Okay, there was a news report last night on CNN that has me all pissed off.

It premise is that middleclass families are barely able to get by on 2 incomes...

It then continues to blame:
1) Gas Prices
2) Taxes
3) Low Raises
4)...

you get the idea. The never ONCE touch on the fact that a lot of middle class families typically has

1) A $1000 SUV payment each month
2) A house payment way over their limit
3) Vacations whether they can afford it or not...
4) Now paying for private school for their children
5) Now paying for soccer practice (used to be free when I was a kid)
6) ....

It's the simple fact that most middleclass families I know pretend to be low upper class with combined incomes of less that $80,000. You cannot afford a $300,000 home, 2 $700-$1000/month SUV's, kids and still have a solid bank account. You cannot do it yet these people keep doing it and going in debt and then blaming everything but themselves.

So much of america is now focused on status... that the middle class is merging with the upper class's desires. Golf... how much does a typical membership cost? How much for a tea time? I ran into this when I visited my ex's family.

He was willing to pay $120 to play a round of golf. He does this every weekend because it's at "the club". You know why they charge $120?

I am Middle Class. I make between $35,000 and $50,000 a year. I also am smart enough to do a budget. Should I meet ms right and lets assume she makes the same as me... that's an average of what? 42,500 x2? That's $85,000 a year. That means every month you have a gross income of $7,083, minus 30% leaves you with $4250 per month. (yes yes come tax season you get money back). Most middle class have to pay taxes because of how they set things up.

~1100 - House Payment for a $200,000 house...
$500-$700 - Car Payments for 2 under $25,000 cars = $500-700
$100 - Cell phones payments

BAM... half your income is gone. You haven't even put money into retirement, or paid for health insurance, or gas, or groceries...

Now lets take the average middleclass family

$1700 - House Payment for $300,000 home in cary
$1100-$2000 - SUV payments for 2 SUV's ($550-$1000)

And they wonder why they can't afford to live their life style. You and I are middle class, it is what we are. If you plan a budget and stick to it sure you can do the above... but think about it... who actually sticks to that tight of a budget... most people don'. That's why most americans are in debt.

People need to accept a lifestyle that fits what they make, not try to be part of the next class up.

Thoughts?

11/16/2006 8:28:34 AM

real wages havent increased, not everyone has an SUV and house that they cant afford. the fact that some people arent responsible doesnt change the fact that it is harder to get by. i also question your example, maybe it was an extreme but i cant think of anyone who makes $80k and has a $300k home.

basically you can come up with examples all day about how some people are irresponsible, but it doesnt change the fact that real wages havent increased and there is an increased burden on the middle class.

11/16/2006 8:35:30 AM

Quote :

"i cant think of anyone who makes $80k and has a $300k home. "

then you dont live in the mid-atlantic or new england. you won't find a small house in a somewhat decent neighborhood for any less then 300k around where i live.



[Edited on November 16, 2006 at 8:47 AM. Reason : df]

[Edited on November 16, 2006 at 8:47 AM. Reason : d]

11/16/2006 8:41:17 AM

i was obviously talking about around here (cary was his example). he was using that price as an example of excess, and around here it would be.

11/16/2006 8:46:13 AM

gotcha

and as a side note, if your making $80k a year, you technically arent in the middle class. currently, the middle class is typically defined with a household income between 25k and 75k

11/16/2006 8:47:44 AM

also the tax burden has shifted towards the middle class
this is old i know, but:

11/16/2006 8:52:08 AM

Man, you are totally right. That <1% change on the middle class (with no mention of how many actual dollars are earned in the category) is something we should be furious with.

11/16/2006 9:19:35 AM

Quote :

"real wages havent increased"

11/16/2006 10:21:21 AM

Get the fuck outta here with facts and figures, we're ranting here.

11/16/2006 10:25:04 AM

Quote :

"How much for a tea time?"

Tee-hee [/pun]

I'm lower middle class. Wife and one kid. One income. 10+ year old cars. Cheap house. I haven't been on a vacation in 3+ years. I feel like I'm losing ground each year. Pay raises never meet inflation rates and they raise taxes and insurance rates every time I turn around. The disposable income pool is constantly shrinking and at times is non existent. But yeah, there isn't a problem.

11/16/2006 11:00:29 AM

Wait, your raises haven't kept up with inflation over the last few years?
what are they lowering your pay?

11/16/2006 11:03:26 AM

Quote :

"and as a side note, if your making $80k a year, you technically arent in the middle class. currently, the middle class is typically defined with a household income between 25k and 75k"

Link to support your range?

11/16/2006 11:04:14 AM

From wiki, but close enough

11/16/2006 11:06:45 AM

Quote :

"Wait, your raises haven't kept up with inflation over the last few years?"

Well I was a state employee for four years. During that period of time there was one 2% raise. Tell me that kept up with inflation. Raises for state employees only come through legislation so there wasn't anything I could do about it other than get a new job, which I did.

Quote :

"what are they lowering your pay?"

If your raises don't keep pace with inflation then yes, your pay rate is effectively being lowered.

11/16/2006 11:11:43 AM

So middle class is defined only by the people that fall into the middle 50% range of income earners? That seems a little "damned statistics" to me for some reason.

11/16/2006 11:12:26 AM

Quote :

"Pay raises never meet inflation rates and they raise taxes and insurance rates every time I turn around."

What you are seeing is the sunset of Bush's tax cuts in 2001 and 2002. As for your insurance rates, not much I can say, I know the auto insurance industry is competition poor, but it always has been that way, so I don't know why your premiums are going up. The only advice I was ever given was people should consider self-insuring as much as they can to avoid using the industry when you drive older cars which can be replaced with a grand or two.

As for your pay raises, what do you do for a living? It may be time to consider changing jobs if this is the case. College graduates (especially engineering graduates) should not be lacking for pay raises about now.

humandrive, that graphic from wili sounds fishy. the U.S. GDP per capita is $41,600 (2005 est.), which should make it very hard to have a median income of only $46k since households tend to contain more than one capita (person) as households include non-working spouses and children/non working parents.

Even just looking at the graphics "top 20%" income of $88,030, if we assume single parents and just one child the per-capita of this household would be only $44,015. All in all, the numbers just do not add up to a per-capita of $41,600 (which is an average of the per-capita incomes of all households).

[Edited on November 16, 2006 at 11:19 AM. Reason : .,.]

11/16/2006 11:13:03 AM

Old, but valid

http://www.factcheck.org/article249.html

11/16/2006 11:14:29 AM

^^I did change jobs, see ^^^^ and for the reasons you mentioned.

Insurance rates include car (minimum mandatory in NC) and the biggie... health insurance.

[Edited on November 16, 2006 at 11:17 AM. Reason : -]

11/16/2006 11:17:02 AM

The chart was Prepared by Brendel, uning data from the US Census Bureau.

So complain about him, not wiki

11/16/2006 11:25:07 AM

Blind Hate, it is only natural for people to get poorer during a recession, so Kerry was 100% correct when he said things had gotten worse for people during Bush's presidency, not to mention the jobless recovery that followed.

But none of that was Bush's fault. Alan Greenspan could be blamed a little, but 95% of the blame still falls on wall street and America's regional entrepreneurs. As it is now, America's economic system is still wringing out numerous problems and that is causing still more hardship. But this is how a free economy operates, you can't make it produce bread, you just have to sit back and hope it does it soon.

If you go back up to the graph I posted earlier you can see what I mean. Productivity is way up (boon for mankind) but compensation levelled off. This is not a permanent situation, this is the result of imbalances in the economy (too little economic activity, so to keep unemployment from rising further compensation slacked off). But if you look at the most recent points on the graph you can see the market filling this gap, month by month employment rises so labor shortages are kicking in and driving up compensation. It may be a while before you feel this effect, but it is happening, be patient and be a good maximizer (consider looking for higher paying jobs or jobs that provide more benefits such as health insurance/etc or jobs that require fewer hours).

humandrive, you're obviously right, I just have trouble understanding the mechanism by which these numbers add up. I guess it works out if most households contain one member, which would surprise me unendingly since we are supposed to have 2.3 children per female.

[Edited on November 16, 2006 at 11:36 AM. Reason : .,.]

11/16/2006 11:33:34 AM

Quote :

"month by month employment rises"

Where are you getting your numbers on this point? Most everything I have read says this has been one of the weakest (so far) recoveries we have had in a long time in regards to job growth.

11/16/2006 11:57:58 AM

Quote :

"But this is how a free economy operates, you can't make it produce bread, you just have to sit back and hope it does it soon."

Wow, we agree on something! The free economy operates ineffectively.

11/16/2006 12:14:00 PM

Quote :

"Where are you getting your numbers on this point? Most everything I have read says this has been one of the weakest (so far) recoveries we have had in a long time in regards to job growth. "

What the fuck kind of crack are you smoking?
http://www.economagic.com/em-cgi/data.exe/feddal/ru

Scroll through that unemployment rate and let me know what you think

Also, of course job growth is going to be a little slower when you're damn near full employment.

11/16/2006 12:56:50 PM

NEWSFLASH

Most people don't live in the triangle, where it's cheap as fuck to own a house compared to the NE, where all these Yanquis are coming from.

11/16/2006 12:56:57 PM

It's interesting how the housing market is crashing in all of the big markets in the country, and prices are appreciating rapidly around here. I just hope we don't have a regional bubble here in the next few years, as people flock from New England and the west coast to the triangle.

11/16/2006 1:01:18 PM

LoneShark, I dont know what you were trying to prove but notice that wages havent matched the increase in productivity. And the median hourly wage has dropped in the past few years. Average income has gone up only because people at the top are making more money. Even for workers at the 90th percentile of earners inflation has outpaced their pay increases over the last three years.

[Edited on November 16, 2006 at 1:22 PM. Reason : .]

11/16/2006 1:15:28 PM

Quote :

"Scroll through that unemployment rate and let me know what you think"

This is the gist of what I've read about government statistics, in this case unemployment. The numbers are massaged to a reasonable number and then no one is told that the gathering method changed.

Short and simple: Not everyone that is not employed is counted as unemployed.

Quote :

"The most noticeable sign is in unemployment. Sure, the official unemployment rate is low as of the time of this writing (5.7%), but the standard used to measure unemployment is seriously flawed. For example, that standard does not include “discouraged” workers; that is, those who have given up looking for work. It also doesn’t include the “underemployed,” who are highly trained but can’t find jobs in their own fields, leaving them to work in jobs for which they are overqualified and underpaid. Additionally, the Labor Department publishes new claims for unemployment benefits on a weekly basis. Economists consider anything less than 400,000 new claims a sign of a recovering economy. Yet 400,000 seems to be an average. With that many new claims each week and the help-wanted index hovering near 30-year lows, we can see that the official unemployment rate, regardless of the number, grossly understates the true percentage of unemployed. How many people do you know who have been laid off? I know plenty. There are about 10 million of them in the United States. And very few of them are finding work easily."

[Edited on November 16, 2006 at 1:20 PM. Reason : /]

11/16/2006 1:19:37 PM

Im single and my house was about 350K

it's not unaffordable after the tax breaks and if you can put something worthwhile down on the property. Plus it's about 8 months out from being finished, so I can save up quite a bit before.

11/16/2006 1:21:16 PM

So where in there did the change occur? What that seems to be is an (outdated) lament about the way unemployment is calculated, not any change in the way its been calculated.

11/16/2006 1:21:24 PM

recent stats on real earnings
http://www.bls.gov/news.release/pdf/realer.pdf

11/16/2006 1:23:54 PM

LoneSnark, plz learn the difference between "median" and "average"

11/16/2006 1:42:45 PM

My rebuttal to the BLS

http://bigpicture.typepad.com/comments/2006/11/bls_margin_of_e.html

Quote :

"Also, of course job growth is going to be a little slower when you're damn near full employment."

Thanks for proving my point.

[Edited on November 16, 2006 at 1:47 PM. Reason : a]

11/16/2006 1:46:15 PM

Quote :

"I dont know what you were trying to prove but notice that wages havent matched the increase in productivity."

Like I said, this is true but is occurring for good reasons and these reasons are fading away slowly over time. Fast forward another five to ten years and compensation will catch back up with productivity.

My main point is that there is nothing the Government should do to counteract this trend beyond increasing the EITC. Any other behavior would probably be counter-productive, disastrously so in some cases.

Edit: well, that's not exactly true. There are a lot of road-blocks the Government could remove to speed the process along. Reducing spending (and if possible taxes) would free up additional resources the markets need to catch up. Reducing regulatory overhead would also help shuffle investment through the system.

Quote :

"Wow, we agree on something! The free economy operates ineffectively."

No, like I explained, right now it is not working as well as it could (and morally should) for all members of society. But in time technological advancement will slow and this trend will reverse. In response to technological and international situations the markets are diverting resources away from consumers (and thus consumption) and into investment. This process is being wildly successful at increasing productivity, but there is only so far it can go. After enough time has passed, China will finish industrializing and the computer will be ubiquitous and these resource sinks will dry up, leading to a reverse shift in the economy (greater investment in domestic production, leading to greater demands for workers and thus compensation until the divide is closed).

To suggest that it is "ineffective" to boost future productivity at the expense of present consumption is stupidity. Society must invest in its future, otherwise we would be like the communist world: trapped in the past.

[Edited on November 16, 2006 at 2:17 PM. Reason : .,.]

11/16/2006 2:12:28 PM

Quote :

"No, like I explained, right now it is not working as well as it could (and morally should) for all members of society."

Then we do agree, it is ineffective.

Quote :

"Society must invest in its future"

I agree, but there is an optimium level, including the optimium level of investment, and we aren't near there because the free market responds so sluggishly.

11/16/2006 2:17:52 PM

Quote :

"we aren't near there because the free market responds so sluggishly."

You are complaining that we are investing too heavily, then turn around and complain the market has responded too sluggishly? Maybe you are saying these investments should have been made awhile ago, negating the need for investment today?

But the technology (and favored trading status with China) didn't exist back then, such investments would have been stupid.

11/16/2006 2:22:18 PM

Quote :

"You are complaining that we are investing too heavily"

Where did I say that?

Quote :

"Maybe you are saying these investments should have been made awhile ago, negating the need for investment today?"

No, I'm saying this whole ping time we're waiting for between investments is ineffective.

11/16/2006 2:25:26 PM

Quote :

"humandrive, that graphic from wili sounds fishy. the U.S. GDP per capita is $41,600 (2005 est.), which should make it very hard to have a median income of only $46k since households tend to contain more than one capita (person) as households include non-working spouses and children/non working parents."

And so they learned the difference between mean and median.

Btw, here's a graph, because graphs are cool:

11/16/2006 3:31:55 PM

i wonder if this median income data point is skewed by recent immigrants working for less, while the overall standard in non-recent immigrant median wage has stayed the same

11/16/2006 3:37:08 PM

most people misidentify their "class" anyways when asked

11/16/2006 3:37:56 PM

Quote :

"So where in there did the change occur? What that seems to be is an (outdated) lament about the way unemployment is calculated, not any change in the way its been calculated."

Not sure when, but it was done by a President when unemployment was getting higher, maybe Reagan. Based on John Williams, a man that follows the published government statistics and then "unapplies" the government's tweaks and footnotes to compare it to how the government used to measure such items in say, the 1950s, he says in the March 2006 article below that he believes unemployment is nearer 12%.

http://www.financialsense.com/fsu/editorials/2006/0325.html

His most famous example of government massaging is the Fed-touted inflation index (CPI), which Clinton completely screwed up to make inflation lower than it really was so that Social Security payments would not go up as much (SS payments increase based on the published CPI number, Clinton stated his version of inflation was based on the idea of substitution). Graph showing his inflation index (the pre-Clinton government index) versus what the government today uses.



http://www.shadowstats.com/cgi-bin/sgs?

[Edited on November 16, 2006 at 4:56 PM. Reason : /]

11/16/2006 4:53:56 PM

Quote :

"he says in the March 2006 article below that he believes unemployment is nearer 12%. "

So would he say that unemployment was also near 12% back in 1998 during the worker crunch? I ask because if the method of determining unemployment was changed in the 1980s then we should still be able to compare the figures from the 1990s and 2000s, right?

And reducing the rate that SS payments increases is both sensible and necessary. Of course, it would have been better if they had accurated pegged it to inflation and not allowed wage rates to influence it at all.

11/16/2006 6:00:45 PM

Quote :

"So would he say that unemployment was also near 12% back in 1998 during the worker crunch? I ask because if the method of determining unemployment was changed in the 1980s then we should still be able to compare the figures from the 1990s and 2000s, right?"

You would be correct...only if they didn't change the method since then.

Quote :

"And reducing the rate that SS payments increases is both sensible and necessary. Of course, it would have been better if they had accurated pegged it to inflation and not allowed wage rates to influence it at all."

Then why don't they just come out and say that instead of taking the pussy way out if it is necessary?

You know the answer to that as well as me, but changing the inflation rate, which is tied to Social Security by law, is very smoke-and-mirrors. And besides, that 4% raise you got last year? What that really means is that you're making less money than last year if the inflation went up more than 4%. So it's in the interest of Fortune 500 companies for the U.S. government to show a lower CPI, cause that means they don't have to give out as big a pay raise just to keep their employees "flat".

[Edited on November 16, 2006 at 6:56 PM. Reason : /]

11/16/2006 6:53:17 PM

Quote :

"and as a side note, if your making $80k a year, you technically arent in the middle class. currently, the middle class is typically defined with a household income between 25k and 75k"

haha, shit...i view even a $200,000/year income as middle class (albeit upper middle class).

i mean, it sure isn't upper class.

11/16/2006 7:00:22 PM

200,000 is square in upper class

11/16/2006 7:01:57 PM

Quote :

"but the standard used to measure unemployment is seriously flawed. For example, that standard does not include “discouraged” workers; that is, those who have given up looking for work. It also doesn’t include the “underemployed,” who are highly trained but can’t find jobs in their own fields, leaving them to work in jobs for which they are overqualified and underpaid. "

Wouldn't the "discouraged" be voluntarily unemployed if they've given up? And underemployed is not unemployed, therefore they are not counted in the unemployment statistic, nor would one expect them to be. Failure to find work in your field does not make you unemployed, it makes you unnecessary.

11/16/2006 7:05:23 PM

http://bigpicture.typepad.com/comments/2006/10/middle_class_sq.html

11/16/2006 8:27:54 PM

Quote :

"Then why don't they just come out and say that instead of taking the pussy way out if it is necessary?"

Because that would be stupid, the old people have nothing to do but vote.

^^ I have to side with 1337 b4k4 on the rest.

11/16/2006 10:31:16 PM