<p>I don’t know if it’s just CC and ABC’s Charlie Gibson, but when did a $150K annual income become middle class? I remember in 1991, we bought our first 3/2 sf house for $104k on Miami Beach with only $32k in annual income - one income/one professional job. Due to life circumstances, we’re not earning much more than that now, however five times that salary now seems to be considered middle class and houses on Miami Beach are now $500k on the low end. Have incomes really gone up that much, or is something really out of whack? </p>
<p>It seems as if anything under $60k a year is low income (just recently, I would have thought under $45k), and above $250k a year considered upper middle income. Have the official poverty levels been raised lately? Because it does seem like it should be much higher than only a few years ago. And, are <em>that</em> many families really earning above $60k a year? Can any Moms stay home to raise their kids anymore? What’s a good entry level professional starting salary, now that $30k would no longer cut it?</p>
<p>The current US “poverty threshold” for a family of four is $20,650. Such a figure is based on a simple formula: Calculate the minimum cost to feed a family and multiply by three. This attempt to measure material deprivation was designed in 1963 by Mollie Orshansky, then of the Social Security Administration, and since used by the Census Bureau and in most federal programs such as Medicaid and food stamps as the criteria for eligibility.</p>
<p>Then factor out all those who intermittently employed, who get laid off, who have health conditions that make it impossible to work (or work full-time), etc., etc.</p>
<p>You can work it out, though - $53k is the median family income in the U.S. (which is more than 2.5x the poverty threshold). Figure 1.5 adults working per family, so per person is $35,338 (in my state, it is slightly higher, around $37k, but that includes Seattle). Average work week is 45 hours (for someone with a full-time job). Put in 52 weeks, or 2340 hours per year, per person, or 3,510 hours per family. Works out to $10.06 per hour as the median wage (with or without benefits). Now keep in mind that this is the median - half are lower. Alternatively, there are some folks whose wages work out higher per hour, but are underemployed.</p>
<p>How many folks on this list think they are middle class now?</p>
<p>mini, the median family income in this country is approximately $60,000. 2006 cps data puts it at $58,500, though i have seen more recent numbers in the $61,000 range.</p>
<p>from the 2006 cps data, a few other percentiles (rounded):</p>
<p>As you can see from this $58.5k is impossible, as only 5 states have medians that high. (This, however, does use three-year averaging, though I rather doubt that would account for the difference.)</p>
<p>However, I’d expect median family income of those on this board (given the interest in prestige private colleges far, far out of proportion to the general population which struggles to send their kids to state schools or the community college) is well above that.</p>
<p>Part of the problem is that the government has not been willing to increae its definition of rich. Somewhere around $75,000 single, $150,000. At that point all sorts of tax phaseouts start, so these follk are really geting hit. For example with AMT. If you have a child and your AMT is $5,000 it wipes out the child deduction plus the equivalent of 2 other kids you don’t have not to mention other deductions that are phased out. So depending on the situation, it is possible for a household with around a $100,000 income to have a real income that exceeds that of someone making $160,000. As for the numbers people are giving above, you need to figure in where they are living. NYC, vs LA, vs Butte, vs Scranton, vs Baton Rouge, etc. Hourly wages by themselves don’t give the whole picture.</p>
<p>Probably a good thread for Taxguy to give an opinion on.</p>
<p>“As for the numbers people are giving above, you need to figure in where they are living. NYC, vs LA, vs Butte, vs Scranton, vs Baton Rouge, etc.”</p>
<p>Much less than one would immediately think. Median family income in New Jersey is only $64k; in California $53k+, New York substantially lower than that.</p>
<p>The majority of parents in the U.S. aren’t sending their kids to college at all.</p>
<p>the problem with this logic is that one then has to readjust any resultant numbers for things like average educational attainment and consumer-driven demand.</p>
<p>for example, take arlington, virginia. it would be easy to determine the cost of living for the county, multiply it by the national median family income and call the resulting number the areas ‘middle class’ income. the problem is that much of arlingtons high cost of living is a direct result of the tons of well educated people with good jobs who want to live there. they arent clamoring to live in scranton, butte or baton rouge.</p>
<p>As I stated when this thread first went on–income has much to do with your peer group. For families with both parents having college degrees the number would be much higher to feel part of the middle of that group. Also assume you are living in a decent suburb of a city where many college educated people go to work and $150,000 seems pretty average. Does it really matter to you that there are people who live in trailer parks somewhere in the South–not really. Those people live in a different universe.
I just got back from driving through parts of rural Virginia and North Carolina. The beater cars and washing machines and or couches out on the front porch is not part of my world.</p>
<p>$150k becomes very middle class when you are hanging around folks who are sending their kids away to college, particularly private colleges. About half the kids in colleges are on financial aid which means the half are paying fully. That gives you some idea where your peers are. To zoom into it further, look up what percent of the kids in your child’s college are on financial aid, and what the average aid is. You can then see what your child’s peers’ parents are paying for them to go to school there. If your child is going to a $40K+ school, that says something about those families.</p>
<p>I also found the numbers you posted surprising but it depends on how the statistics are generated (isn’t it always?). For similar job types, I’d expect the private sector to generally pay higher than the public sector. However, when one is rolling up ‘all incomes’, then they’re also rolling up all of the private sector minimum wage jobs that don’t generally exist in the public sector so that would skew the results.</p>
<p>your data is fine, mini… its just the wrong data. you want median FAMILY income, not median HOUSEHOLD income. throwing a bunch of single 20-somethings (and 80-somethings) into the calculation doesnt make much sense in context of determining what income defines a middle class family.</p>
<hr>
<p>on the public/private jobs question, i dont know if the numbers are accurate, but i think people are looking at the wrong part of the employment spectrum for an answer. top private sector employees certainly make more money that top public employees. however, there are also HUGE numbers of private sector employees in this country working for $8.00 an hour, certainly more (in relative terms) than the public sector employs.</p>
<p>I think it’s hard to compare “ourselves” to “each other”, too, because many of us are at different points in our lives - if we had kids young, if we had kids as oldsters. Some of us are retired or close to retired and some of us are just hitting our peak earning years. Some of us need large homes with space for the kiddos, others can be content with less square feet with the kids on top of us. Some of us are in urban areas and some of us are in rural areas. Some of us are in service careers with lower paying incomes others are captains of industry…all this impacts greatly how we feel emotionally about college costs. Plus I swear money expands and contracts. We’re a one-income family but for many years we were a two income family and it feels much the same…never enough money LOL. Collectively it feels like we struggle to relate to each other when really all we have in common are kids that are in or heading for college. I struggle with statistics - because being a generalist there is never enough information behind the numbers to “allow” me to measure against to make myself feel better (or worse).</p>
<p>The thing to me is, we can feel any way we want, but at 150K, you’re way above the median, the average, and any other comparison, no matter how it’s parsed. Living in NJ, ya know, the place you supposedly can’t get by on at less than 200K, I feel blessed and comfortable at half that.</p>
<p>Just a feeling, of course–but when I know that most of my neighbors, and virtually all of the students at the college I work at, have smaller, sometimes much smaller incomes, it kinda is corroborated.</p>
<p>It hardly matters - median family income and median household income is virtually the same (at around $55k, give or take $3k.)</p>
<p>The majority of parents aren’t sending their kids to college at all. They can’t afford it, period. It’s not for lack of spaces - there are literally hundreds and hundreds of colleges begging for warm bodies, IF the bodies’ families can pay the bills.</p>
<p>Paying full tuition at a private? On average, income is roughly four times the middle, and assets are 8X the middle. There just isn’t anything “middle” about it.</p>
<p>Wages and benefits for a public job at $40/hour works out to about $80k. That’s probably true - in California, and, I’d bet, in Washington, DC. Actually, it would be low for a public service worker in Seattle. But not among state workers here.</p>
<p>I imagine there are “fewish” folks (some, but not that many) who frequent these boards who know what it feels like to be “middle income”</p>
<p>My mom always used to say that expenses almost always rise to meet income, so one does not “feel” much different earning $60,000 or $300,000 though an outside observer might disagree.</p>
<p>Mini is absolutely correct. Most students who go to college are not 18 year olds going to a “sleep away” school funded by the parents. THey are much older, are working and painfully getting through a local college, course by course sometimes borrowing to pay for the privilege. </p>
<p>My brother’s in-laws are European, and when they were here they commented on how Americans send their kids off to college since they saw my son and his friends. I told them that this is the case for those families who can afford it for the most part and a financial luxury. My sister in law went to a local college in Europe, living at home as most students there do. There isn’t the infrastructure at universities there. </p>
<p>But just as they thought this was the norm since they were among families sending off their kids, so we begin to feel that way as our peers are in this college world. It’s easy to lose perspective. When you are with a group of people who are all sending their kids to private schools and are in the half that are paying full freight, you can feel mighty poor at $150K. Especially if you have only been getting that amount recently.</p>
<p>We are in that $150,000 range and live a solidly middle class life. We clip coupons, shop sales, eat out once per week max and drive economical cars like Hyundai Elantras and Mazda compacts. Our splurge is travel where we frequently travel to Europe and USA resort spots. And we live debt free, meaning no mortgages, auto loans or credit card debt.</p>
<p>I would say that we are Buffett-like in that we live way below our means. Our happiness derives from our family, health, and simplicity as a choice. Never bought into the American dream mentality. Let me cook a nice meal followed by an evening reading with my wonderful wife. Now that is the good life.</p>
<p>A typical public school teacher married to a typical police officer, both with 20 years of experience, together stand to earn about $100,000 per year with good benefits. Add in two or three kids and I would certainly consider their family middle class. </p>
<p>It isn’t much of a stretch to think of a similar family earning $150,000 per year (perhaps if Mom or Dad is an accountant or an engineer instead of a police officer or a teacher) as middle class.</p>
<p>(Credit to George Will in Newsweek for the hypothetical earning pair.)</p>