Who's Rich?

It's always interesting to ask about people's subjective definitions of "rich" and an interesting token of how class-stratified we've become as a society that so many people in the top twenty percent of the income distribution tend not to think of themselves as rich.

That said, annual family income is a pretty crude metric of people's financial situation. The bottom end of the income distribution chart includes a lot of retired people, who aren't necessarily poor in any intuitive sense. Down there at the bottom you've also got a certain number of students and people in apprentice-like jobs (entry-level positions at political magazines) that they're expected to quickly transition out of. As a result, while $88,000 a year is good enough to put you in the top twenty percent, it's not nearly good enough to put you in the top twenty percent of real grownups (say, people over 25) who have full-time jobs. And of course wealth matters here as well. There's a difference between someone earning $88,000 a year and someone who's the beneficiary of a trust fund that pays out $88,000 a year. There's also a difference between earning $88,000 a year free and clear and earning $88,000 a year while trying to pay off college and law school debts.

Comments

If your parents can afford to send you to an Ivy-league school for four years without any aid, you might not be rich, but you're damn comfortable.

Posted by Jake | March 12, 2008 4:47 PM

I'm RICH, bitch!

Posted by Ashy Larry | March 12, 2008 4:48 PM

Rich is being able to afford $1,000/hour hookers.

(That means you, Clinton superdelegate!)

Posted by Peter K. | March 12, 2008 4:50 PM

Maybe you're trying to get at it in the last sentence, but cost of living matters too.

Posted by Al | March 12, 2008 4:51 PM

There is a writer in the center for the American Progress or at the DLC (Sorry, I don't remember) who in a previous discussion with Matt had provided the details about how the young and the old tend to skew the statistics on the low level.

Matt should be familiar with whom I am talking about. Does anyone else remember? I ve been looking for this info for months.

Posted by Nick Kaufman | March 12, 2008 4:52 PM

I generally define the "upper class" as people who can maintain a relatively high standard of living with only the income from their wealth (not including pensions, 401Ks, IRAs, and so on). Necessarily, this depends on things like what you consider to be a relatively high standard of living, the local cost of living, whether your home is owned or rented, expected returns, your age, whether you want to leave a legacy, and so on. But roughly speaking, around $1-5 million in income-producing wealth should do the trick in most circumstances.

But "rich"? I get the sense that many people think of "rich" as being defined on the expenditure side more than the income or wealth side, so it doesn't matter where the money is coming from (a job, investment income, a sugar daddy/momma, an actual daddy/momma, fraud, a line of credit, or so on). You just have to be living the high life and you are rich.

Posted by DTM | March 12, 2008 4:54 PM

The answer to this question is really quite simple:

"Rich" isn't a question of income; it's a question of net worth. Income is irrelevant if you're sitting on a pile of $200M.

People focus on incomes because there is good data, due to the tax code. The data on wealth is terrible.

Posted by right | March 12, 2008 4:56 PM

Yes, Matthew. Income data are a poor measure of standard of living and economic well-being. Wage data are even more misleading. Conservatives and libertarians understand this. Liberals don't.

Posted by Mixner | March 12, 2008 4:57 PM

Let's not forget about geography -- an annual income that would you make the richest person in a small midwestern town might only subsidize a middle class lifestyle in Manhattan...

Posted by David | March 12, 2008 4:57 PM

I remember reading something four or eight years that was meant to prove that Republican policies would help anyone earning over $380,000 and hurt anyone making less. So I'll call income over $400,000 rich. In any case, this $157,000 top 5% income is definitely not rich even for a single person - which demonstrates how much the top one percent have hogged for themselves recently.

Posted by Gary Sugar | March 12, 2008 4:58 PM

I think "rich" needs to be adjusted for residency and cost of living. Making $100K per year in Des Moines is a lot different than making it in New York City. You can barely live in New York at that salary, but you will be very comfortable in Des Moines. I think the definition of rich should be this: Can you afford the annual fee at the nearest private golf course? If you can, you're rich. If not, you're not.

Posted by fostert | March 12, 2008 4:59 PM

The problem with the concept of "rich" is that it doesn't make much sense to treat people who make $100,000 a year and people who make $100 million a year as being in the same class.

Posted by KCinDC | March 12, 2008 5:00 PM

"how class-stratified we've become as a society"

I don't believe there's ever been a capitalist society in which the top 20% in income distribution think of themselves as rich. Well-off people in far more class-stratified societies than ours did not and do not consider themselves to be rich.

Read any novel of middle-class life: Jane Austin, or Thackeray, or Trollope, or Balzac, or Tolstoy, or William Dean Howells, or Cheever, or Updike, or Doris Lessing, or Vikram Seth. You'll see that well into the upper reaches of the upper middle class, people with incomes many times that of the average person do not consider themselves to be rich.

The line between rich and non-rich, as the upper middle class has always conceived of it, is easy to see: if you have to work to maintain your standard of living (or if you're a woman and your husband has to work to maintain the family standard of living), you are not rich, no matter how much disposable income you have. Rich people may work for personal gratification or from a puritanical sense that not working is immoral (e.g., Warren Buffett), but people who would see their standard of living fall if they stopped working are not rich.

Posted by Bloix | March 12, 2008 5:02 PM

This is just human nature. Money is like crack. The minute you get it you start wondering how you can get more.

If thousands of years ago Thag sat in his cave and thought, "Wow. I have a woman, a fire, and a hunk of meat, this is the fucking high life!" progress would have stopped and we wouldn't be able to afford high class prostitutes and wars of choice.

Posted by How Insane Is John McCain? | March 12, 2008 5:03 PM

This is always an interesting discussion, but holy shit is it subjective. For example, I like your 'seat of the plaid golf pants' metric, fostert, but 100K to barely live on in NYC? Maybe with a stay at home spouse and two kids and no health insurance, but really. When I moved to NYC as a new grad eight years ago, I did fine overpaying for my first apartment (in shitty part of Brooklyn) and making 30K. I was single. I wasn't paying for my health insurance. I didn't have a car. I wasn't going out every night with my consultant friends to the latest financial-crowd hotspot. Like I say, very very relative.
It is interesting to see how touchy people get, tho'. (I'm not rich! Cost of living! Damn you trust funders!)

Posted by max | March 12, 2008 5:08 PM

There's a difference between someone earning $88,000 a year and someone who's the beneficiary of a trust fund that pays out $88,000 a year

I thought the $88,000 a year included any trust income (which is probably ordinary income for tax purposes), and that the person Matt describes would be considered as having a $176,000 income for these purposes. I'd think that the studies of income would treat it that way, but I'm no expert.

But look. I raised my kids in a New York neighborhood in which the average household income is about $32,000 a year, while we were making between $150,000 and $225,000 a year, depending on circumstances. I always told my kids we were rich, compared to most folks, and you can be damn sure we were, even in New York. (Even though we paid for about 15 years of private schools, and for full tuition college, which made us feel not so rich.) As a result, thank god, my kids are not spoiled rotten. Lots of people I know making $150,000 to $225,000 think they aren't rich, and they are spoiled rotten.

By the way, I've followed a Brooklyn website dealing with real estate and seen commenters claiming that people could not possibly raise a family in New York on $32,000 per year. Seems that they do, however, pretty regularly.

Posted by David in NY | March 12, 2008 5:11 PM

Oh heck, I was probably misreading Matt in that $88,000 line above, so forget that part of what I said. The rest stands, however.

Posted by David in NY | March 12, 2008 5:15 PM

Income is a terrible measure of wealth. Much better is assets. Gross assets meaning assets minus liabilities. For most of history assets were the measure of wealth. Before there was money there were the rich and powerful, because of their assets.

Sometimes income and asset numbers are mixed up when discussing these issues and that muddies things up terribly.

There are plenty of young adults and middle aged adults earing $40K a year who live well because their parents or grandparents have asset wealth, and share it and their income with them, (The nice house(s), cars, clothes, toys, etc.)

Just as importantly they stand to inherit that wealth. The knowledge of that coming inheritance is possibly the most important determinant of how individuals think of themselves class wise. If you KNOW your going to be secure in the future it takes a huge burden off of you in many many ways. Not that people don't stress about their own earnings and current class status but still, that knowledge that you are made is extremely powerful.

Asset distribution is tricky to measure but I think we can assume that currently in the US the top 20% have 80% of the assets. The bottom 20% have zero assets. Show me someone without assets or the reasonable hope of ever having any and I will show you a probable future convicted criminal, prisoner, gang member, etc.

Trends before the financial crisis suggested that 90% of assets would eventually accrue to the top decile. That in fact is probably the natural equilibrium of asset distribution of any economy that has private ownership and no commitment to income redistribution. (Yes I am mixing income and assets but hardly anywhere are assets taxed. Taxes favoring capital over labor necessarily drive income towards returns on assets, Then a virtuous circle ensues whereby asset holders earn more and aquire more assets.)

Since financial assets have soared so since 1980, as the entire system devoted itself to inflating financial assets the wealthy stand to lose relative to everyone else if the system fails significantly.

Posted by rapier | March 12, 2008 5:16 PM

Rich is a very subjective term, so to try and put normative values on it is rather unproductive. To a person in parts of sub-Saharan Africa or New Guinea, myself and Mr. Yglesias are incredibly rich. To a resident of Beverly Hills California, we are not. You see, it is too subjective to put normative metrics like % of disposable income or tax bracket.

A more productive question would be: are top 10 and top 20 percent of wage earners aware that they are in such an elite percentile? Do they think of themselves as being top tier?

Posted by freddiemac | March 12, 2008 5:21 PM

Re: the New York City comments above, they were partly why I said that cost of living matters. But, really, often when people say "New York", they really mean "Manhattan south of 96th Street". And in that case, living on an income in the bottom one or two quintiles has got to be really, really difficult (though possible, given rent control, the ability to fit 5 people into a one bedroom apartment, etc.).

Posted by Al | March 12, 2008 5:31 PM

"There's also a difference between earning $88,000 a year free and clear and earning $88,000 a year while trying to pay off college and law school debts. "

Im glad Matt gets it. Too bad my family and friends don't read The Atlantic. I suppose I should have left the idealistic legal positions to "the Rich" young attorneys.

Posted by laborlibert | March 12, 2008 5:35 PM

I've been in the top 10% of my local income bracket since moving out of southern California. Although I can sense an ability to afford a certain lifestyle, I can also see that local power, a relatively unrestrained ability to act, rests with the boys and girls who control significant assets.

Ergo, my "elite" status is illusionary, a paycheck or two from a mere memory.

Posted by cmholm | March 12, 2008 5:36 PM

actually, yeah, 100K CAN be barely making it in NYC...especially in Manhattan.

example:

125K income.

no real deductions. city, state, federal income tax: 40K.

student loan payments on 160K in student loan debt: 10K a year.

rent with roommates: 2200 a month. (by yourself in my hood: 3-4K a month. yeah, you could spend 1500 in Brooklyn. maybe). 25K a year.

metrocard/taxis: 3K a year.

cost of dating/networking for a single guy (assuming 2-3 dates a week): 2400 a month -- 28k a year.

which in theory leaves 19K for vacation, clothes, furniture/electronics/food...at Manhattan prices. $10 beers anyone?

certainly not saving anything.

that's a realistic breakdown.

Posted by Nathan | March 12, 2008 5:36 PM

I would regard "rich" as a term that aims for a higher bar than "top quintile," even if you adjust for standards of living und so weiter.

I mean, if you grab a handful of people off the street, and the odds are that one of them makes more money than you, are you really rich? I'd probably put the minimum bar for what most people think of as "rich" at being top 1%, 5%, or at most 10% of whatever fuzzy income/wealth conglomeration it is that people intuitively think of.

Posted by Michael B Sullivan | March 12, 2008 5:36 PM

I think the comments here prove Matt's point in a way. A lot of comments saying "157,000 a year isn't really rich" and "you can't live in NY for under 100,000 a year." Um, yes you very easily can. You're rich, get over it.

Posted by mad6798j | March 12, 2008 5:36 PM

"but 100K to barely live on in NYC?"

In my defense, I was thinking Manhattan when I wrote NYC. Yes, you can live comfortably outside of Manhattan, but still in The City, on $100K. But in Manhattan, you'd have a pretty small apartment. I obviously should have been more precise in my wording. That's why I don't make a living at writing.

Posted by fostert | March 12, 2008 5:40 PM

well, by Manhattan you mean below 96th as well....(which is why general Manhattan income figures aren't germane either. except for a couple small downtown enclaves...poor people in Manhattan are all clustered above 96th....(really more like 100th these days)

Posted by Nathan | March 12, 2008 5:43 PM

metrocard/taxis: 3K a year.

Let's see, a monthy MetroCard is $81. $81 x 12=$972. I additionally contend that it's possible to live in New York and not ever take cabs, because I've done so for ten years. There are plenty of bars in NYC--even in Manhattan--where the beers aren't ten dollars. As for spending $28K/year on one's social life--all I can say is, if I was in that position I sure as hell wouldn't be pissing and moaning about it in a public forum.

As mad6798j points out above, the degree of whiny entitlement exhibited on this thread is nothing short of astounding.

Posted by James Gary | March 12, 2008 5:51 PM

Nathan: as an admitted 2-percenter, I'm not trying to attack your math or class status, but being able to spend $2400 a month on dates is what I (or almost anyone else this side of Elliot Spitzer) would call a "comfortable" lifestyle.

Posted by max | March 12, 2008 5:51 PM

Assuming I didn't cook, as many new yorkers don't, and spent $20/meal on every meal, plus $5 for breakfast, we're talking $40/day for 30 days, which is $1200/month. I'm trying to figure out how you spend ANOTHER $2400/month on top of that entertaining others.

I live as a young, decently-paid professional in DC, and while my rent is more than I want to pay, the truth is that I don't do so badly. And I wouldn't even *think* of having my food and entertainment expenses rise to the $2400/month level.

That said, lawyers are frequently constrained in that they have to constantly attend bonding-events and other outings with their colleagues at their own expense.

However, Nathan makes a good point: trying to live like the "rich" are perceived to live is a very expensive proposition, even when you make a lot of money.

Posted by Tyro | March 12, 2008 6:11 PM

Dang - 2-3 dates a week at which he's dropping $600 total. I want Nathan's social life.

Posted by Al | March 12, 2008 6:11 PM

What some call "whiny entitlement" is really a recognition of where the true power in this society lies. Upper middle class people have a better position than the lower middle class or the poor to see how decisions really get made in this country and to understand how far away they really are from the centers of power. No doubt someone making $250K-$400K is materially damn well-off, but their ability to actually exert any influence on society or really control their own destiny isn't generally not much better than any other wage earner. Rich=money+power. As many have already said, a big salary is great but you need to control significant assets to have power.

Posted by vanya | March 12, 2008 6:13 PM

Shorter everyone who is 'upper middle class': There's no denying I'm in the top 10% of income and anyone with half a brain knows top 10% isn't 'upper middle' so I'll cite some local factor like 'the rent in Manhattan is high' or 'I'm the salt of the earth!' to obscure the fact that I'm definitely upper upper middle class and more than likely rich.

Posted by joejoejoe | March 12, 2008 6:14 PM

well...if you're not married, the alternative choice is celibacy. women cost a lot of money. at least women with careers over the age of 22.

but I think the key point is that one still has to live with roommates when making six figures here.

and, yes, there are still plenty of places with $6 beers. never mind that most of them are sports bars filled with dudes (or even the laudatory Corner Bistro with $2.50 McSorleys...also full of dudes).

Posted by Nathan | March 12, 2008 6:15 PM

Nathan: as an admitted 2-percenter, I'm not trying to attack your math or class status, but being able to spend $2400 a month on dates is what I (or almost anyone else this side of Elliot Spitzer) would call a "comfortable" lifestyle.

Um, that would only buy 2 hours of loving a month at Elliot Spitzer rates. Hardly "comfortable."

Posted by vanya | March 12, 2008 6:19 PM

oh, I live the good life and get to indulge my hobbies. but if I instead lived the way I lived in grad school and saved money, tell me again what the point is in working this hard? people don't go through law or med or business school to not live the good life on the other end...but it doesn't change the fact that living the way people think people like you must live...leaves you living paycheck to paycheck.

for example, women have very different expectations for a grad student taking them on a date, then for a professional. that's just reality.

Posted by Nathan | March 12, 2008 6:22 PM

Nathan, you know, there are plenty of people who live in NYC who are young professionals who have much lower expenses.

And I don't think any of the first dates I had with NYC women approached $200.

This perhaps shows a few things: in America, you can reach an income that some people couldn't even dream of, and still struggle. That level of income doesn't actually buy you much influence. Without family wealth backing you up, you only get a certain amount of financial freedom when you get to early middle aged, just like most other people with a steady income. Finally, Americans spend way, way too much of their money trying to live a certain lifestyle (eg, my insistance on living in central DC rather than in, say, Rockville or Gaithersburg).

Posted by Tyro | March 12, 2008 6:23 PM

Most people think of themselves as being 3 things:

They think they are good drivers
They think they have a sense of humor
And they think they are middle class

I guess that I disagree with most of you here. If your household income is in the top 20% of the nation, you are rich. Stop bitching about cost of living or else move somewhere else. I think you'll find that your $700,000 starter home in SF buys a lot more house in Ohio.

Now, earners in the top quintile may not be wealthy. This is especially true in the African American communities where success often leads to obligations of support for extended family members. But for tax purposes, it's absurd to suggest, as Clinton did, that raising the cap on SS would negatively affect middle class Americans. I also find the claim that the AMT is increasingly affecting middle income Americans to be ridiculous. This is simply not true and it behooves liberals to say so instead of pretending that "rich" means trust fund.

Posted by Just Karl | March 12, 2008 6:29 PM

An excellent book on this topic (and several others) is The Millionaire Next Door. The authors had a formula for relative affluence which took into account your current income and lifestyle. They also pointed out the negative impact of status-striving. Most of the multimillionaires surveyed in the book weren't status seekers: the drove used cars (most often a Ford F-150, IIRC), etc. The authors pointed out the status traps that the children of wealthy parents often fall into, particularly when they don't make a lot of money themselves. For example, their parents might "help" them by helping them buy a house in a neighborhood they would otherwise be unable to afford; then, to keep up with the Joneses, they feel obligated to send their kids to the same prep school; usw.

"I think the definition of rich should be this: Can you afford the annual fee at the nearest private golf course? If you can, you're rich. If not, you're not."

Eh, perhaps. But, apropos of The Millionaire Next Door, I'm sure you'll find some rich folks at your local public courses. I remember running into a very successful broker I knew from work at our local $18-for-9 holes course. A lot of affluent folks are tight with a buck -- particularly when they can get the same quality without spending more.

Posted by Fred | March 12, 2008 6:30 PM

"A more productive question would be: are top 10 and top 20 percent of wage earners aware that they are in such an elite percentile? Do they think of themselves as being top tier?"

I agree with this. We are an affluent society. Many of my friends get along just fine on "limited" incomes. Many others think of themselves as "poor," and I find this annoying, what with all the people around us (not to mention the people in the rest of the world) who really are poor. I grew up in a relatively low-income family (though we were certainly middle class), and I've lived all of my adult life in cities with a high cost of living (NYC, SF), except for the years I spent in grad school, getting overeducated. I've never made much more than $50,000 a year. I don't have kids, of course, but I don't have anyone to share expenses with, either. To me, just being able to live independently and autonomously is a luxury, esp. when I look at (a) the rest of the world and (b) the limited range of options open to by my mom and other women of her generation.

Don't get me wrong: I do think it's often hard for people with kids or other dependents to make ends meet. But I also think that we could ameliorate a lot of this difficulty if the US could ever break free of this Republican gilded age, build a better safety net, invest in schools, infrastructure, housing, the environment, community, etc. What a pipe dream!

Posted by mary | March 12, 2008 6:31 PM

Tyro, we're basically in agreement.

and I'd throw out that restaurant and booze costs in Manhattan have gone up drastically in the past three years. the $34 entree is now standard.

example, on Sunday night I had a first date with a lovely young lady. drinks at the bar of a local restaurant in my corner of the WV turned into dinner. she ordered a lot. $200 before I knew it. that's the reality of Manhattan life in 2008.

Posted by Nathan | March 12, 2008 6:35 PM

Fred, you'll notice that the guy you're quoting from said you were rich if you "can" afford the annual fee at the course. Not if you actually do so.

Most of the affluent people I know are quite "tight with a buck," of course-- that's how they became affluent. :)

I've been complaining plenty about how much my salary affords, but the truth is that in 3 years, I foresee having a nice condo and a be in a position to afford a european car. Things are just tight right now because I'm in a transitional period at the moment. Once Nathan calms down, stops with the $200 dinners, pays down his debts, and buys himself a condo within his price range, he'll feel like he's doing pretty well, also.

People who have top 1% salaries for 20 years or so and save their money-- they ARE rich, and we shouldn't deny that simple fact. The ones that don't save their money? Well, they may not be rich, but they are stupid.

Posted by Tyro | March 12, 2008 6:39 PM

Tyro, there's no such thing as buying a Manhattan condo on 125K a year.

Posted by Nathan | March 12, 2008 6:42 PM

"but I think the key point is that one still has to live with roommates when making six figures here."

If one wants to live like a rich person, then yes. Otherwise, not at all.

Posted by mad6798j | March 12, 2008 6:46 PM

"Rich" doesn't mean "wealthier than average." I wouldn't consider the 80th percentile as "rich." Maybe the 90th. Definitely the 95th. "Rich" just means, "more money than a normal person would know what to do with."

Posted by too many steves | March 12, 2008 6:46 PM

Since all these people are arguing, I will revise. If you need a job to support your life-style, you're not rich.

Posted by Gary Sugar | March 12, 2008 6:47 PM

This is why I'll never move to New York: Nathan just mentioned $6 beers like they're a good deal. I don't think I've ever paid more than $4 for a domestic or $6 for a premium/import in L.A. I mean, those places exist, I just avoid them. Cocktails, I'd never pay more than $10, and then it better have the good stuff. Plus, I can go outside for a cigarette in the dead of winter.

Posted by too many steves | March 12, 2008 6:54 PM

There's a bit of a temptation to criticize Nate's lifestyle choices and tell him how to live and what expenses to cut. I'm going to try to avoid doing that here.

The point being: even the rich try seek after a lifestyle that can exceed what their salary can afford them. After all, if they wanted a more modest lifestyle, they wouldn't be so inclined to choose a profession that paid so well.

Posted by Tyro | March 12, 2008 6:54 PM

"drinks at the bar of a local restaurant in my corner of the WV turned into dinner."

That was your first mistake. First date should be coffee or drinks, or, as was the case with my girlfriend, dinner at a BYO place (not too many of those in Manhattan, to be sure, but I can think of at least one).

"Fred, you'll notice that the guy you're quoting from said you were rich if you "can" afford the annual fee at the course. Not if you actually do so."

Fair enough, I guess.

"I've been complaining plenty about how much my salary affords, but the truth is that in 3 years, I foresee having a nice condo and a be in a position to afford a european car."

You could afford a European car now, I'm sure, though perhaps not a new one. The most expensive smell in the world is that of a new car.

"Tyro, there's no such thing as buying a Manhattan condo on 125K a year."

You could afford a studio, though it might be a co-op. Or once you settle down with a woman, you could move to the mainland and buy a capacious one or two bedroom.

Posted by Fred | March 12, 2008 6:55 PM

"There's a bit of a temptation to criticize Nate's lifestyle choices and tell him how to live and what expenses to cut. I'm going to try to avoid doing that here"

I'm not critisizing his choices. I'm just saying that he chooses to live like a rich person.

Posted by mad6798j | March 12, 2008 6:58 PM

too many steves:

it's a function of real estate costs. I mean, Florent is closing cause their rent went from 6K to 50K overnight. the problem with being an island.

as for lifestyle, your peers affect that a massive amount. almost everyone I associate with makes more than me, or the same as me with no debt or the same as me and they're female.

social expenses in school are much lower cause your peers are in school. but unless you want to sit at home in your pajamas, your social peers will roughly determine your social costs.

other things: suits from the Men's Wearhouse might fly in Des Moines (if you wear something that ugly)...but not here. not when you have to dress the part.

Posted by Nathan | March 12, 2008 6:59 PM

on Sunday night I had a first date with a lovely young lady. drinks at the bar of a local restaurant in my corner of the WV turned into dinner. she ordered a lot. $200 before I knew it. that's the reality of Manhattan life in 2008.

Here's some financial advice: quit dating ill-mannered gold-diggers. Really, I'd think you were trolling if I didn't know so many real-life people who say the exact same kind of stuff.

Posted by James Gary | March 12, 2008 7:01 PM

I usually post under another name here, but don't really feel like talking about my income publicly.

I (or at least my parents, I'm still in college) make good money. Really, really good money (I think we've broken seven figures in at least one year of the last three). And while we live in a city, it has population well under a million, and not particularly high cost-of-living. We're obviously really well off. I still contend that we're not rich, per se. As a couple people pointed out upthread, what 'rich' says to me is that you could stop working entirely. And we definitely don't have that.

Second, this may well be a skewed perception based on my income level, but I'm not sure I'd even say you're upper-middle until you get into the top 15% or so. I'd have labeled the cutoff for upper-middle class somewhere around $100,000, maybe higher. To me, upper-middle class says you can afford lots of nice new things without having to worry about it--nice house, new cars, high-end electronics, and no debt (my family, for instance, bought our current house with cash. I think we've been almost entirely debt-free for over ten years). Rich means you don't have to worry about how much money you're spending--as my father's boss put it when he was building a new house, "You know, I'm not sure why I should spend $1 million for this particular feature. I mean, sure, I could, I have the money, I'm just not sure why I should bother."

Posted by Temporarily Anonymous | March 12, 2008 7:02 PM

Fred:

first date was drinks. when people get hungry, you have two choices, cut the date off, or get food. you're right, I could have done the first. I actually have a no-dinner for the first three dates rule with women....doesn't always work. they have an amazing ability to not have had dinner already.

um, studios start at around 500K. maybe you could find one for 350K on the UES but who wants to live there?

Posted by Nathan | March 12, 2008 7:04 PM

Since all these people are arguing, I will revise. If you need a job to support your life-style, you're not rich.

I like this metric.

You could afford a European car now, I'm sure

Theoretically, yes, but I have a mental aversion to borrowing money to buy a rapidly depreciating asset. If I were complaing "how hard it is to live" on my decent salary and mentioned the car payment on my luxury car, everyone would have the right to slap me for being such a dink.

The guy in the office next to me makes probably $100k/yr. He lives in an apartment complex near work, where he's lived for 20 years and doesn't seem to have too many expenses. He pondered buying a house, because he was getting tired of the apartment complexes. The SFHs he was looking at cost about 500k. He said to a coworker of mine helping him look, "All this mortgage stuff is too complicated. I'm just going to pay in cash."

Posted by Tyro | March 12, 2008 7:04 PM

maybe you could find one for 350K on the UES but who wants to live there?

You mean the LES.* No, Nathan, I think you are trolling--that "who wants to live there?" is just too calculatedly over-the-top.

*UES-Upper East Side. LES-Lower East Side.

Posted by James Gary | March 12, 2008 7:09 PM

James Gary:

dude, it's not like I'm hanging out at the bar at Le Cirque! NY golddiggers aren't interest in $200 dinners. you're taking them to Per Se and spending 2K on dinner (after wine).
that's reality.

and it's not like women walk around with signs on their foreheads saying "I'll split the tab" (if she's from the east coast or CA she almost certainly won't).

Posted by Nathan | March 12, 2008 7:09 PM

You mean the LES.* No, Nathan, I think you are trolling--that "who wants to live there?" is just too calculatedly over-the-top.
No, I think he means UES. There are lots of ugly highrise apartment buildings there filled with ticky tacky little apartments that all look the same. The LES is full of hip bars, clubs, ateliers, and vacant lots being developed by European hoteliers. The median price there is probably a good deal higher, as is the crime rate.

Posted by max | March 12, 2008 7:12 PM

James Gary:

I'm not trolling in the slightest. the UES isn't cool to anyone under 40. no fucking way. it's also the cheapest neighborhood in Manhattan below 96th other than the far east EV or LES. roughly equivalent to Murray Hill. all frat boys and sorority girls from Jersey and Long Island.

I say that as a former resident of NoLIta and current resident of the WV.

Posted by Nathan | March 12, 2008 7:13 PM

Further to Nathan - and I certainly think he's right - I think his list omits and underestimates expense of living in NYC as a young urban professional. Taxes are underestimated - 30 percent effective rate given state and local ? No. And where are utilities - phone, cellphone, internet, cable, blackberry, gym membership, etc?

Posted by Al | March 12, 2008 7:15 PM

I think the evident problem here is that we're trying to use, basically, two terms ("rich" and "wealthy") to cover what should be more than two categories.

(As another example: I'm a 25 year old college graduate making about $32K, or below the nat'l average. Certainly below the average for college graduates. But I have no dependants and no debt, and while I live in a big city it's a relatively affordable big city [Chicago], so I say that I'm "fake middle class," because I probably have about as much money to spend on myself as a guy making twice as much with 1.5 kids and a wife who has a part time job.)

I joke with my dad that when he moved from San Francisco to Tampa (for work reasons) he went from "upper middle class" to "lower upper class" despite no change in income. He makes between $200K and $250K a year (it fluctuates), put me through an expensive college without taking out loans, and lives by my standards (and his) quite comfortably. BUT he works 60-90 hour weeks, travelling cross country, to make it happen, isn't close to being paid off on his mortgage, is just hitting a point where he can start really setting some money away for retirement, etc. I'm perfectly comfortable saying my dad is rich, but I'm not being an asshole to note that what most people, including me, think when we hear the word "rich" doesn't describe his life (or, by proxy, mine).

(Chris Rock: Shaq is rich. The guy who signs Shaq's checks is wealthy.)

Posted by Quarterican | March 12, 2008 7:16 PM

With Nathan, I'm facing that all-to-common liberal dilemma of trying not to be judgmental while at the same time feeling the need to point out that Nathan is being a huge snob.

It strikes me that one of the best ways to get rich is to work in a profession where you don't have to deal with so many social climbers. Once you're in a mode where you're talking about how you have to "look the part" and refer to an otherwise-quickly-appreciating neighborhood with "who wants to live there?", your ability to accumulate wealth is going to be significantly hampered.

You're rich if you should be rich, given your professional assets and salary. You're rich if you could choose to be rich if you wanted to be. If you're not in a position to make that choice, you're middle class.

Posted by Tyro | March 12, 2008 7:16 PM

You can't get a $500k condo on $125k a year? I know the credit situation is bad, but it ain't that bad. If you can manage to sock away $50k, it shouldn't be that hard. Might have to cut back on the $200 dinners, certainly.

Posted by too many steves | March 12, 2008 7:17 PM

well, those are incidentals (150 a month for gym, etc.)...but you're right I underestimated the taxes. looking at my return for this year. oy!

Posted by Nathan | March 12, 2008 7:17 PM

toomanysteves:

you're not accounting for mainenance (extra high in NY because of the ground lease):

figure 1200-1800 a month. then your mortgage. not happening.

Posted by Nathan | March 12, 2008 7:20 PM

I defer to your judgment on that, Nathan. But still, man, take the girls to dive bars. If they don't like 'em, they weren't worth it anyway.

I guess I'm just jealous at the 2-3 dates a week.

I'm also starting to understand Eliot Spitzer's decisions.

Posted by too many steves | March 12, 2008 7:24 PM

"um, studios start at around 500K. maybe you could find one for 350K on the UES but who wants to live there?"

Corcoran was advertising one a couple of months ago for $250k in a doorman building in the West 50's -- 55th & 9th or something. Saw it advertised on their office window when I was walking to Zabar's.

"I'm not trolling in the slightest. the UES isn't cool to anyone under 40. no fucking way."

And yet it's full of folks under 40.

"all frat boys and sorority girls from Jersey and Long Island."

Ah, the old bridge & tunnel accusation: anyone in Manhattan who has no class is from elsewhere, right? News flash for you: almost everyone who lives in Manhattan is from elsewhere. And plenty of Manhattanites have no class. Anywhere there are young people out late at night -- whether it's the East Village, LES, West Village, UES, UWS -- wherever -- you can find a-holes. Most of them are probably Manhattanites. When you're twenty-something and know you can just stumble into a cab to get home, you're more likely to drink within an inch of your life than the B&T kids who know they'll need to be alert enough to drive back to Tenafly or catch the last train back to Garden City.

Posted by Fred | March 12, 2008 7:32 PM

Once again Nathan, with the "who wants to live there." People who aren't as rich as you for one. Rich people like you can live wherever you want, wear whatever you want, and eat/drink wherever you want. That's fine, I don't have a problem with that. But you're still rich. Being not rich means you CAN'T live in a lot of places, nor just that you don't want to. That's why I say you're rich.

Posted by mad6798j | March 12, 2008 7:36 PM

I agree about the cost of housing in Manhattan; but I don't understand why these women aren't paying for themselves after the first date. Or second... maybe. If every date is a first date, wtf dude?

Posted by Gary Sugar | March 12, 2008 7:39 PM

"Theoretically, yes, but I have a mental aversion to borrowing money to buy a rapidly depreciating asset."

I was referring to using cash. For $10-$15k you can find a great used car. I spent $15k on a luxury car with 60k miles on it and 110k miles later, it still looks and drives great. To each his own though.

Anyhow, some meta-questions: Why does it matter who is called "rich"? Would people be so resistant to call themselves "rich" if it weren't for the Dems' class warfare rhetoric and threats of higher taxes on "the rich"? Should "the rich" be the only ones who bear the costs of government in America?

Posted by Fred | March 12, 2008 7:42 PM

Wealth means assets. Wealth means assets. Bill Gates, always 1 or 2 on Forbes list, a list based upon assets, probably has an income below thousands of other Americans. Ditto Warren Buffet. Especially Buffet because he lives modestly. This year he was # 1 on the list. He might be # 10,000 on the income list.

Then too is the problem capital gains. I suspect a lot of capital gains are taken by the wealthy by selling assets which are not reported or counted as income. This probably depends upon the source of the data but it should be easy to understand.

For the super rich, income never approaches their comparative wealth in terms of assets. Focusing on income in fact is a powerful method of downplaying the degree of inequality.

As I said, the assets of the lowest 20% are essentially zero. Thus Gates or Buffet or other super rich individually are richer than the bottom two deciles combined. Richer than millions. Approximating the top 10% of asset holders own as much as the lowest 60% I'd guess.

Worldwide 2% own at least 70% of all assets. (I admit I'm pulling these numbers out of my ass but they approximate the profound wealth of a very few which income numbers downplays. Even if 1 billion people do live on $2 a day.

Posted by rapier | March 12, 2008 7:45 PM

Ah, the old bridge & tunnel accusation:

The irony being that if Nathan we not part of the bridge and tunnel crowd himself, he would not be in the position he is in now, particularly since he'd be in a more socially and economically secure position than he is in now.

Ironic that social-climbing behavior makes it more difficult to actually make it to the social heights you were trying to climb to in the first place.

Alright, we shouldn't make this the "pile-on-Nathan" thread. But it does demonstrate that plenty of people who are struggling to get by actually wouldn't be if they tried not to. And plenty of people who would like to do better than they're doing now don't even have that opportunity.

Posted by Tyro | March 12, 2008 7:45 PM

Fred, I think one of the reasons people are reluctant to call themselves "rich" is because the concept of being "middle class" is embedded in the American mythology. Have a single family house and 2.5 kids and 2 cars? You're middle class!

But there's a weird schizoid thing going on where you have to be the person who's middle class but has "made it." So, sure, you might have a SFH, but you need a 5000 sq.ft. mcmansion with a "great room."

I don't get it, myself. People want to the accoutrements of wealth while at the same time be "getting by." Maybe because they see "getting by" as normal. Which makes you middle class, almost by definition. And here we get to the difference between your "class" and your "income."

Posted by Tyro | March 12, 2008 7:53 PM

Tyro--you've made a lot of excellent comments in this thread. I'd just add that Nathan's behavior (not to pile on) helps explain why we have so much inequality. A single person making 125k--Manhattan or not--is doing quite well for himself. But rather than appreciate the fact that he can have several $200 meals a week, Nathan acts like a struggling victim. I'm sure he's not alone, and that a lot of people in his social sphere either:
1) Spend lots of money because they feel they have to (how else will I meet a woman without dropping the weekly food budget of a family of four on a date?!)
and/or
2) Feel entitled/deserving/etc. to stratospheric levels of excess.

I imagine that explains a lot of inequality--well-off people buy thousand dollar suits and watches and dinners to impress each other, run out of money, and then complain that they pay slightly higher taxes than the rest of us until they get more/pay less in taxes. Etc.

Anyway, I live in San Francisco on about 60k a year, and appreciate the fact that I have a nice studio apartment, a new car and can go out with friends a couple times a week to reasonably priced restaurants while living within my budget. And I'm kind of baffled that there are people out there who feel like--god, this sucks going out to $200 meals and buying expensive things--rather than feeling like: isn't this pleasant?

Posted by brad | March 12, 2008 8:43 PM

"Maybe because they see "getting by" as normal. Which makes you middle class, almost by definition."

The long version is that even if you're in the top 15% of income, you need to put yourself on a budget. Otherwise you'll always choose to spend money on what you want, instead of what you need. Do I buy a couple drinks after work or a bottle of wine and extra toppings for pizza at home? Do I head out and party tonight, or do I have to stay at home? It's much better to be making these choices because the budget forces you to, not because your dwindling checking account does.

Unless you are incredibly lucky and either inherit wealth, win the lottery or invent the next Google you'll most likely become rich by saving and living below your means. It's not sexy, but it sure beats being 55 and realizing you have nothing to show for working 30+ years.

Posted by JordanT | March 12, 2008 8:44 PM

I think "rich" needs to be adjusted for residency and cost of living. Making $100K per year in Des Moines is a lot different than making it in New York City. You can barely live in New York at that salary, but you will be very comfortable in Des Moines. I think the definition of rich should be this: Can you afford the annual fee at the nearest private golf course? If you can, you're rich. If not, you're not.

That's a fascinating comment. 100K for an individual is almost certainly in the top quintile or above in NYC. WTF do you think all the people you buy stuff from make? WTF do you think the security guard who lets you into the lobby so you can to to the elevator that takes you to the receptionist (WTF do you think SHE makes) who lets you into the office where the assistant (WTF do you think he or she makes) tells you that the guy who actually makes more that 100K you came to see will be back shortly.

"Barely live?" Uneffing believable.

Posted by jayackroyd | March 12, 2008 8:45 PM

I lived in NYC on 12k. Worked AmeriCorps. Rented a room first on West End and 101 and then in Marble Hill.

I had a good time.

Posted by Mark | March 12, 2008 8:53 PM

Agree with Tyro about those who to make it difficult for themselves to survive on X amount of dollars.

I choose to live in an expensive city, but it doesn't make me any less wealthy (income-wise) relative to the rest of the country. I just happen to be choosing to spend my income on high rent, high taxes, and expensive dates.

The "Who'd want to live there?" argument from Nathan has zero credibility. There are plenty of neighborhoods in non-Manhattan boroughs and in Jersey that are affordable, safe, relatively clean, and even have a semblance of culture that still allow me easy access to my high-paying job in Manhattan.

Posted by LeftBrain | March 12, 2008 9:00 PM

The wealthy can buy what they wish with little thought to cost. The rich can buy what median-income households wish for with little thought to cost, but many rich folks seem hard-pressed to save because they aren't content with what for much of the world is unimaginable luxery: a safe home, reliable transportation, college for the kids, occasional vacations.

Posted by AZ Escapee | March 12, 2008 9:02 PM

I don't mean to pile on Nathan either, but something about his tone got under my skin. Maybe because it reminded me of the occasional "woe is me" feelings I've caught myself having about how much I'm spending to live in this city (and I'm in Brooklyn).

Posted by LeftBrain | March 12, 2008 9:07 PM

Sorry. I very seldom go off on line. But that one just got me. (And that was before I read the rest of the thread, and discovered just how awful it is to live on the UES, ahem, below 96th. Don't tell Spitzer. He's had a lousy enough day.)

The entitlement contained in this, in Nathan's and other comments is really remarkable. It does speak to Matt's comment that everybody denies being rich.

Even if you do restrict the comment to Manhattan, you've still got most people living on middle (30-70K) five figure incomes. I'd still suggest that even in the prime real estate market in Manhattan, now rightly described as south of 96, (Ten years ago, the Lower East Side, Hell's Kitchen et alia didn't qualify.) that 100K for an individual is still likely to be the top quintile.

It could be that what these guys regard as a "decent" lifestyle can only be attained by a six figure income. It remains the case that those earners are in the minority, even in Manhattan, and that the vast majority of people you encounter as you move through your day, from the starbucks barrista to the security guard at the office to the guy who delivers your tuna sandwich to the bartender who serves you your 10 dollar Corona at the end of the day are all making less than 100K.

I won't mention the guy who delivers your Financial Times, or the guy who comes around in the afternoon to shine your shoes.

(But these are all too.)

Posted by jayackroyd | March 12, 2008 9:13 PM

Hmm, I've always been really confused by all this.

Am I rich?

I live in Westchester County, and I attended Hackley School.

I attend the University of Chicago, where my parents pay for my entire tuition, my $505/month rent (and would pay up to $750 in rent), $100/week for food expenses, and finally, utilities.

My parents have combined salaries of something like $500,000 p.a., and up to $1 million p.a. when bonuses are factored in.

I am purposely unaware of our assets, but we own two houses and lease an apartment. Our primary residence cost us something like $1 million in 1998, and is now about $2 million.

Now, I've not been raised as rich, my parents always insist on the elusive title of "Upper Middle Class." And furthermore, one of my closest friends in high school is a member of a family that has something like $500 million in assets. Hackley is a pretty decently rich school. So I would say that I'm not rich, but since coming to Chicago, I'm not so sure.

Posted by Greg | March 12, 2008 9:19 PM

Yes, by any measure you want to try for, Greg, you are rich. Did you regard yourself as "smart" when you scored in 98th percentile on your standardized tests?

Same thing.

Posted by jayackroyd | March 12, 2008 9:22 PM

Rich is simply being able to afford what you want, rather than what you need. It's very subjective. For example, right now I'm poor, but tonight I'll be rich, because I'm going to win the $220 million powerball.

Posted by tom.a | March 12, 2008 9:23 PM

http://en.wikipedia.org/wiki/Household_income_in_the_United_States#Quintiles

Data is always helpful Greg.

The cut point on the 95th percentile of household income is 157K in 2004. You're family's earnings are in top two percent. If you were measuring any other characteristic of your life, from your vertical jump to your score on the MCATs, you'd regard yourself in a very elite group. The word for that, when talking about financial resources (there is a "wealth" vs "income" issue here) is "rich."

Posted by jayackroyd | March 12, 2008 9:26 PM

But see, compare this to many, perhaps 50% of my high school, and I come out looking like the middle class.

So I think we need to expand our class vocabulary, because unlike one scrawny guy I knew in Mock trial back at Hackley, I don't exactly own a private helicopter, etc.

Posted by Greg | March 12, 2008 9:26 PM

"Am I rich?"

Jesus fucking christ.

Posted by adsf | March 12, 2008 9:31 PM

Yeah, but the measure is not relative to the people you hang out with, who are going to be of the same socio-economic status. The measure is relative to the general population.

It's a very amusing indicator that you find the private helicopter a persuasive indication of your relative deprivation. What, did you have to drive to school was Mom's old Beamer, three years old?

Posted by jayackroyd | March 12, 2008 9:31 PM

I drove a beat up piece of shit. :)

And it wasn't even foreign, it was a Chrysler pre-merger!

Posted by Greg | March 12, 2008 9:34 PM

"But see, compare this to many, perhaps 50% of my high school, and I come out looking like the middle class."

No. You come out looking less rich.

Stop soiling the U of C in public kid. I have good friends who went there.