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I'm a bleeding heart liberal but every time I see this kind of analysis I get uncomfortable. Most middle aged peole who live in Claifornia west of the I5 and o

I'm a bleeding heart liberal but every time I see this kind of analysis I get uncomfortable. Most middle aged peole who live in Claifornia west of the I5 and own a house probably have a net worth > $700k. I would guess most people who read this site will have a greater net worth before they are forty, if not sooner. Are these rich people? If you live in Boston, New York or California you can have that net worth and just be getting by. It doesn't feel like you live a life of priveledge, or you have some kind of power over the world that other responsible employed adults don't have. It's hard to feel like that sort of wealth is really a social ill.

sliverstorm 12y ago
Sure, you're "just getting by". But you are still wealthy- it is your wealth that lets you even hope to live there. If you were to cash out and move to Mexico, you'd practically be a shah. Wealth isn't just access to servants and lavish meals, it's access to anything other people want but can't afford. A house in San Francisco is such a thing, even if it doesn't have carved ivory statues and a moat.
- TTPrograms 12y ago
  For most people, though, isn't living in that expensive environment a significant boost to their ability to earn at a level required to achieve that net worth? Not just San Fran, but any urban environment as opposed to, say, a rural environment. This suggests possibly massive disruption in wealth structure once augmented reality puts remote interaction on par with local interaction. If your day-to-day expenses are significantly more decoupled from your income how will spending patterns in the top 5% change? Would luxury spending increase, or perhaps individuals would be able to invest more and retire earlier?
  - georgeoliver 12y ago
    That assumes no adjustment in earnings, though. What will the labor supply/demand curve look like when you don't have to live in SV?
  - sliverstorm 12y ago
    First, yes. Like many other investments of capital, (such as research) it provides economic opportunities. Second, absolutely yes. This has been the dream of telecommuting for, what, a decade? But rather than increasing discretionary income, remember that perfect telecommuting brings with it increased competition, which drives down compensation. So you would probably not see 2014 San Francisco tech salaries being paid to all those remote workers. A real part of today's high SV salaries is simple cost-of-living adjustment that would be unnecessary with remote hires in Nowhere, USA.
jdmichal 12y ago
Only the equity paid off on that $700k+ mortgage counts as net worth. How many of those people completely own their houses?
- seanmcdirmid 12y ago
  If they bought during the 90s crash, that house probably only costed $200k, and the mortgage is probably mostly paid off. They really can't sell either to upgrade given the way property taxes work in California (they pay tax on $200k, a new buyer would pay tax on $700k).
  - ChuckMcM 12y ago
    This is part of it. Prior to the great 'give everyone a mortgage' mess, a lot of people ended up buying their own home. In the Bay Area it was popular to convert stock options into property because you could live on your property but not on the stock certificates. That said, it is much more common to exclude the net asset value of your primary residence in a 'net wealth' computation as it isn't nearly as useful to compare 'rich homeless people' as it is to compare people who are wealthy beyond simple home ownership. It would be interesting to see the map where primary residences were excluded. (and the numbers, which is to say how much wealth outside of your home you need to qualify as the "rich".) And once you've done that, consider excluding $250K * kids as 'college money'[1]. Then you start to realize that "rich" means different things to different people. [1] That assumes a lot of course, but still median 4 year tuition * kids might be useful too.
ap22213 12y ago
Based on my experiences, if you live in the DC metro area and have a net worth of 10M, you're considered upper middle class.
nandemo 12y ago
> Most middle aged peole who live in Claifornia west of the I5 and own a house probably have a net worth > $700k. Well, yeah, there are lots of wealthy people in California. It seems like you're saying "it's so normal to be wealthy in California, so they aren't really wealthy". Sure, maybe you aren't relatively wealthy compared to your neighbours, but that doesn't change the fact that you're wealthier than 99% of the world. > you can have that net worth and just be getting by Only if you define "just getting by" by "having a normal lifestyle compared to your peers". But then most of the people in any range will be "getting by", by definition, including the 0.1%. There's no need to confuse "these people are wealthy" (for some arbitrary but quite reasonable definition of "wealthy") with "these people are privileged" or "these people should feel guilty" (both of which involves all sorts of value judgement)

sliverstorm 12y ago

Sure, you're "just getting by". But you are still wealthy- it is your wealth that lets you even hope to live there. If you were to cash out and move to Mexico, you'd practically be a shah. Wealth isn't just access to servants and lavish meals, it's access to anything other people want but can't afford. A house in San Francisco is such a thing, even if it doesn't have carved ivory statues and a moat.

TTPrograms 12y ago
For most people, though, isn't living in that expensive environment a significant boost to their ability to earn at a level required to achieve that net worth? Not just San Fran, but any urban environment as opposed to, say, a rural environment. This suggests possibly massive disruption in wealth structure once augmented reality puts remote interaction on par with local interaction. If your day-to-day expenses are significantly more decoupled from your income how will spending patterns in the top 5% change? Would luxury spending increase, or perhaps individuals would be able to invest more and retire earlier?
- georgeoliver 12y ago
  That assumes no adjustment in earnings, though. What will the labor supply/demand curve look like when you don't have to live in SV?
- sliverstorm 12y ago
  First, yes. Like many other investments of capital, (such as research) it provides economic opportunities. Second, absolutely yes. This has been the dream of telecommuting for, what, a decade? But rather than increasing discretionary income, remember that perfect telecommuting brings with it increased competition, which drives down compensation. So you would probably not see 2014 San Francisco tech salaries being paid to all those remote workers. A real part of today's high SV salaries is simple cost-of-living adjustment that would be unnecessary with remote hires in Nowhere, USA.

jdmichal 12y ago

Only the equity paid off on that $700k+ mortgage counts as net worth. How many of those people completely own their houses?

seanmcdirmid 12y ago
If they bought during the 90s crash, that house probably only costed $200k, and the mortgage is probably mostly paid off. They really can't sell either to upgrade given the way property taxes work in California (they pay tax on $200k, a new buyer would pay tax on $700k).
- ChuckMcM 12y ago
  This is part of it. Prior to the great 'give everyone a mortgage' mess, a lot of people ended up buying their own home. In the Bay Area it was popular to convert stock options into property because you could live on your property but not on the stock certificates. That said, it is much more common to exclude the net asset value of your primary residence in a 'net wealth' computation as it isn't nearly as useful to compare 'rich homeless people' as it is to compare people who are wealthy beyond simple home ownership. It would be interesting to see the map where primary residences were excluded. (and the numbers, which is to say how much wealth outside of your home you need to qualify as the "rich".) And once you've done that, consider excluding $250K * kids as 'college money'[1]. Then you start to realize that "rich" means different things to different people. [1] That assumes a lot of course, but still median 4 year tuition * kids might be useful too.

ap22213 12y ago

Based on my experiences, if you live in the DC metro area and have a net worth of 10M, you're considered upper middle class.

nandemo 12y ago

> Most middle aged peole who live in Claifornia west of the I5 and own a house probably have a net worth > $700k. Well, yeah, there are lots of wealthy people in California. It seems like you're saying "it's so normal to be wealthy in California, so they aren't really wealthy". Sure, maybe you aren't relatively wealthy compared to your neighbours, but that doesn't change the fact that you're wealthier than 99% of the world. > you can have that net worth and just be getting by Only if you define "just getting by" by "having a normal lifestyle compared to your peers". But then most of the people in any range will be "getting by", by definition, including the 0.1%. There's no need to confuse "these people are wealthy" (for some arbitrary but quite reasonable definition of "wealthy") with "these people are privileged" or "these people should feel guilty" (both of which involves all sorts of value judgement)