Why a Six-Figure Salary No Longer Means You’re Rich • Hacker News Board

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

#51

Post by jiggy2011 » Thu, Aug 21, 2014, 2:32 PM UTC

antihero wrote: post #20

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…

Surely requiring two incomes in a household is extraordinarily problematic? Before, one partner could sustain the household and the other could stay at home and raise kids. Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging? And doesn't that mean that in real terms we're earning half as much?

You also produce more, which means you can export more, thus giving the economy a boost overall which raises standards of living because you can get more foreign goods for your $.

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

#52

Post by gshubert17 » Thu, Aug 21, 2014, 2:32 PM UTC

ccallebs wrote: post #33

Consumerism. 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…

The article lists factors such as inflation, geography (the coasts are more expensive), kids, and healthcare, but not underlying reasons.

Some people want larger homes, more cars, bigger lifestyles (over-the-top weddings as an example), communication and entertainment (expensive cable, internet, and phone providers, just to start). And the allocation or misallocation of resources within the health "care" system is another reason that average income doesn't seem enough.

The few tips at the end -- live modestly, save a lot, and don't get hung up on status -- are barely a start.

The goal of "living the dream" is left unexamined or unquestioned.

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

#53

Post by specialp » Thu, Aug 21, 2014, 2:32 PM UTC

antihero wrote: post #20

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…

Surely requiring two incomes in a household is extraordinarily problematic? Before, one partner could sustain the household and the other could stay at home and raise kids. Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging? And doesn't that mean that in real terms we're earning half as much?

Two incomes in a home is not required, it is just that our lifestyles have evolved to "require" that. Home prices over last 40 years adjusted for inflation have not changed very much (besides in the bubble in mid 2000's).

Previously on that one income a reasonable 40 years ago family could have a home, a TV, a car, and take inexpensive road trip vacations. Now the typical family has multiple cars, homes much larger than in the past, a vacation could be flying to some destination, $100 cable bill, $150 phone bill...

So if one wanted to live like in the past it is certainly attainable on a single reasonable income. That may mean "only" having a 1700 sf house with one bathroom and one car.

Even since I was a child things have changed a lot. The typical new home today would be something I would have considered luxury as a child. I think that things changed a lot in the dot-com -> Real estate bubble era that gave Americans a taste for luxury that is now the normal.

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

#54

Post by [deleted] » Thu, Aug 21, 2014, 2:32 PM UTC

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…

[deleted]

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

#55

Post by msandford » Thu, Aug 21, 2014, 2:33 PM UTC

applecore wrote: post #30

onion2k wrote: post #22

Earlier 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.

Which makes substantial profits for the home builders but very little in the way of more affordable housing.

The price of a barrel of oil is determined by supply and demand. As the price goes up, more production is brought online which is now economically feasible. So at $100/barrel you've got the Canadian tar sands projects which make oil for something like $80 a barrel worth of cost so the company can make $20 a barrel.

But there are still tons of wells out in west Texas that are producing oil for $20 a barrel in cost. The people that own those wells are making $80 a barrel in profits.

If housing prices are high home builders might be able to build less expensive houses but they have no incentive to. They can sell the houses they build at market rather than below market prices. It might increase the supply but that doesn't necessarily translate into reduced prices in any kind of a reasonable timeframe.

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

#56

Post by humanrebar » Thu, Aug 21, 2014, 2:33 PM UTC

ccallebs wrote: post #33

Consumerism. 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…

> I grew up (and now live) in rural Appalachia... In most areas of the U.S., a six-figure household income is enough to have a warm place to live and healthy food to eat..

I completely agree with everything you wrote. I grew up in a rural community, too. I see how DINKs overspend on things they "need" all the time.

However, something you're missing is the safety premium. Often it's not possible to live modestly in a safe, clean neighborhood with good schools within a reasonable commute distance of work (especially if both spouses work).

The long-term answer might include more telecommuting so people can live in Appalachia and still be productive, but that requires a big cultural shift and doesn't help all jobs and careers.

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

#57

Post by nodata » Thu, Aug 21, 2014, 2:33 PM UTC

antihero wrote: post #20

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…

Surely requiring two incomes in a household is extraordinarily problematic? Before, one partner could sustain the household and the other could stay at home and raise kids. Now, if both partners are expected to earn and have careers, who looks after the home life? Who looks after the kids? Surely this is really really damaging? And doesn't that mean that in real terms we're earning half as much?

> And doesn't that mean that in real terms we're earning half as much?

Yes. It does. Average earnings per person started to drop once women entered the workforce, presumably since at the beginning it was a big bonanza - "hey look at this! twice as much household income!" Over time the dual income averaged out to what it is today, but now both people have to work.

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

#58

Post by a_c_s » Thu, Aug 21, 2014, 2:35 PM UTC

ccallebs wrote: post #33

Consumerism. 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…

"...is enough to have a warm place to live and healthy food to eat, with enough left over to provide security during times of famine"

That's a great definition of being middle class. I'd argue being rich involves having far more resources than that.

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

#59

Post by geebee » Thu, Aug 21, 2014, 2:37 PM UTC

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…

I think there are a couple of factors you're overlooking.

Consider the case of a dental hygienist married to a nurse. In SF, they both earn about 110k a year. So $220k is a high salary, comparable to a physician in a modestly paying speciality.

Here's the thing... I think payroll deductions apply to the entire 110K of each dh and nurse's salary, but only the first $110k of the physicians salary. However, the second salary in the two-income family will be taxed at a high rate, on top of the first salary. Furthermore, physician's husband, who doesn't work, is available for full time child care. The nurse and dental hygienist have to arrange full time day care for their two young kids, which runs about $20-25,000k a year per kid in SF. And because they are a very high income family, over the "ultra-rich" 200k threshold, they don't get a tax break.

Even close to 100k, that second salary may have a marginal value close to zero once kids enter the picture.

That doesn't mean you shouldn't work just because the marginal value is low in the moment - eventually you get to come back up for air, and people who continued to work are often much better positioned to advance again. So there are benefits.

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

#60

Post by Someone1234 » Thu, Aug 21, 2014, 2:38 PM UTC

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

I think they're poking the perception even today that people have. If you say to someone that you earn 100K they might claim that you're wealthy or rich, but the as the article states it doesn't automatically mean that anymore.

I'd agree with you that $288K makes someone wealthy or rich, but human perception and the reality aren't often one in the same.