Last year, the New York Times told us it's difficult for people to make ends meet on $500,000 a year, and the Washington Post insisted that it's hard to "squeak by" on $300,000 a year. Now the Denver Post insists that if you make $250,000 a year, you may only be "middle class":
The $250,000 income cutoff has become a near-mythical figure in American politics, setting up a heated and sometimes highly personal debate...Are (those who make $250,000 a year) rich? Or, as some define that income range, simply middle class?
This follows CNN's Kiran Chetry famously insisting that "Some would argue that in some parts of the country" $250,000 a year "is middle class" -- which itself was a follow-on of ABC anchor Charlie Gibson making a similar assertion at a 2008 presidential debate. Put it all together, and you have a pretty intense misinformation campaign to make us believe that the very wealthy are, in fact, poor.
It is, of course, misinformation. Even in the wealthiest, highest-cost-of-living places in America, $250,000 is most decidedly not "middle class":
As census data show, state median incomes vary from $65,933 in New Jersey to $35,971 in Mississippi. But even in wealthy states, $250,000 ain't bad-it's nearly four times the median income in wealthy states like Maryland and Connecticut. And even if you look at the wealthiest metropolitan areas-Washington, D.C. ($83,200); San Francisco ($73,851); Boston ($68,142); and New York ($61,554)-$250,000 a year dwarfs the median income...
[T]he number of places where $250,000 stretches you is small indeed-certain parts of Greenwich, Conn.; several neighborhoods in Manhattan; some of California's coast. Even in the most exclusive communities where the wealthy congregate, $250,000 is still pretty good coin. Consider this: CNNMoney recently ranked America's 25 wealthiest towns. In all of them, someone making $250,000 would have a difficult time buying his dream house. But in all of them, making $250,000 means you're doing better than most of your neighbors. Even in America's richest town, New Canaan, Conn., the median income is $231,138.
This isn't to say that you are living the life of Bill Gates if you make $250,000 a year. Nor is it to say someone making that amount isn't working hard. But it is to say that if you make $250,000 a year, you aren't anywhere near the "middle" - and, in fact, you have plenty of money to not have to worry about money, unless you are making profligate discretionary choices.
That's a key point in what constitutes "rich" and "not rich," and kudos to the Denver Post for at least examining that problem of profligacy among the wealthy:
"One of the things we know about people is their consumption expectations uniformly expand to fill their income," said Jeffrey Zax, a professor of economics at the University of Colorado at Boulder. "But there's strong social pressure not to think of ourselves as wealthy. There's a fair amount of self-deception going on here."
Indeed, while "wealthy" can have negative connotations in the minds of the wealthy, it's not a word that automatically connotes value judgment. You can be a wealthy person who fully earned your wealth through the hardest of hard work, and you can be a wealthy person who received your wealth through no work at all (think: trustafarian). You can be an honest wealthy person or a dishonest wealthy person. You can be a greedy wealthy person or a charitable wealthy person.
You get the point -- in attempting to avoid any negative connotations, wealthy people delude themselves into believing they aren't actually wealthy, when, based purely on math, they are both relatively wealthy in comparison to everyone else, and extremely wealthy in terms of being able to afford the basic necessities of life even in the highest-cost-of-living locales in the nation.
The problem, of course, is that perception can become reality.
Media voices perpetuate these myths of the impoverished wealthy, in part, because many media voices are themselves wealthy -- and there's no more powerful class solidarity than that which exists among the rich.
Indeed, the wealthy don't just convince themselves they aren't wealthy, they try to create the perception among themselves, politicians and the public at large that they are "middle class" and thus persecuted by taxes. Put another way, the real danger of the New York Times, Washington Post and Denver Post article floating the idea of the wealthy as not wealthy is in skewing our political debate over economics. If someone making $500,000 is just "getting by," and someone making $300,000 is barely "squeaking by" and someone making $250,000 is in the persecuted "middle class," then having any fact-based discussion about tax inequities becomes that much harder.
Follow David Sirota on Twitter: www.twitter.com/davidsirota
Most middle class families get by with an income between $30,000 and $70,000. That's it. If you are making $250,000 and complaining about how hard it is to make ends meet, cry me a river!
$250,000 not wealthy? Now THERE's a load of crap for ya!
ROFLMFAO
Reality Check is that $250k is not middle class, we all know it and should not allow this to become conventional wisdom.
Here is the question... Why do the so-called "Masters of the Universe" all want to live in NYC and S.F.?
nyc is up to about 1/3 of its residents living in poverty. a large assumption is much of it is from paying too much for rent. you can eat pretty well on the same 3000 you give your landlord and have money left over for an end table from roche bobois -- that is iif you are lucky enough to have to pay only 3000 for rent.
i think americans have lost the concept of the value of anything. what makes ct so charming? all the white middle class neighbors with sprawlling green lawns and perfectly manicured hedges too? nj is expensive but where else can you party in a hot tub with snookie and the situation?
i remember a nyc pre-giuliani. when the east village was fun. now everyone has moved to brooklyn and rents are skyrocketing there. a friend of mine can't afford to leave his brooklyn apt -- if he does half the space will cost him twice as much. what fun.
My son, btw lives in the east village too. The banking community is a perfect example of a business which could largely be run from a desk in one's home. All sorts of questions arise about mass-group-think, don't they?
Whole towns in the Midwest sit empty. It's like that last scene in Bladerunner where the whole audience looks down at the green fields Harrison Ford's plane is flying over and thinks, "What? If the land is so beautiful out of the cities, why are they all in the city???"
So, a person who makes $250K might be in the top 10 percentile of their city, but they will live in a neighborhood, and work with people, and send their kids to school in a place where they are in the 50th percentile. And they will covet the house and car and lifestyle of the person up the street who makes $500K.
The more you have, the more you want, and soon you forget that you have a late model car, and a swimming pool and kid in private college and you focus instead on the things you can't afford and you wonder why $250K doesn't go that far.
So if you ask somebody who makes $250K, they will tell you they are scrapping by, without acknowledging that it is their own lifestyle choices that makes that so. And they will consider the fact that they can't afford a Ferrari or a Piper Cub or a ski home to be more meaningful than the fact that the average American gets by on 20% of their income.
Now what's odd is that it's conservatives arguing that 250k types are middle class...
It's in the fat cats' interest to keep them identifying with the rich.
But I forget... Somehow the conservatives have convinced poor people to identify with the rich a la Sarah Palin types. The world is strange.
Granted, I think the 250k thing is arbitrary and that the middle class should be hit with tax hikes as well as the rich (anyone who can make a sacrifice should)... but the author is correct in that it's stupid to claim that someone making 250k is struggling in any meaningful way... assuming no catastrophic health issues the insurance company ducks out of.
It's concerning, because somehow this country has become a place where it's better in some ways to make less than 150k if you can't approach 500k. Those making 250k are often small-business owners or executives in smaller companies, and not only do they not benefit from breaks the other brackets get, there are penalties (such as the AMT), and of course it's the famous cut-off point for the President's tax cuts.
I have a number of friends in this income bracket who vote Republican exclusively because they're under the impression that their taxes will be cut by a Republican. And that's all they seem to really care about.
Of course, anyone earning 250k and above has more than enough opportunity in the U.S. to use their money wisely, and benefit greatly; but there doesn't seem to be much incentive to rise from, say, 150k to 250k.