you want a solid indicator of how prices and wages affect people, I would suggest looking at the median values, which are not skewed by wealth disparities. Also, you have to take certain factors in to account, such as the utility of the purchases in determining the effects of food prices eclipsing inflation. DVD players may have gone down in price, but that doesn't help much when you need to eat. Also taking into account stratification in food quality (as mentioned above), availability, etc. is also important.
- Duff 16y ago
  It depends on how you eat. In my efforts to lose weight and get more healthy in general, I shop mostly along the outer edges of the store (produce/meats). In these areas, prices have shot up way beyond 6.7%. Onions and potatoes are easily up 100% or more since 2006/7. "Cheap" cuts of meat like chicken, roasts, pork chops, skirt/flank steaks and beef briskets are easily up 15-20%. Milk is up. Butter up 150% of more since 2006/7. Beer is up 10%. If you eat processed stuff, those manufacturers can blunt price increases by using lots of subsidized commodities like corn and soy products.
  - michaelchisari 16y ago
    If you eat processed stuff, those manufacturers can blunt price increases by using lots of subsidized commodities like corn and soy products. I think this is an important factor to consider. In many ways, this stratification simply offsets the costs into health issues later in life.
bugsy 16y ago
Those feds number are cooked. They replace steak prices with hamburger prices and say it is the same thing to show there is no inflation, while they have the printing presses running 24/7. Food prices have doubled based on the receipts I enter into Excel. Everyone should do this and find that the Fed's numbers are totally fraudulent. Knowing this, you can then make better business decisions, such as to get rid of cash as fast as you can.
- yummyfajitas 16y ago
  They replace steak prices with hamburger prices This seems like the sort of thing they can only do once. Just curious, do you know when they did this? As for my food expenses, month to month variation is bigger than any increase. Which is surprising, seeing as I've been actively trying to eat more for the past year. But I guess healthy food is cheaper than the crap I was eating two years ago.
  - stephenbez 16y ago
    I was curious so I googled it and found this: http://www.shadowstats.com/article/consumer_price_index http://www.shadowstats.com/article/consumer_price_index Apparently it happened early in the Clinton administration. Quoting: The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that.
    - bugsy 16y ago
      Right, the steak/hamburger is one of the well known examples and certainly not the only one nor is it an isolated example. It is the way things are done; cooking the books is the official state policy. The adjustments are done across the board and have resulted in massive "savings" (more money for war yay) regarding Social Security payments and such that are indexed to their official inflation rates.

bryanlarsen 16y ago

$50K is listed as the absolute lower bound for middle class. Any lower bound is debatable, but it's about right when there are almost as many that don't fit as do. Many households at $50K aren't middle class, as you demonstrated, but there are lots of households with $40K of income that could be considered middle class. Most single guys/ladies with $40K of income are probably solidly lower-middle class. And families with an $600 mortgage payment instead of an $1800 mortgage could also be considered middle class at $50k. And with current interest rates (3% floating), $600/month will buy half of the houses in the midwest because $140K is the median house price in the midwest.

roboneal 16y ago

Considering the article cites Census data broadly collected across the country - not sure where you are getting those mortgage/food price numbers? $1800 would buy you a 5 bedroom/2.5 bath/2400sf house in Houston. A "small" house for a couple making $50K gross would run easily under $1000/mo. While prices are higher, I'm not paying double over 2008 prices....otherwise I'd be paying $6 for a gallon of milk or $4 for a loaf of bread.

anamax 16y ago

> Mortgage on a small house is $1800/month. $1800/month is a >$300k 30 year mortgage. > Cars are expensive too, add $400 a month for payments on that. That's absurd. It's not hard to stay well under $20k new and used is even cheaper. Keep it for at least 7 years and $400/month is two cars and change.