Writes Megan McArdle in "The $400K conundrum: Why America’s urban rich don’t feel that way" (WaPo).
Compared with the old establishment that survived on inherited wealth and social position, they are insecure, and many worry that their offspring will be downwardly mobile, which leads them to spend virtually all of their outsize disposable incomes on preparing the children to become star performers in the next round of competition....
What self-respecting mammals don’t want their kids to have it at least as good as they did? At the median household income, that’s even a semi-plausible demand, because here all government needs to provide is median-grade public goods.... If you would be satisfied knowing that your child had a secure but unremarkable life managing a Walmart in some exurb, the government could probably guarantee that....
But — as McArdle sees it — if you worked hard enough to get to $400,000 a year, you expected something bigger for yourself and then you'll probably want the same — and more — for your children, and — overspending for them — you're stuck with an ordinary life for yourself. The Camry. The eggs.
Is that really the explanation for the Collins/Stephens agreement? I don't know. But if it is, there are some good solutions for young people looking on and thinking I don't want that to happen to me:
1. Don't have children.
2. Don't get the idea that you're special and you need to win in economic terms. If you sort of win — within the range that you're likely to win — you'll still have an ordinary life, and it will be much more work and much more disappointing. So come to terms with your mediocrity early. If you do this, it's easier to....
3. Live somewhere cheap (and close to nature).
4. Do some sort of work that you can enjoy and feel good about.
5. Go ahead and have children. If you're doing ##2-4, you can skip the non-having of children. Make life about love, not boosting these random new humans to the next higher rung above some other couple's random new humans.
पोस्ट्स
१२० टिप्पण्या:
It's too late to save the $400k club. They skewed their priorities when younger and now they can't get off the hamster wheel.
To young people I would say: have kids. Enjoy them for who they are and not what you want them to be. Amazing people are now your family. You've been blessed. The rest of it will sort itself out. Even in this covid-plagued, climate endangered, cruel world, your children -- if you see them honestly and don't try to remake them -- will be worth all of the trouble.
Why do liberals not think that people with combined incomes of $400,000 are rich? Because they make that muc, or because they know people that make that much, that is why.
Pardon the language but I'm increasingly having trouble distinguishing a McCardle column from a steaming pile of horseshit.
Well one thing that is important to the $400k couple, is how they got that way in the first place. Generally, through successful undergraduate college educations, and then as often as not, graduate school. They may even have incurred considerable loan debt to do that.
And so the $400k couple is worried about their kids doing the same. College, and grad school.
And nowadays, the four-year college tuition, followed by the graduate school tuition and expenses, is very much into six-figure considerations.
And why have those expenses shot up so much? The right wing argues that higher education is bloated with nonessential workers who themselves are getting paid a lot. The left wing argues that state and federal funding for higher education now supplies far less of the costs of higher education than in past decades. This is one issue where just maybe, both sides are right.
Progressive prices, for one. Population density pressure, for another. Secular excess, too.
"What self-respecting mammals don’t want their kids to have it at least as good as they did?"
I don't know many self-respecting mammals; I am sure they are all humans. The other kinds of mammals probably don't worry about what indoctrination centers there offspring are associated with.
like so much of what Burt Stephens says this is pure Bullshit. 400K and they're driving a Camry? LOL. And what happens when their kids graduate from college? Guess they're not "Scrimping" anymore.
People making that much have a HUGE disposable income. And can put large sums into investements, realestate etc. for their more senior years. If they aren't "rich" they are very, very, well-to-do.
I hate motherfuckers like Burt Stephens. They are constantly crying and moaning and playing victim. But at the same time ruthlessly using "the microphone" to demand others be punished or sacrifice. WHen the last time Burt Stephens gave a damn for the poor black or some soldier dying in one of his wars or a working class white or anyone else, unless it was someone from his same class, his same ethnic group, or his religion?
He's all take and no give. Just like the other Left/liberal/neo-con are on almost every issue. Why people like him or constantly give him a pass is beyond me.
John Calhoun's research of the 1950s to 1970s showed that rats placed in an artificial utopia eventually descend into infighting and collapse. Humans are similar.
https://www.smithsonianmag.com/smart-news/how-mouse-utopias-1960s-led-grim-predictions-humans-180954423/
Plus, establishment media is owned by billionaire oligarchs (Bezos, Gates, Bloomberg, Murdoch, Musk, etc.) and so much of the press is directly or indirectly required to defend the upper class status quo. In the old Hollywood tradition, "make them sympathetic" so the horde doesn't come with pitchforks. Billionaires need millionaires and $400K-aires for protection. Just ask Jeffrey Epstein. They are upper crust wage slaves indeed.
The primary purpose of all life is to produce more life.
I totally get it. I don't even make half that, have two kids, and live in the Bay Area, and I had to give up my yacht club membership. The struggle is real.
Kate: that's the best advice I have seen in a very long time. I agree with every word!
Come and talk to my friends making 70K as a working electrician. No wonder we have such horrible, horrible leadership.
This 'middle class' couple? that are making FIVE times more a year? than i did my Highest paid year?
How much is their mortgage? How much are their school loans? How much is their credit card debt?
WHO'S Fault is that? NOT MINE.
$400,000/yr is about $200,000/yr after taxes. My $80,000/yr came to about $40,000/yr after taxes
If they lived like *I* did, they would have had about $150,000/yr to pay off their debts
(i'm assuming the extra person's food/etc would be about $10,000).
If they're not Rich NOW.. They COULD BE, in about 4 years (150,000/yr * 4yr = $600,000 for debt)
Everyone sees generational wealth as the target, but everyone alters their lifestyle each time their income bumps up. You can make $400,000 per year, but if you spend $400,001 there's nothing left.
So, my pity is a bit stunted here.
"...many worry that their offspring will be downwardly mobile, which leads them to spend virtually all of their outsize disposable incomes on preparing the children to become star performers in the next round of competition...."
The other way to go is to close down the avenues of opportunity for everyone else.
a BIG vacation for me, is a trip to Wyoming, and 1 (or maybe2) days guided fishing ($500/day).
That's like $2000 guide/gas/motel/new fly line($120).
I'm kinda assuming that mister and misses $400,000/yr take at LEAST one week long trip to vegas (or Disney (or something), and spend the far side of $10,000 on THAT.. EVERY YEAR.
The Hilarious Thing.. Is that mister and misses $400,000/yr probably not only Don't have a 401k, they're PROBABLY underwater with their 1.6 MILLION DOLLAR house
(to say NOTHING about their Hundreds of Thousands of dollars in student loans*)
student loans* gilbar worked nights as a computer operator, and went to school part time..
Ask him how many student loans he had.. Go ahead! Ask him!
"...and many worry that their offspring will be downwardly mobile"
My 20-year-old son and 23-year-old daughter are downwardly mobile guaranteed. We're already there. They will live poor after I die, unless I am able to leave then enough money. It's a constant worry in my head. Whatever the conditions, ADHD and Ritalin, the Autism spectrum, psychological problems, computers, divorce, my failures, their mother's failures...shitty fucking liberal public schools....it's a reality.
In general, Generation Z will be poorer than their Baby Boomer Grandparents, and Generation X parents unless money is left to them in wills. Probably much poorer. We spent their future. And today it's being sent to Ukraine.
Plus they are very anti-capitalist and pro-communist. Communists usually end up poor. Except the ones employed the The University of Wisconsin, or working for WI State Gov't in Madison. They're in the Ivory Tower and doing just fine.
Doesn't matter if you're the Liberal White City dweller $400K club member, or The Pretender living in the suburbs in the $200K club...fast asleep at the traffic light...
For Generation Z the public schools have not prepared them to manage or make money. But we got pussy hats and boys in dresses. Progress I guess. Oh, and a massive autism spike nobody wants to investigate. That rocks doesn't it???
This was one of Rush Limbaugh’s favorite questions: what amount of money would make you think of yourself as rich? And the answer, no matter how much money the person made, was always more than they were presently making. For the person making $40,000/yr, the answer was $100,000 a year. For those making $100,000 a year rich was double or triple that amount. And so on. Maybe, if you equate being rich with being free from anxiety, then no amount of money will be enough.
The Democrat Party is a top-bottom coalition against the middle. Neither the top, nor the bottom pay the freight, the middle does, and so the middle must be demonized. It's like when Stalin decided he required the land of the farmers, did he issue bonds and raise money to buy the land at a fair price? No, he demonized the farmers until 'kulak' became a dirty word.
Here is the original definition: Kulak, (Russian: “fist”), in Russian and Soviet history, a wealthy or prosperous peasant, generally characterized as one who owned a relatively large farm and several head of cattle and horses and who was financially capable of employing hired labour and leasing land .
Where the hell is Thomas Wolf when we need him?
The Bonfire of the Inanities.
https://www.youtube.com/watch?v=ybkqUWw3i5o Tottenham!
Watch Out For the Humble Brag
This is some good advice from althouse.
COME BACK LOUIS-ANTOINE DE SAINT-JUST ALL IS FORGIVEN!
Not even the college-going offspring of $400K households drive Camrys--BMW X5 is far likelier. The only Toyota that household would consider is a Prius, as a carbon offset for for a Panamera.
Excellent advice, Ann! Once you remove the expensive locale as table stakes, major savings add up. It's easier to be "frugal" when you don't put yourself in a "keeping up with the Jones" mindset.
Excellent advice, Kate! Well said.
Priorities and what should be most important to clear-eyed people… their legacy. It’s not the big house, or the new luxury car(s), or the vacations in far-off places. Consumerism/materialism are for the shallow.
Biden's NEW Fresh 2023 Tax Hikes will help!
Biden's Tax Hikes. You have his word as a Biden, they will hurt. But it's for the common good, and the New Green eel boondoggle.
List of Jan 1st 2023 Biden TAX RAPE:
$6.5 Billion Natural Gas Tax Which Will Increase Household Energy Bills
$12 Billion Crude Oil Tax Which Will Increase Household Costs
$1.2 Billion Coal Tax Which Will Increase Household Energy Bills
$74 Billion Stock Tax Which Will Hit Your Nest Egg — 401(k)s, IRAs and Pension Plans
$225 Billion Corporate Income Tax Hike Which Will Be Passed on to Households
Somehow, I don't feel any sympathy for these people.
$400k household income
Say, $300k after taxes/deductions
That's a takehome of $25k per month. The eggs tho...
Brett Stephens is hilariously lost. I think the funnies part of his dumb exchange with Gail Collins was when he said he opposes stronger capacity for auditing the poor people making $400k to make sure they're complying with tax law -- and suggests in its place a fundamental change to the tax law. I mean, obviously there's no support from that it congress. But even aside from that -- what's the point of changing the law if you oppose enforcement of the law?
The effort to enter a deflationary period are moving along as seemingly planned.
Hard to save when inflation, tax rape, energy costs, soaring costs of basic necessitates and war war war machine war are eating up our universe.
Biden is awesome.
In Bonfire of the Vanities, Sherman McCoy was barely getting by on a million dollars a year. And that was in the 80's!
The reality is, it's easy to spend all of a $400,000 salary. You don't have to, but it's easy enough to that you might not feel rich. Especially if you live in or near a big city. $150,000 in taxes, $40,000 or $50,000 mortgage payments on a $3 million dollar house, each child will need at a few hundred thousand for college and, before that, $40 to $50 K a year for private schooling at the lower levels (for each child). Throw in a hundred different things that individually will cost you $1,000 or more a year--internet, phone, computer, clubs, clothes, car, summer vacation, etc.
Again, you don't have to spend that much, but it's easy enough to that you won't be left feeling rich.
In some locations, if a couple is earning $400K, their combined federal, state, social security and medicare taxes, plus deductions for insurance and retirement savings might make their take home pay be only 50% of their net income. Given huge property and sales taxes, these people might only have 1/3 of their net income to actually use to buy things.
Of course they don't feel rich.
How Mc is their mansion? I live in one of the most affluent neighborhoods in my metro, but I was only able to do this because we bought a paid-off house from a family member. My property taxes trippled when we moved here and we stay because the schools are excellent. But it's a choice. We could have a must bigger/nicer/newer house in suburbs further out. We make about half the example given, but I can't imagine even that couple doing much more then skating by if they're paying the high mortgage, saving for retirement/college/etc.
Bear in mind that the $400k club gets none of the breaks in the world - handouts form government on the one hand and access to tax shelters on the other - and pays more than their own way through life. That grouping generally makes all of their money in income (usually through a considerable amount of time and effort) and pays the highest tax bracket, while the truly rich pay capital gains on most of their money. The $400k club pays full freight to send their kids to college, which really pays for their student and a big chunk of another student - I have seen statistics that say that only 25% of college freshmen pay the full amount, and only 38% of college students overall, with the numbers dropping to 14% for private colleges - someone is paying the remainder). The Alternative Minimum Tax prevents the taking of virtually any deductions. Most jobs that pay in this range (even considering a dual income family) are centered around cities where the cost of living is considerably higher than elsewhere. The people are not poor, don't get me wrong, but they are not living high on the hog and do have money worries.
By the way, while only 14% of private school freshmen pay full price, 50% of Ivy League freshmen pay full price. Seems like they are not concerned about financial diversity so much, huh?
The time has come to switch from eggs to bagels with cream cheese!
All is well that ends well.
I think McArdle's proposition is nonsense and telling.
"If you would be satisfied knowing that your child had a secure but unremarkable life managing a Walmart in some exurb, the government could probably guarantee that."
How is every child in this conjuration to grow up to be the manager of an enterprise employing dozens of workers? It seems that McArdle can't even imagine that such a grubby position is not somehow guaranteed to the children of the $400K dual-income club.
overspending for them — you're stuck with an ordinary life for yourself.
My daughter loves horses. I'm counting the days until she gets over it because I want a boat but I'm not getting a boat until she's done with the horses.
Not unlike Orwell's 'shabby genteel' in 'Road to Wigan Pier'. And they present similar disdain for those they consider below them as they strive. They loath the "working class" tradesman who makes six figures without even so much as a "by your leave" to the college credential class. And all they offer their children is more, increasing worthless college credentials. And live in terror of the rebellious child who might want to learn to do something useful in the trades.
===
"In the kind of shabby-genteel family that I am talking about there is far more consciousness of poverty than in any working-class family above the level of the dole. Rent and clothes and school-bills are an unending nightmare, and every luxury, even a glass of beer, is an unwarrantable extravagance. Practically the whole family income goes in keeping up appearances. It is obvious that people of this kind are in an anomalous position, and one might be tempted to write them off as mere exceptions and therefore unimportant. Actually, however, they are or were fairly numerous. Most clergymen and schoolmasters, for instance, nearly all Anglo-Indian officials, a sprinkling of soldiers and sailors and a fair number of professional men and artists, fall into this category. But the real importance of this class is that they are the shock-absorbers of the bourgeoisie. The real bourgeoisie, those in the £2,000 a year class and over, have their money as a thick layer of padding between themselves and the class they plunder; in so far as they are aware of the Lower Orders at all they are aware of them as employees, servants and tradesmen. But it is quite different for the poor devils lower down who are struggling to live genteel lives on what are virtually working-class incomes. These last are forced into close and, in a sense, intimate contact with the working class, and I suspect it is from them that the traditional upper-class attitude towards " common " people is derived.
"And what is this attitude? An attitude of sniggering superiority punctuated by bursts of vicious hatred. Look at any number of Punch during the past thirty years. You will find it everywhere taken for granted that a working-class person, as such, is a figure of fun, except at odd moments when he shows signs of being too prosperous, whereupon he ceases to be a figure of fun and becomes a demon. It is no use wasting breath in denouncing this attitude. It is better to consider how it has arisen, and to do that one has got to realize what the working classes look like to those who live among them but have different habits and traditions."
" ... why America's urban rich don't feel that way."
Perhaps they would feel better if they moved to a suburb where they could become a member of the suburban rich. Walmart and all that.
I recall Tom Wolfe's novel *Bonfire of the Vanities* in which the protagonist Sherman McCoy enumerates the expenses that prevent a self-identified Master-Of-The_Universe earning an annual pay of $6 Million per year (nearly $17 million per year, comparing 2023 dollars to their 1987 value) from accumulating any durable wealth or even ordinary savings. "Necessary" expenses such as a rented apartment, a depreciating vehicle, the tuition for a daughter, the vacations for the family, the gifts for a mistress, the wardrobe appropriate to his social duties, the donations expected and demanded by all the right politicians and charities and causes.
Duh. They don’t feel rich because they’re chasing their tails, by spending up to their income level because of choices they make on what to spend and why, almost always having to do with status — the neighborhoods they choose to live in, the houses they buy, the schools they choose for their child or, heaven forfend, children (let’s call them boutique families), the cars they buy, where they buy their groceries and, yes, what high-priced college they aspire to for their child as they hover over her or him. It’s beyond parody. I seriously doubt Stephens or Bobo chronicler David Brooks would share my mirth about the spectacle, but I always am amused by people who simultaneously take themselves seriously while completely lacking self-awareness.
I see I'm late to the party with the Tom Wolfe notes. Is it surprising so many of us remember it? Is it more surprising McArdle or Stephens, do NOT?
Women have trouble finding a satisfying anything except nagging, which isn't even satisfying but just going meta.
Collins and Stephens are two jabronis.
My daughter loves horses. I'm counting the days until she gets over it because I want a boat but I'm not getting a boat until she's done with the horses.
Narrator: She would never, in fact, be done with horses. And he would never get a boat.
Beggar approaching the Queen Mother hat in hand:
"Please, Mum, I haven't eaten in a week."
"Oh my dear man, you must try, you must force yourself if you have to."
It really depends on where you live. $400,000 in New York is a pittance, thanks to how stupid New Yorkers vote. A decent school, you know, where they're not paying the teacher pedophiles to sit in the rubber room, costs $70,000 a year. That's elementary school. We're not even talking about college.
$400,000 in North Carolina means you literally live on a plantation and have black people serving you dinner. Well-paid black people.
It really depends on where you live. $400,000 in New York is a pittance, thanks to how stupid New Yorkers vote. A decent school, you know, where they're not paying the teacher pedophiles to sit in the rubber room, costs $70,000 a year. That's elementary school. We're not even talking about college.
$400,000 in North Carolina means you literally live on a plantation and have black people serving you dinner. Well-paid black people.
The truth is that these are city folk, and depending upon which city, they could be living an ordinary middle class existence. Washington DC, for instance.
The second truth is, that they are a disgrace for calling themselves journalists, while being too lazy to figure this out before they wrote something so ignorant.
rcocean is correct.
This is gibberish dressed up as a think piece. This is shoveling nonsense into the gaping maws of their target audience to feed that audiences insatiable need for validation.
A couple pulling in $400k could have this and still have more disposable income than I do
$6000 nut on the house
Two BMW payments
Two kids paying full freight at Harvard
What parent would send their kids to the public schools of NYC or DC? Not many!
That's why they move to CT, VA or out of the cities.
Private school tuition in those areas is very high. And now we find out that VA schools have gone woke.
The solution is to voucherize K-12 education. But that will NEVER happen as we saw how much power the teachers' unions have in the Dem party.
Omaha is different. OPS is mostly a failed district. There are some good suburban school districts. The Catholic schools aren't terribly expensive.
With covid, we all discovered the pure evil of the teachers' unions.
My wife and I are the least prosperous of our circles--and I doubt that our highest-earning friends make 400k per couple per year (though it is possible, and some hit 300k easily I'm sure).
In each case at least one is a white-collar professional with graduate degrees. Of course this is Memphis, where 300k is a really good income.
Our son could have followed us into whitecollardom but prefers more hands-on labor and makes OK money now.
As the last of the line he'll end up with whatever we (and my younger brother who has guarded and grown his inheritances) haven't spent.
Andrew Tobias covered this topic in Getting By On $100,000 A Year. First as an Esquire article and then a book.
First, the government takes a large chunk of that number, even more so if they live in a city with a municipal tax. Second, to make that sort of money often requires living in areas with higher costs, so to an extent the extra money they make from living there gets siphoned right back out in housing costs and other elevated expenses. Third, people who make that sort of money tend to think they have a lot of money, so the concept of budgeting seems unnecessary, and then they wonder what happened.
Or perhaps it is just a matter of wanting to have it all. Even for someone like Elon Musk, having it all is not possible as massive amounts of money cannot buy everything, plus time and effort are never infinite. You cannot live a million-dollar life on $400K, but to a lot of people that is so much money that it seems like you should be able to live that sort of life. This also explains why so many lottery winners end up broke. Yeah, that 5-million-dollar jackpot is a lot of money, but it is not as much money as you think.
That said, they will keep voting for the same people who call them rich.
The left ruin an inexpensive form of protein.
Gadfly is cool with his new overlords.
Man, McArdle REALLY needs to get out of DC.
A few years ago I read an essay by Neal Gabler. Gabler is a mid-list non-fiction writer. His bio of Disney is great.
The essay was about how Gabler had found himself, in late middle age & at the near end of his career, driving a junk car & looking at not being able to afford to repair it.
Gabler fit the profile sketched out by Stephens and Collins, though I am not sure he and his wife ever made as much as $400k/year. He had good year and bad years in the writing biz, but every cent he made was spent trying to live a bit above his means. Nice condo in the better part of a big city, poorly timed his buying and selling of his real estate, private school for the kids (two daughters IIRC), then private college for them both. again IIRC, neither of the daughters was particularly well off even after attending pricey colleges. They got jobs in the arts.
Here is the essay if you are interested: https://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/
"How is every child in this conjuration to grow up to be the manager of an enterprise employing dozens of workers?"
Hundreds of workers, but just a scrub getting by unremarkably out in the boonies with the other trash.
Seems like a good time for a little reminiscence of the aspiring middle-class in postwar Memphis.
Both of my parent's families owned pianos. My mother's mother, widowed young (as my mother would be in her turn), taught piano at some point before my memory kicks in. I do recall an upright at one end of the small living room that she would play a little at Christmastime, and one of my aunts could also play a bit.
The success-house that Opa and Oma had built in 1948 had a baby grand in a corner of the large living room. My father could bang out a few tunes, but it was his sister who was given the lessons . . . to little avail. It was mostly a photo display area.
The piano was a Steinway IIRC, and probably a mid-price model originally. They had it tuned once in a while in hopes that I or one of my brothers would show some aptitude, or even much interest.
I was given piano lessons in the second grade but remember nothing whatever of the teacher or even where I took them.
After some thought, I do recall an upright at our house for a while--in the den. That must have been my practice instrument but at some point it was sold or given away.
The baby grand at Oma's was hauled off some time in 1984 after she died and my brothers and I had divvied up the desirable chattels. I don't know who if anyone bought the beast, or why.
This is one issue where just maybe, both sides are right.
Yes, it would seem likely that this could be an area of violent agreement.
And also: 2%er problems!
My wife And I briefly made over 400k together, in the late 80s. Salaries and bonuses, not capital gains or self employment. Our gross taxes (state, fed, sales, gas, etc.) were about 50%. Marginal income tax rate around 45%. We had a used Camry and a SAAB.
Tim, a boat? Damn. Why don't you just get another wife and a pair of kids? It'd be less headache, and cheaper.
"like so much of what Burt Stephens says this is pure Bullshit. 400K and they're driving a Camry? LOL. "
$400k and we drive a Volkswagen. A little one. Also have a small pickup, base model, 12 years old.
Of course, that's how we got to $400k in our retirement. Ain't changing now.
The time has com$2.58e to switch from eggs to bagels with cream cheese!
3 eggs, and 2 Purnell frozen sausage patties is $2.58. My daily ritual. Way less than a Starbucks coffee.
Understanding value will serve you well, no matter your tax bracket
people who make that sort of money tend to think they have a lot of money, so the concept of budgeting seems unnecessary, and then they wonder what happened.
When we were young and poor, we had a forward-looking budget. When we reached the designated amount we allowed ourselves to spend on a line item, we stopped spending on that item. Dining out, for instance - I believe we budgeted $200 a month (besides hiking and camping on National Forest land - that is, freebies - dining was our only out-of-house entertainment). We put $200 in Monopoly money in one envelope and transferred it to a "spent" envelope as we used it. When the first envelope was empty, no more dining out that month.
Now, for some years we've had what I think is a backward-looking budget. My husband, the CFO of the family, sets a budget at the beginning of the year, then shuffles money around in it all year after we've spent it. I don't really get the point, but it seems to make him happy. And thanks to him, we have no insoluble money worries, and I, the COO of the family responsible for most of the spending, am frugal anyway.
A couple pulling in $400k could have this and still have more disposable income than I do
So that is your judgment on who is rich?
The comment thread divide between "Macardle, Stephens and Collins are morons, $400k is rich" (facts) and sympathy for poor $400k John Galts taxed to death by Joe Biden is funny. There's a left right alliance infuriated by these op-ed writers, and a left right alliance that can only identify with victimized rich people.
First of all, you can’t fix stupid. The stupid don’t understand the concept of delayed gratification. Whether you earn $100k per year or $400k per year, if you spend it all there will nothing left to help your children circumnavigate the hell-scape your fevered imagination has fashioned.
Teach your children by example how to live on the salary they expect to eventually receive. Teach them how to live below their means. Teach them how to delay gratification and save. Teach them how to invest. Teach them how to spend. If you do that, they stand a chance.
The children of the stupid $400k earners will eventually work for the children of the true middle class who learned life lessons through they own experience and what was modeled for them by their parents. Those kids will be OK.
Those who don’t will live a life of envy and resentment.
You have choice.
Well, as Howard Hughes reportedly said many years ago, "A million dollars isn't what it used be!"
Given how swiftly our new corporate barons lose and gain and lose again great fortunes, one must admit a billion dollars isn't what it used be. $400,000 per annum? They're paupers!
This is back to Insty's observation.
People want the Markers of success, but ignore the traits that create the success.
Great work ethic, honesty, attention to detail, treating others well, and a variety of other traits will provide more material things than you desire.
I'm ashamed to admit what our combined w-2's are. We just got them in the mail last week. But we live like we're very wealthy.
2800sq ft, +100sq ft 2cnd garage, no mortgage, no car payments, Property tax $2400, $50 water and garbage. Ive been retired for 7 years, better half still working, but I have part time consulting work.
What you make is not near as important as how much you believe you HAVE to have.
One of the commenters to the W. Post article makes what I think is a very good point. $400,000, even after taxes, is over $20,000 per month. $20,000 per month. Two kids in a $48,000 per year private school is $4,000 x 2 = $8,000 per month. I just can't imagine how a family could spend the "left-over after school fees" $14,000 a month. Is it enormously expensive houses and cars? Is it extravagant foreign travel and restaurant food?
Louis CK said that if you can’t afford ten boats, you shouldn’t buy one. I have a nice boat, but I doubt that I have any more fun on it than the people at the marina with 20 year old boats, or the guys backing theirs into the lake on the back of a pickup. Don’t postpone joy. Besides, you need to learn on a beat up old boat so you don’t scratch up your shiny new one first day.
$400,000 in Manhattan, NY only buys as much as $168,961 in Madison, WI. And in my much-larger-than-Madison city, $154k. While that is still an affluent income, it doesn't seem as "rich" as the larger number.
https://www.nerdwallet.com/cost-of-living-calculator/compare/new-york-manhattan-ny-vs-madison-wi
remember the olden days? Back when Bret Stephens used to Pretend to be a conservative?
At Least Those days are gone
It's correct that the huge difference is what people spend on their kids. There's actually an interesting cultural difference between people who make a lot and spend nothing extra on education and people who make a lot and spend every extra penny that way.
Maybe moderation is the way. Then you're not idiotically going around telling people you're middle class when you're making almost half a million dollars a year.
Last week, Glenn Reynolds resurrected a post from 20 years earlier which elicited a reply from John Nye which nails the problem the $400K impoverished couple is experiencing. Namely they are unable to use their $400,000 income to obtain "prestige goods."
From here: https://instapundit.com/565765/
Quote:
DeLong’s prediction for 2023 reminds me of Neal Stephenson’s Snow Crash, in which we’re told that globalization had smeared things out into a worldwide layer of “what a Pakistani bricklayer would consider prosperity.”
Is that really our future? I’m inclined to doubt it. But I could be wrong.
UPDATE: John Nye emails:
I think the trends you speak of would be at work even if there were no globalization. And Stephenson had it wrong. The greatest wage pressure will be on status and goods. Prosperity should easily increase material welfare (no. of cars, clothes, dinners, etc. you can buy) but will adversely affect prestige goods (like the probability of being accepted to the top ten universities or the chance of buying that prime lot in Menlo Park or even getting tickets to Broadway). So the issue is not that standard of living will be at the Pakistani middle class level.
Rather it will feel like that for some because they will be objectively richer but some of the things they cherish which provide status will be unobtainable. This has already been happening in the US. See my article on Irreducible Inequality.
Someone who drives a Camry rather than, let's say, a high end Mercedes is just smarter and more likely to be able to "scrape" by on $400K/year. $400K/year is $33,000/month. Even if you are carrying a two million dollar mortgage in California at 5% interest, you are only spending about $11,000/month of that $33,000 on the house.
As for college education costs- don't pay to send your kid to expensive schools, and don't let them take out big loans to go to them either.
And why have those expenses shot up so much? The right wing argues that higher education is bloated with nonessential workers who themselves are getting paid a lot.
Chuck being obtuse again. Look at the numbers for God's sake !
I read an essay once that offered that the nature of occupations gave rise to the insecurities of affluent. After all, if they can't leave the farm or small business to their children, and they can be fired very easily, they are justified in being worried.
"And why have those expenses shot up so much? The right wing argues that higher education is bloated with nonessential workers who themselves are getting paid a lot. The left wing argues that state and federal funding for higher education now supplies far less of the costs of higher education than in past decades. This is one issue where just maybe, both sides are right."
No, both sides are not right, and "the right wing", while pointing out the obvious, is more concerned about why the problem exists and how to solve it.
If you want to raise the price of something, subsidize it.
Stop the subsidies!
All taxpayers have been bilked to pay for a whole lot of nonsense. Education has become progressively worse while becoming way more expensive. Those who earned enough to actually pay for their kids college educations have paid for it twice. I know, I'm one of them.
Building up the anecdotal evidence to setup the premise: if you don’t earn 400k you are poor and it’s the right/republicans fault.
Feeling rich and being rich are two different things.
If you spend all your (400k) leaving little left, you are still rich, you just were foolish in how you spent it: is ‘feeling rich’ a priority?
Chuck is as obtuse as a bowling ball.
Floris said...
In some locations, if a couple is earning $400K, their combined federal, state, social security and medicare taxes, plus deductions for insurance and retirement savings might make their take home pay be only 50% of their net income. Given huge property and sales taxes, these people might only have 1/3 of their net income to actually use to buy things.
Of course they don't feel rich.
1/30/23, 1:37 PM
Seems you are saying that taxes might be a big problem…let’s ask these ‘not feeling rich’ media people what the solution to that might be…
Average home price in my township in Suburban Philly is $650-800K. $400K income is paying the mortgage. Add two cars,$15K in taxes, $300 a month to mow the law, cleaning person, Gas, Utilities, etc. To quote Erma Bombeck, "We are all $100 short at the end of the month". FYI, I live in a cheap house $350k.
@Hunter Biden’s taxpayer funded Hooker: “Biden's Tax Hikes. You have his word as a Biden, they will hurt. But it's for the common good, and the New Green eel boondoggle.”
You misspelled Green Leap Forward.
I looked online, and apparently the salary for managing a Walmart is about $120k/year. I assume this is a ball park figure. There must be bonuses for reaching certain targets, etc. Anyway, the amount is comparable to what a skilled tradesman or contractor might make, e.g., a skilled manual laborer, $50/hr.
We've got a lot of kids and nothing close to 400k/year. We did move a few years ago to a lower cost of living area. But I don't worry too much about how much money my kids will wait. We talk about budgeting and no debt a lot.
You can "get by" on $ 100,000 annually. If you set aside some of your money for saving and investing (NO crypto), you can easily become a (multi) millionaire after a decade or two.
Lots of the $400K is rich commentary is really asking for a $400K monthly budget. "even if the school fees are.." "even if the mortgage payment is ...." "even if the taxes are....." But I can't find one comment from the opposing camp (the $400K isn't really rich camp) present us with a comprehensive budget that shows where the $33,333 per month goes. Step up!
2 kids at a Manhattan private school $160,000. Two week Hamptons rental $50,000. $300,000 gross after IS and NY taxes. Life is hard in the semi fast NY lane.
"Im already going broke on a million dollars a year!"
Sherman McCoy, 1987
Lots of sloppy thinking everywhere about wealth and income. Not just here but all over.
$400m/yr is not "wealthy". It is income, not wealth. If they save/invest part of it, they can become wealthy.
There are lots of relatively low income people in the US with high wealth. Jeff Bezos is one, Warren Buffett is another. Lots of farmers are wealthy by the value of their farms, but don't make a lot of income from them.
We also have a very high, multiple 10s of millions, people who are not at all wealthy because they spend it as fast as it comes in. Actors and Athletes are a couple visible examples.
So let's stop confusing wealth and income. They are not the same. They are not even necessarily tightly related.
John Henry
Take home is $200k.
And people in that bracket don't qualify for any freebies...no $7,500 rebate on an EV, no college grants...you get the point.
They pay for all of the services that the poors use but use none themselves.
Inflation since Biden was 13% as of September 2022, so 400k is really only $348k. Taxes, however, did not get reduced accordingly.
do these 'conversationalists' know difference between gross income and net spendable income?
Maybe it comes from reading too many English novels, but to me being rich means having a mansion and at least five or six servants. A couple with 400k is certainly very well off but not rich.
Doing our 2022 taxes. Did they change the brackets sometime during the year? The tax tables for 2022 that I found earlier this year and entered into my tax estimate spreadsheet are not the same as the ones I find now on-line. The income levels at which you enter the next higher bracket have been lowered. Result: I'm paying more than I estimated at the beginning of the year. i.e.they increased taxes.
My wife and I have never made as much as $200,000 per yr. We both had professional careers and are retired now. During our lives we have had airplanes, a hangar, and private runway to use; a lakehouse, dock, powerboat, small sailboat, canoes and kayaks; 4 successful kids, 2 blue collar (Mercedes Benz & steel worker), 1 lawyer (big law partner) and 1 professor (Harvard grad). We pay cash for good used cars and trucks; Lexus, Volvo, Lincoln, and Tacoma. We make no car payments and carry no credit card debt. How did we do this? We lived in reasonable places like Mississippi, South Carolina, North Carolina, and now Texas. We saved up for major purchases and made reasonable investments with dividend reinvestment plans. We still live below our means and do not spend our mandatory IRA withdrawals. I advise to void big cities and high tax states.
You and me baby
Ain't nothing but self-respecting mammals.
Let's do it
Like they do on the Discovery Channel.
Seriously though, husband and I at the end of our earning years pull in close to 300K and we are NOT "rich." We are at the lowest levels of upper middle class. We have a very average house, just recently paid off. We don't squander our money, we are socking away for our imminent retirement because we know just how much care will cost if we need it in our old age. Our kids are doing OK but we have helped them get a start by paying all of their college costs at state schools, giving them our old cars, initial deposits for apartments etc.
Our two children are absolutely the best thing we could have possibly spent our time and "treasure" on---they ARE our treasure. How do you explain the value of family and kids to today's generation, so many of whom are renouncing having kids.
“many worry that their offspring will be downwardly mobile”.
In a meritocracy like ours where there is regression to the mean on inherited traits, it is a truth that the offspring of the relatively well off will, on average, be downwardly mobile.
Someone earning $400,000 is about on par with someone with $10 million in investments who is drawing 4% a year, except that the $400Ker has to work and the $10Mer doesn’t. If the $10Mer does work, and most of them do, the $400Ker is going to fall behind, so they are downwardly mobile too.
You shouldn’t kill a man’s dreams, Mr. Wibble!
My second wife and I put our young daughter in kindergarten in a private, Episcopalian school just up the street. It was known for a great grade school environment and education. My wife had retired from the USPS and I was making 70,000 a year as a Postmaster. Some of our friends with children said to us, "I wish WE could afford that". We had two old vehicles, a decent mortgage payment, and did not live beyond our means. I had a rebuilt desktop computer from my dad, and of course, no smart phones (1998). We took simple vacations instate, usually for a three-day weekend. We had two other teenagers. Our friends, on the other hand, had two new or pretty new cars -- fancy ones. They went to Disney twice a year, went out for dinner all the time, had the latest Mac (2 or 3 in the house), and brand-new furniture, renovated bathrooms in nice homes, and BOTH parents worked.
It can be done if you want it. You have to be disciplined and, as another said, don't worry about keeping up with the Joneses.
MarcusB. THEOLDMAN
A married couple with a combined income of $400K is only in the third-highest of the seven tax brackets.
"A married couple with a combined income of $400K is only in the third-highest of the seven tax brackets."
Not likely. They'd need over $220k in deductions.
Nothing that follows is asking anyone for sympathy. Just an attempt to edify on where the money goes.
It seems like some people above have never heard of income taxes. "$400k a year is $33k per month." Lol, no. If you live in CA, NY, or NJ, or some other state with significant income tax and property tax, and are employed professionals with all of your income reported on a w-2, you're looking at half that in actual income. That is still a lot of income, but let's at least start with the correct number.
We are over $400k per year with my wife making significantly more than I, but my income alone would be considered "wealthy" by many people posting in this thread. My entire GROSS income (that is, before payroll taxes) just covered our fed and state income taxes. Property tax is another nearly $15k per year.
We do have three cars - 16 yo minivan, 9 yo compact, and 5 yo large SUV (entry trim level). So where does the money go? $3k per month for private schools to try to insulate our children from the woke/commie indoctrination; $3k per month on mortgage; $2k on groceries; $1k on wine at home or dining out; $1.5k on utilities (gas, electric, water, internet, cell phones, youtubeTV, netflix, AmazonPrime); $1k on music lessons, dance, sports, etc. for kids; $1k for the 5 yo SUV; >$1k per month for insurance (haven't added up that actual number, could be $1,500 for HC, auto, homeowners, liability umbrella). If I've done my math correctly that's about $13.5k out of about $16k per month.
So we still have a surplus, but we don't have a lake house, have to set aside money for one trip per year with the kids, etc. We have been saving diligently for retirement for more than 20 years, so we should be fine when we get to that point. If we don't have enough in our retirement, then this nation as a whole will have serious problems, because we will be much better off than the vast majority.
Now I agree with above posters that we could have significantly more surplus. The single biggest issue for us is that we have spent way too much on our house (initial purchase and improvements). Some of that is pure consumption, but some of it is simply shifting cash to an illiquid asset. Our house appraised for 2x what we purchased it for and most of that is the result our renovations.
The second issue is that we bought recreational land (hunting, atv riding, etc.) with property taxes at another $400 per month and the past 2 years I've been spending money to build out the interior of a 12'x24' shed into a cabin (e.g., $3k on spray foam insulation). Now again much of this is consumption, but in some sense this is asset shifting. A hunting cabin is one of the things I really want in retirement. So I'm buying/building it now and I'll have the use of it, making memories with my children in the mean time.
The third issue is that we eat very well and drink too much wine.
One last comment. "Lol, ok Boomer." Some of the comments above are hilarious. "We had a lakehouse, and an airplane, and..." Have you not paid attention to what has happened to asset prices over the past 30 years? Most of the people we know have incomes similar to ours, yet only two couples have a lake house, one of whom isn't really similar to us since his income is likely >$1million. Meanwhile most of the senior people in my wife's organization were able to afford a lake house on the nicest lake on one income, younger than we are now because they bought it in 80s before the big run up in asset prices. Further more, they did not have the huge cost of college that we had to pay. Oh yeah, they also didn't have to send their kids to private school because the woke/commies hadn't ruined education yet by the 80s. So yes, a couple can raise a family very comfortably on $400k gross, but your experience raising kids 30 years ago isn't the same.
Original Mike: You're wrong. https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets
Married filing jointly:
32% tax bracket: 340,101 - 431,900
35%: 431,901 - 647,850
37%: 647,851 or more
Bitter Clinger - I believe Left Bank meant third from the bottom. Only way I can make sense of his comment.
Location, location, location.
$400k in Alabama* is a king's ransom.
*Don't tell me how bad you think it would be to live here. I had that same misconception in 1987 when I moved here. It's great, but y'all stay put.)
I appreciate Bitter Clinger’s posts, and have seen other posts talking a bit about how having wealth doesn’t guarantee you can pay your bills if you get in over your head.
McArdle has written similar posts in the past, and I think the first time I saw something like this, she was describing the city dwellers as “new mandarins.” That’s probably not complementary enough a description these days now that she seems to be writing for that crowd. I was fascinated by it when I first heard it, because it seemed a good explanation for the reaction of folks who think $400k a year is middle class.
These days, I am much more bothered by these pieces: they are no longer explanation, but justification. It’s offensive that folks smart enough to know better keep trying to define themselves as needy.
I am single and have gotten along on $40,000 a year since 2000 and some years, not even that much. I live in Queens. $400,000 is above my wildest dreams.
Gilbar, please quote the part of my post where I stated that I think people don't have to pay state and local taxes. I'm afraid the envy is strong in you and it is rendering you unable to comprehend what you read.
The point I was trying to make is that people who earn all of their money as wages and have a high income pay a heck of a lot in taxes. People whose adjusted gross income never exceeded six figures really have no idea.
A couple reporting AGI of $80k would pay about $9k in federal income tax. A couple reporting AGI of $400k would pay nearly $90k in federal income tax. They make 5x the money but pay 10x the income tax. It's plenty of money to raise a family, no doubt. But for those of you who are trying to do the math, you have to take 30-50% off the top for taxes (fed income, state income, social security, medicare, property).
Again, I'm not asking for sympathy. I'm just pointing out that income taxes take a much larger chunk than many here might think. $400k gross is not nearly $33k per month. It is plenty to live on, for sure
There are about 4500 Walmarts in the United States. If you assume 1 top level manager, 2 2nd level/lead managers and 3 3rd level/area managers per store that's about 27,000 "Walmart manager" jobs in the nation.
Why does McMegan think that position would be something that'd be easy to provide to the children of most the elites (if only they'd settle for such a thing)?
Walmart Superstore managers make around $150-200k/year, by the way. It's not an easy job to get or keep.
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