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Why a Six-Figure Salary No Longer Means You’re Rich

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Re: Why a Six-Figure Salary No Longer Means You’re Rich

#21

Post by adventured »

shawabawa3 wrote: post #9

I'm not sure why the article is so obsessed with this "six-figure salary" thing (which seems to mean exactly $100,000). $100k 30 years ago after inflation is $288k now. Anyone earning $288k now is definitely rich enough to "live the american dream" (in the article they price that at $130k). It would have been a much more interesting article if it had just focused on cost of living increasing faster than inflation

You're confident that the problem isn't that inflation is being intentionally understated via the government having altered the CPI to mask inflation? (ie that the cost of living is showing the true rate of inflation)

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#22

Post by onion2k »

jawns wrote: post #10

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of (material) richness. For instance, you might have a family with a sole breadwinner who has a low six-figure salary, but that has to cover all the family's expenses. Meanwhile, even if his neighbors, a dual-income household, both earn less than him, their household incom…

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of richness.

That depends on how the income is spent. If people spend their extra income on leisure activities, luxury goods, etc then it'll absolutely mean that a high household income will be a good measure of richness. That's obvious.

However, if dual income households decide to spend their income on investing in a better house, what will happen is that it'll push house prices up - a finite supply of housing stock means there'll be competition for the best homes, so people will have to pay more for them. That demand side pressure will filter down the housing ladder and pull all the prices up. After thirty or forty years this will have had the effect on house prices that single income families just can't afford to buy. Further, it'll mean that dual income families have to retain two incomes, so parents wanting to stay at home when they have children simply won't be able to afford to.

This has already happened in the UK. Lots of pundits are predicting a crash because the first-time buyers can't afford to buy, meaning no one is buying the lower price houses, and that's going to pull the whole thing down.

Mind you, the pundits have been saying as much for about twenty years.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#24

Post by skizm »

smackfu wrote: post #17
shawabawa3 wrote: post #9

I'm not sure why the article is so obsessed with this "six-figure salary" thing (which seems to mean exactly $100,000). $100k 30 years ago after inflation is $288k now. Anyone earning $288k now is definitely rich enough to "live the american dream" (in the article they price that at $130k). It would have been a much more interesting article if it had just focused on cost of living increasing faster than inflation

Same thing with millionaires. A million dollar net worth is not the same thing it once was.

You're still not poor though. In fact, if you have a million dollar net worth with expenses covered by your current income, you're definitely in the "rich" category compared to 99% of the US.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#25

Post by middus »

lnanek2 wrote: post #15
chasing wrote: post #6

It sure as hell does mean you're rich. Median household income in the US is about $50k/yr. The average global income is about $10k/yr.

What if your job is in Manhattan where that means you are making negative income vs. your rent? And a good meal is ten times more than a beef soup shop in Taiwan? Or spending 2 hours every morning commuting into the city and back out on a bus to somewhere you can afford on $50k/yr? Is that still rich?

Just because your job is in Manhattan, does not necessarily mean that you need to live in Manhattan (especially not in that $15k/month penthouse).

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#26

Post by ohhoe »

chasing wrote: post #6

It sure as hell does mean you're rich. Median household income in the US is about $50k/yr. The average global income is about $10k/yr.

Yeah, no. No it doesn't.

Don't forget to take into account the massive amount of student debt people have now, and also the vast cost of living in larger tech centric cities such as SF and NYC. I'm not talking fancy apartments either, I'm talking regular standard 1 br apartments.

Just because someones income is a certain amount on paper it doesn't take into account other financial responsibilities that lower the amount you have leftover at the end of the month.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#27

Post by cbr »

lnanek2 wrote: post #15
chasing wrote: post #6

It sure as hell does mean you're rich. Median household income in the US is about $50k/yr. The average global income is about $10k/yr.

What if your job is in Manhattan where that means you are making negative income vs. your rent? And a good meal is ten times more than a beef soup shop in Taiwan? Or spending 2 hours every morning commuting into the city and back out on a bus to somewhere you can afford on $50k/yr? Is that still rich?

To handle questions like "And a good meal is ten times more than a beef soup shop in Taiwan?" we can use "Purchasing Power Parity". And adjusting for PPP we still see that an income of $100k is in the top few percent worldwide: http://jefftk.com/world-income-distribution.png

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#28

Post by jdimov »

When has this EVER meant that you're rich? It doesn't, never has, and never will. Even a 7-figure salary doesn't by itself make you rich. You are only rich when you've learned how to make money work for you and when you have the freedom to do with your time as you please. This automatically excludes any kind of salary making you rich. Salary and riches do not mix. It's the wrong mindset altogether. A high salary CAN be a good initial catalyst on your way to riches, but by itself will never get you there.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#29

Post by potatolicious »

chasing wrote: post #6

It sure as hell does mean you're rich. Median household income in the US is about $50k/yr. The average global income is about $10k/yr.

The average global citizen also isn't paying American costs of living. My cousins in Asia are earning easily 10x less than I am in real nominal currency, but their cost of living is commensurately less.

Measures of wealth are just numbers until put in context of local costs of living.

Which addresses the reply to your post: $100K is wealthy in parts of the country, it's not wealthy in others. Getting paid $100K in small-town Idaho is a whole different ball game than getting paid $100K in SF.

The trick is that there are a lot more $100K jobs in one place than the other. What PhasmaFelis insists on calling "living beyond your means" is often nothing more than people looking for work.

Re: Why a Six-Figure Salary No Longer Means You’re Rich

#30

Post by applecore »

onion2k wrote: post #22
jawns wrote: post #10

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of (material) richness. For instance, you might have a family with a sole breadwinner who has a low six-figure salary, but that has to cover all the family's expenses. Meanwhile, even if his neighbors, a dual-income household, both earn less than him, their household incom…

As dual-income households have become more the norm, it's really the household income, rather than an individual's income, that's a better measure of richness. That depends on how the income is spent. If people spend their extra income on leisure activities, luxury goods, etc then it'll absolutely mean that a high household income will be a good measure of richness. That's obvious. However, if dual income households…

Housing supply isn't fixed. When house prices go up, people build more houses.
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