What is Middle Class....Really?

[Anonymous]

Anonymous wrote:
Makes sense.

BTW, for readers unfamiliar with real wealth, here's a hierarchy:

https://www.joshuakennon.com/the-hierarchy-of-the-rich-in-the-united-states/

It's weird that this article doesn't seem to include a category for UMC professionals who accumulate wealth over time. I guess they fall into the "Millionaire Next Door" category, but it's pretty odd that they weren't explicitly called out. Yes, doctors and lawyers have to work for a living. But the savvy ones also save and invest. They many not get to the point of mid-six figure passive income, but they can do pretty well and generate low six-figure passive income...which is a lot of passive income.

[Anonymous]

Anonymous wrote:It's weird that this article doesn't seem to include a category for UMC professionals who accumulate wealth over time. I guess they fall into the "Millionaire Next Door" category, but it's pretty odd that they weren't explicitly called out. Yes, doctors and lawyers have to work for a living. But the savvy ones also save and invest. They many not get to the point of mid-six figure passive income, but they can do pretty well and generate low six-figure passive income...which is a lot of passive income.

http://www2.ucsc.edu/whorulesamerica/power/investment_manager_2014.html

Here's the relevant extract:

One might think that physicians, America's highest-paid professional group, would be largely exempt from the economic currents affecting most other Americans. This isn't so. Medscape, a key physician website, reports that as of 2013, mean income for male physicians in all specialties was $259k; for female physicians, it was $199k. Family practice doctors and internists earned the least, averaging around $175k. Orthopedic surgeons earned the most, averaging around $405k; they are the only physician specialty falling within the top 1% by income. If we assume an income of $259k before taxes, our male physician filing jointly would bring home about $200k after taxes annually (or about $16,600 per month). In most of the U.S., it is likely that living well, raising a family, and other expenses would make it difficult to save more than $4,000 to $5,000 per month, or around $50k to $60k per year.

If our hypothetical physician saves and invests for 35 years, he will have contributed less than $2 million dollars to retirement plans; with growth over time, the absolute number will be larger but the purchasing power of each dollar will be less. Future returns in investment markets are somewhat unpredictable, as is inflation. Thus, an average physician — while doing very well by most people's standards — is unlikely to earn or accumulate enough to place him or her in the top 1% by income or net worth at the end of their career. Opportunity for most Americans, even physicians, is decreasing, even while net worth and income accelerate for those at the very top of the system. If an average physician today is unlikely to make it into the top 1% (Piketty and Saez's end-of-2012 data show that the 1% income line is crossed with an income of $396k per year), then it seems pretty clear that crossling that line via income, savings, and investments will be impossible for nearly every American in the future.

[Anonymous]

Anonymous wrote:As someone who makes somewhere between 3M and 5M a year depending on a number of international factors, I have far more respect for the folks who make 100k and appreciate it than for the various slugs who trumpet their 200-500k salaries while looking down on people who make less. And I know who I'm far more likely to take under my wing for new business ventures.

+1 from another member of the 7-figure HHI club (and no, I'm not arrogant enough to think I got here simply because I worked harder than everyone else).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: You are upper class, although it's possible you are "new money," depending on your grandparents' situation.

She's upper middle class unless she's living on passive income.

Disagree, we don't not know if she COULD live on passive income, only that she and DH earn in top 1%.
I made a distinction above between upper class and "new money," when I should have made the distinction between upper-lower (new money) and upper-upper (which you cannot earn your way into). If the poster's parents went to the Dalton School and Deerfield (as examples), it's likely she's upper-upper.

I'm the PP OP is responding to. It's interesting, because I would put us both in UMC (while recognizing DH and I are extremely well off). The reason for this is we both have to work for a living...though, theoretically, if my parents believed in providing inheritances early we could live a decent lifestyle off of passive income (not as nice as our current lifestyle, though).

I think the question about "new money" gets at one of the more difficult aspects of defining class in the US. My parents are immigrants, while DH has one ancestor who came over the the Mayflower (as an indentured servant). The rest of his ancestors still immigrated at least 3 generations ago, though. My parents come from fairly well-off families, landed, in their country of origin, but both of my grandfathers were younger siblings meaning they did not inherit the bulk of their familial wealth (think Mathew Crowley but not in Europe). One was a doctor, the other an engineer turned extremely high level government official. My parents did not come to the US for economic opportunity so much as better training, but they ended up staying here and becoming wealthier than they likely would have if they returned. My mom's siblings benefit from passive income, living lifestyles their professions (college professor, political activist) could never possibly support. So, class-wise, given this background with grandparents who straddled UMC and UC in my parents' birth country, what does that make me? I think it still makes me UMC, but I know that in my parents' culture my tastes are "higher brow" than my friends' whose parents come from less well-off backgrounds in the same country but earn similarly to my parents.

While I know that OP didn't mean it this way, part of the problem with class and the somewhat pejorative "new money" is that it explicitly leaves out a majority of Americans who either were denied the opportunity to build generational wealth or just don't have that history here in the US. A wealth African-American person is pretty much guaranteed to be "new money"...what does that mean for their SES?

OP here, and the one who originally made the distinction between "upper class" and "new money," although I corrected it later to "lower-upper" (which is the new money) and "upper-upper" (inherited through a few generations). Certainly I did not intend it to be pejorative, but merely a way of noting that one cannot earn his/her way into the "upper-upper," no matter how rich. (Interestingly, many "lower-uppers" have more wealth than "upper-uppers.")

I realize we're digressing from my original point, but the topic is interesting and does tie in. FWIW, I still think you are in the upper-class, as your income puts you in the top 1%. If people in the upper 1% income-wise still consider themselves "upper-middle," then I understand more what is happening here: There is "class deflation" here on DCUM! That is why so many of those earning $200,000 and $300,000 look at someone earning $100,000 - a single income that still affords a comfortable upper-middle class lifestyle - and calls them lower-middle, or, even worse, lower-class and "almost welfare class." It's patently ridiculous. Everyone is lowering their class (at least based on some of these DCUM posts), which means that if someone earning $100,000 is viewed as lower-middle, then the typical average couple pulling in $54,000 is....what.....poor? No wonder the average American is insulted by the disdain upon which the upper classes look at them.

So, I get it. If a couple earning $600K consider themselves upper-middle, then $100K DOES sound...It's more than the average COMBINED income of two people, here in DC.)well....a bit hard to get by. But that's not the case. People earing $100K (single) have maids, European vacations, theater tickets, etc., etc., and enjoy an upper-middle class lifestyle with that income. So the perspective is skewed, which is what I've been saying all along.

(will continue below in a minute)

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's weird that this article doesn't seem to include a category for UMC professionals who accumulate wealth over time. I guess they fall into the "Millionaire Next Door" category, but it's pretty odd that they weren't explicitly called out. Yes, doctors and lawyers have to work for a living. But the savvy ones also save and invest. They many not get to the point of mid-six figure passive income, but they can do pretty well and generate low six-figure passive income...which is a lot of passive income.

http://www2.ucsc.edu/whorulesamerica/power/investment_manager_2014.html

Here's the relevant extract:

One might think that physicians, America's highest-paid professional group, would be largely exempt from the economic currents affecting most other Americans. This isn't so. Medscape, a key physician website, reports that as of 2013, mean income for male physicians in all specialties was $259k; for female physicians, it was $199k. Family practice doctors and internists earned the least, averaging around $175k. Orthopedic surgeons earned the most, averaging around $405k; they are the only physician specialty falling within the top 1% by income. If we assume an income of $259k before taxes, our male physician filing jointly would bring home about $200k after taxes annually (or about $16,600 per month). In most of the U.S., it is likely that living well, raising a family, and other expenses would make it difficult to save more than $4,000 to $5,000 per month, or around $50k to $60k per year.

If our hypothetical physician saves and invests for 35 years, he will have contributed less than $2 million dollars to retirement plans; with growth over time, the absolute number will be larger but the purchasing power of each dollar will be less. Future returns in investment markets are somewhat unpredictable, as is inflation. Thus, an average physician — while doing very well by most people's standards — is unlikely to earn or accumulate enough to place him or her in the top 1% by income or net worth at the end of their career. Opportunity for most Americans, even physicians, is decreasing, even while net worth and income accelerate for those at the very top of the system. If an average physician today is unlikely to make it into the top 1% (Piketty and Saez's end-of-2012 data show that the 1% income line is crossed with an income of $396k per year), then it seems pretty clear that crossling that line via income, savings, and investments will be impossible for nearly every American in the future.

It's interesting, because literally every doctor I know likely earns more than these average numbers based on their lifestyle...and it's hard to believe that they are all above average practitioners.

Regardless, though, it still seems like these incomes would put them above the "millionaire next door" school teachers. Maybe not.

[Anonymous]

OP, you are responding to me...and I am making the distinction between passive and earned income to be the difference between UC and UMC. I think $100K is UMC, though. And that many high-income UMC might actually be better off than UC folks.

This is a bit more of a European way of looking at things, though, I suppose. I in no way mean to imply that my HHI is anything but extremely high...I've supported your viewpoint in multiple posts throughout this thread.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: You are upper class, although it's possible you are "new money," depending on your grandparents' situation.

She's upper middle class unless she's living on passive income.

Disagree, we don't not know if she COULD live on passive income, only that she and DH earn in top 1%.
I made a distinction above between upper class and "new money," when I should have made the distinction between upper-lower (new money) and upper-upper (which you cannot earn your way into). If the poster's parents went to the Dalton School and Deerfield (as examples), it's likely she's upper-upper.

I'm the PP OP is responding to. It's interesting, because I would put us both in UMC (while recognizing DH and I are extremely well off). The reason for this is we both have to work for a living...though, theoretically, if my parents believed in providing inheritances early we could live a decent lifestyle off of passive income (not as nice as our current lifestyle, though).

I think the question about "new money" gets at one of the more difficult aspects of defining class in the US. My parents are immigrants, while DH has one ancestor who came over the the Mayflower (as an indentured servant). The rest of his ancestors still immigrated at least 3 generations ago, though. My parents come from fairly well-off families, landed, in their country of origin, but both of my grandfathers were younger siblings meaning they did not inherit the bulk of their familial wealth (think Mathew Crowley but not in Europe). One was a doctor, the other an engineer turned extremely high level government official. My parents did not come to the US for economic opportunity so much as better training, but they ended up staying here and becoming wealthier than they likely would have if they returned. My mom's siblings benefit from passive income, living lifestyles their professions (college professor, political activist) could never possibly support. So, class-wise, given this background with grandparents who straddled UMC and UC in my parents' birth country, what does that make me? I think it still makes me UMC, but I know that in my parents' culture my tastes are "higher brow" than my friends' whose parents come from less well-off backgrounds in the same country but earn similarly to my parents.

While I know that OP didn't mean it this way, part of the problem with class and the somewhat pejorative "new money" is that it explicitly leaves out a majority of Americans who either were denied the opportunity to build generational wealth or just don't have that history here in the US. A wealth African-American person is pretty much guaranteed to be "new money"...what does that mean for their SES?

OP here, and the one who originally made the distinction between "upper class" and "new money," although I corrected it later to "lower-upper" (which is the new money) and "upper-upper" (inherited through a few generations). Certainly I did not intend it to be pejorative, but merely a way of noting that one cannot earn his/her way into the "upper-upper," no matter how rich. (Interestingly, many "lower-uppers" have more wealth than "upper-uppers.")

I realize we're digressing from my original point, but the topic is interesting and does tie in. FWIW, I still think you are in the upper-class, as your income puts you in the top 1%. If people in the upper 1% income-wise still consider themselves "upper-middle," then I understand more what is happening here: There is "class deflation" here on DCUM! That is why so many of those earning $200,000 and $300,000 look at someone earning $100,000 - a single income that still affords a comfortable upper-middle class lifestyle - and calls them lower-middle, or, even worse, lower-class and "almost welfare class." It's patently ridiculous. Everyone is lowering their class (at least based on some of these DCUM posts), which means that if someone earning $100,000 is viewed as lower-middle, then the typical average couple pulling in $54,000 is....what.....poor? No wonder the average American is insulted by the disdain upon which the upper classes look at them.

So, I get it. If a couple earning $600K consider themselves upper-middle, then $100K DOES sound...It's more than the average COMBINED income of two people, here in DC.)well....a bit hard to get by. But that's not the case. People earing $100K (single) have maids, European vacations, theater tickets, etc., etc., and enjoy an upper-middle class lifestyle with that income. So the perspective is skewed, which is what I've been saying all along.

(will continue below in a minute)

...continuing from above....

But anyway, to the $600K couple (can I borrow a few bucks?), you are upper-class. Perhaps not upper-upper, but definitely part of the upper class.

You bring up another interesting point, though, about the black upper class, and that you feel that they have not had enough opportunity (or any opportunity) to accumulate and inherit generational wealth. That's not entirely true. There's a book called "The Aristocracy of Color" in which pockets of black elites, as they are called, are described - and dating back to the early 1820s. So there is some true "upper-upper" class blacks around, although obviously not as many as whites. There's another book "People Like Us" (or something like that), written by a member of the so-called black elite, and he describes the cotillions and summering on Nantucket. An interesting read.

To circle back (I have plans this evening and cannot respond back again after this), I keep pointing out the skewed perspectives of DCUMers, where $500,000/couple is merely upper-middle in their minds, and $100,000 (or $200,000 a couple for an apples-to-apples comparison) is therefore considered lower-middle. But again, that's my point. The perspective is wrong. The average Americans in the pejoratively nicknamed "flyover country" know it's wrong, as well. And until Democrats understand that, rather than double-down on the insults (if this thread is any indication), they will continue to lose votes.

[Anonymous]

Anonymous wrote:OP, you are responding to me...and I am making the distinction between passive and earned income to be the difference between UC and UMC. I think $100K is UMC, though. And that many high-income UMC might actually be better off than UC folks.

This is a bit more of a European way of looking at things, though, I suppose. I in no way mean to imply that my HHI is anything but extremely high...I've supported your viewpoint in multiple posts throughout this thread.

OP here, and thank you. I believe I've recognized several of your posts, and I appreciate that you recognize a $100 salary is UMC. I believe I've gotten frustrated not only because there's been some real "nasties" around (i.e., I'm a moron whose income almost qualifies for welfare), but that my major point is continuing to be missed by so many - and that's how it relates to the groundswell of anger among the real middle and working class that showed up at the polls.

Anyway, I now have to go. I've enjoyed my discussion with you.

[Anonymous]

Anonymous wrote:Regardless, though, it still seems like these incomes would put them above the "millionaire next door" school teachers. Maybe not.

Basically, the only way to get to the upper class type of generational wealth is to get it via the financial industry, whether that's stock options, private equity, etc. Lawyers and doctors basically inhabit the lower half of the top one percent (at best) and aren't going to climb into the 0.1% of income or top 1% of wealth. They're the privileged workhorses of the elite. It's almost impossible to earn your way into the upper class and that's why you hear all these HHI people referring to themselves as upper middle class. They're recognizing that they just can't work themselves into having generational wealth.

Instead of class deflation on this site, I think that we're seeing a lack of awareness of how the upper class has pulled so thoroughly away from those who have to earn income.

Another way to look at it is that the professionals posting on here are unlikely to be affected by the estate tax because their total worth will be less than $10M. The estate tax affects very, very few people, but the upper class is doing its best to put fear into the upper middle class that they'll be affected.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, you are responding to me...and I am making the distinction between passive and earned income to be the difference between UC and UMC. I think $100K is UMC, though. And that many high-income UMC might actually be better off than UC folks.

This is a bit more of a European way of looking at things, though, I suppose. I in no way mean to imply that my HHI is anything but extremely high...I've supported your viewpoint in multiple posts throughout this thread.

OP here, and thank you. I believe I've recognized several of your posts, and I appreciate that you recognize a $100 salary is UMC. I believe I've gotten frustrated not only because there's been some real "nasties" around (i.e., I'm a moron whose income almost qualifies for welfare), but that my major point is continuing to be missed by so many - and that's how it relates to the groundswell of anger among the real middle and working class that showed up at the polls.

Anyway, I now have to go. I've enjoyed my discussion with you.

Oops! I didn't mean $100 salary....I meant $100k. (Someone earning $100 would be struggling!)

[Anonymous]

Discussing salary without location is meaningless. Also not that relevant if you are talking about it without discussing family make-up.

$100K for a single person no kids D.C. Area is likely the high range of middle. They can live in a pretty nice apt and most importantly are not limited by where they can live by school options. This is the biggest cost.

That salary is probably UMC elsewhere though even if you have kids because in nonurban areas much more of the spots for living are viable school options.

[Anonymous]

Anonymous wrote:Discussing salary without location is meaningless. Also not that relevant if you are talking about it without discussing family make-up.

$100K for a single person no kids D.C. Area is likely the high range of middle. They can live in a pretty nice apt and most importantly are not limited by where they can live by school options. This is the biggest cost.

That salary is probably UMC elsewhere though even if you have kids because in nonurban areas much more of the spots for living are viable school options.

Very strange terminology there. You're saying that a person earning $100k in DC is in the high (or upper) range of middle, but not upper-middle. They're the same thing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Discussing salary without location is meaningless. Also not that relevant if you are talking about it without discussing family make-up.

$100K for a single person no kids D.C. Area is likely the high range of middle. They can live in a pretty nice apt and most importantly are not limited by where they can live by school options. This is the biggest cost.

That salary is probably UMC elsewhere though even if you have kids because in nonurban areas much more of the spots for living are viable school options.

Very strange terminology there. You're saying that a person earning $100k in DC is in the high (or upper) range of middle, but not upper-middle. They're the same thing.

NP- Yeah, they're the same thing, whatever OP, you are obsessive.

[Anonymous]

Anonymous wrote:Discussing salary without location is meaningless. Also not that relevant if you are talking about it without discussing family make-up.

$100K for a single person no kids D.C. Area is likely the high range of middle. They can live in a pretty nice apt and most importantly are not limited by where they can live by school options. This is the biggest cost.

That salary is probably UMC elsewhere though even if you have kids because in nonurban areas much more of the spots for living are viable school options.

A single person earning a $100,000 in DC can afford a "nice apartment" in a decent section of town - and that's about it? Again, this is what the OP is talking about. That's a single salary equivalent to the average combined HHI income, right here in the DC area, and it provides for a very comfortable standard of living.

People (single no kids) who earn in that range have posted as to their lifestyles, and it's a lot better than merely a "nice apartment". On that income, they are taking trips to Europe, going on luxury-line cruises, have a housekeeper, hire people to mow their lawn (so they own property), max out their retirement savings, and so forth. Definitely upper-middle.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Discussing salary without location is meaningless. Also not that relevant if you are talking about it without discussing family make-up.

$100K for a single person no kids D.C. Area is likely the high range of middle. They can live in a pretty nice apt and most importantly are not limited by where they can live by school options. This is the biggest cost.

That salary is probably UMC elsewhere though even if you have kids because in nonurban areas much more of the spots for living are viable school options.

Very strange terminology there. You're saying that a person earning $100k in DC is in the high (or upper) range of middle, but not upper-middle. They're the same thing.

NP- Yeah, they're the same thing, whatever OP, you are obsessive.

How do you know these comments are from the OP?