How much of this is just personal perspective? What exactly defines being rich? $100k a year? $1m a year? More? Why go after being rich when you can go after being wealthy? If you have enough money generating assets that cover all your expenses, you're pretty much set. It's all about the cashflow.
Why a Six-Figure Salary No Longer Means You’re Rich
41–50 of 101 posts
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#42Earlier quoted context omitted.
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.
The availability of usable land is fixed. There's a limited amount of single-family homes you can build in a given area.
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#43As 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…
> "the growing number of dual-income households has been suggested as an exacerbating factor in the growing income inequality in the U.S." That's a red herring. When people talk about inequality as a serious economic problem, they're not talking about any discrepancy between households living off a salary or two. They're not even talking about the discrepancy between the ninety-nine and the one percent -- they're tal…
I don't think it's as much of a red herring as you suggest. More and more, a dual income is required for basic sustenance. That has a significant impact in many intangible ways: stress, family dynamics, freedom to pursue entrepreneurial efforts, etc.
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#44Earlier quoted context omitted.
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.
In the UK when house prices go up people tend to build more houses at the top end of the market where there's the most profit. No one builds cheap houses that people on a single income could afford. I don't know if the US is similar.
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#45I'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
> It would have been a much more interesting article if it had just focused on cost of living increasing faster than inflation
I nearly fell out of my chair laughing at this line. Crazy Austrian folks call the increase in the supply of money "inflation" but that's not what most people think of when you say the word. The vast majority of people would agree that "inflation" and "the CPI" are basically the same thing. The CPI is the Consumer Price Index. It is a measure of the cost of living as set forth by the BLS here in the US.
So what you just said is that the cost of living is going up faster than the cost of living! That clearly can't be true, so there's a problem. The actual cost of living is going up faster than the government's measure of it. Okay, that's better. But it's still problematic.
If the government's measure of the cost of living is going up slower than the actual cost of living then a lot of people are getting screwed. Anyone on a fixed income that's inflation adjusted like Social Security or a pension. Anyone buying a TIPS bond, anyone who gets regular cost-of-living raises so that their salary keeps up with their expenses, etc.
If the CPI number was accurate then all these things would be OK. But since it seems like it's not the fact that huge swaths of socioeconomic activity is tied to these indicators is really pretty tragic.
I think Carl Sagan captured the essence of why these kinds of things take forever to get found out:
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back."
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#46Earlier quoted context omitted.
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.
There is "rent seeking" (a microeconomics term for a market inefficiency using politics for wealth creation instead of true wealth creation) by having zoning laws which keep land use density artificially reduced as well as over-using "historic landmark" laws. The zoning restrictions on land use and the overuse of historic landmark laws effectively make very wealthy landlords and other landowners wealthier still at the cost to others.
See writings of Harvard economist Edward Glaeser for more details.
This is something that can be fixed by reducing the market inefficiency of "rent seeking" through state law which overrides the desires of wealthy landowners at the city level.
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#47Consumerism. It convinces people that once they make $100k/year, they require a vehicle that befits someone who makes that much money. It convinces people that they require a place to live that compares to their other 6-figure earning peers. More, bigger, better -- the importance of those three things outweighs most everything else. I grew up (and now live) in rural Appalachia. The "American dream" is defined much di…
My favorite quote from the article:
> There are a lot of ways to be frugal, but you can start with driving older (paid-off) cars and tracking your expenses to ensure that your family spending aligns with your values and goals.
So I guess being "frugal" means that you track your expenses and not live beyond your means?
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#48Because we have to start with definition of what IS rich. I want to think about it of as how many months/years I can live the life I'm living right now If out of a sudden I loose a job. So being rich should be more about balance between earning and savings. And looking at those places like SF, how one can claim himself rich if 100k a year can barely cover cost of living there ( if can at all)
As someone who recently quit a six-figure tech job in SF... 100k/year does not "barely" cover cost of living. When I first got the job, I decided I wanted to live close to where I was working in SOMA, which meant paying quite a bit more in rent, but I never had any illusions that what I was paying for was a necessity of life.
Though I mainly picked it out for the location, it was easy to tell the building was built explicitly to cater to the wealthy (because that's the kind of building that's getting built in SF right now). When I first moved in, I felt everything about the place was conspiring to tell me, "Yup, you're a rich asshole now."
Even with that expense, I still had plenty of money. Even if you feel like you're too good to pack a lunch, and need to eat at a hip restaurant for every single meal, I have no idea where this "barely covering living expenses" is coming from.
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#49I'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)
So pick another index. How about the Billion Prices Project [1] from MIT. Oops, that pretty much tracks the CPI. Guess maybe the CPI isn't intentionally understated.
Re: Why a Six-Figure Salary No Longer Means You’re Rich
#50Consumerism. It convinces people that once they make $100k/year, they require a vehicle that befits someone who makes that much money. It convinces people that they require a place to live that compares to their other 6-figure earning peers. More, bigger, better -- the importance of those three things outweighs most everything else. I grew up (and now live) in rural Appalachia. The "American dream" is defined much di…
My favorite quote from the article: > There are a lot of ways to be frugal, but you can start with driving older (paid-off) cars and tracking your expenses to ensure that your family spending aligns with your values and goals. So I guess being "frugal" means that you track your expenses and not live beyond your means?
I caught that too, words cannot express my distaste for that kind of mentality. It's unfortunate that normalcy to the author is not keeping track of finances and buying things you cannot afford.