Tuesday, July 25, 2006

Money realities: when $500,000 a year is not enough

Slacktivist has a great post that illustrates the widely varying views people have on a fundamental question: How much money is enough?

Here we have a group of people convinced that $500,000 a year is "not enough to live on." They would not understand the grateful joy of my fortunate colleagues in the press room. They wouldn't consider $95,000 a year as "striking it rich," but as "striking it poor."

I don't begrudge those millionaires their millions any more than I begrudge the lucky guys in the pressroom their tens of thousands. The trouble comes when these extraordinary people cease to realize they're extraordinary -- when elites fail to realize that they are elites.

I do think Americans live in a warped reality when it comes to economic class issues. Probably as warped as the female body image world: I remember in the movie Devil Wears Prada, the main character was considered fat because she wore a size 6 dress (she's down to a size 4 by the end, and this is considered a great accomplishment). And no one in the movie commented on how absurd this was. According to this article, the average (presumably American) woman wears a size 11-14 dress. Did the characters in the movie know this? Surely they did, working in the fashion industry?

But is body image distortion universe in which size 6 is fat any crazier than thinking you can't live on $95,000 a year? Or $500,000 a year? (Average American income for household of 4: 44,389, according to Slacktivist).

Of course, there are people who would consider a $45,000 a year wildly extravagant, too. It's not bad that people have different lifestyles, with wildly differing costs. But it is bad that people don't know when they are exceptional and mistake their own, rarified reality for what the country, or the world as a whole, is experiencing. It's OK if you want to spend more than $500,000 a year, but you should have some consciousness that many Americans won't spend that much in 10 years, and many people around the world will never see that kind of money.

It's OK to be rich, but please, don't be oblivious and insensitive. If you're bringing in $200,000 a year, it positively grates on me to hear you call yourself "middle class". You may be in the "middle" of your peer group, but look at some census data before you declare yourself the "middle" of the country. Of course, you may not feel rich, because of the obligations on your money. $200,000 a year can disappear darn quick, I bet. It doesn't let you live like Michael Jackson, certainly. It probably won't even let you live the lifestyle of "middle class" people depicted on TV, because of the "lifestyle inflation" most shows seem to indulge in. So you may feel like you're middle class, even though you're in a very high income percentile.

I guess I'm saying don't rely on your "gut" to figure out where you are in the economic hierarchy, because our gut feelings on these matters are often out of sync with reality. Not everyone gets to call themselves middle class.

4 Comments:

Anonymous Sarah said...

Yay for a post on one of my favorite pet peeves.

5:41 AM, July 26, 2006  
Blogger grishnash said...

It's easy to fall into this trap, and I think you've hit exactly on the reason. I have to be middle class, because of the people I might discuss such things with (my friends and co-workers), I know that I make more than some, and less than others. Therefore, I must be solidly in the center of the American experience.

Then there's a statistical reality check. Global Rich List has a nice web tool that you can use to compare your income on a world scale. From that site, I have computed that I'm the 42,561,742nd richest person in the world. Granted, 42,561,741 is a lot of people, and some of those 42,561,741 have a LOT more money than I do, but it's really nothing compared with the 6 billion or so on the other side. I'm stinkin' rich.

Of course, the tool is built by a U.K. organization, so it doesn't compute where you are in U.S. terms. I think last time I looked at the quintiles published by the IRS, I'm around the divider between the top and second quintile of American income. So, for every person making more than me in this country, there are 4 making less. I guess if you wanted to call the top quintile "rich", the bottom "poor", and the middle three "middle class", then yes, I might squeak in at the very, very, very top of "middle class". Either that or I'm a not-very-rich rich person. In either case, the lottery win mentioned in the post you linked to would definitely change my lifestyle for the better.

Part of the problem is that the income curve is starting to look really flat. If Shaquille O'Neal were visiting an elementary school classroom where the kids averaged 4 feet tall, the average height of people in the classroom might be something like 4'1". You might then say that a kid who is 4'2" is almost as tall as Shaq because he's the third tallest in the room. So while in numeric terms, I'm in that group of rich people, maybe, I still have a lot of the same concerns that mark a middle class. I don't wonder where the money is coming from for my next meal, but I could quickly find myself there given a catastrophic health problem or something. That's at least more likely than me buying a yacht next year.

And yet another problem is that the true "middle class" today has gotten a lot poorer as a group. It used to be that my situation with steady employment, a good retirement plan, and a decent house that I can afford on my income was available to a lot more of the "middle class". It seems as now those things are a luxury only available to the very top of the middle class, where I'm sittting. Maybe I haven't gotten rich, the middle class has gotten poor.

5:25 PM, July 26, 2006  
Anonymous Justin said...

Course in most countries class is about more than money.

6:56 PM, July 26, 2006  
Blogger Zachary Drake said...

Thanks for your excellent comments and the Global Rich List link. I think I'm going to "front page" that.

9:00 AM, July 28, 2006  

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