The So-Called Middle Class
I understand why the affluent want to call themselves middle class. Some even think that their very cushy lifestyle is the norm. But supposedly knowledgeable observers should be pointing out what the real situation is.
Business Week profiled a few affluent families and how the possibility of tax hikes (or the expiration of the Bush tax cuts) might affect them and their lifestyle. The first is a family of four from suburban Philadelphia.
By any measure, Dr. Howard Hammer and his wife, Hope, have a comfortable life. Hammer, 40, has built a thriving practice as an ear, nose, and throat specialist, while Hope, 39, has switched to part-time work as a real estate lawyer after years at a big firm in order to spend more time with Arielle, 7, and Matthew, 9. Home is a four-bedroom house in the Philadelphia suburbs, and between them, they bring in over $300,000 a year. "We can't complain," he says. "We're certainly not struggling."
But are they wealthy? That's far more debatable. Hammer, who feels the same pressures squeezing Americans up and down the income ladder, says he's anything but. Ever-rising prices for gas, health insurance, and other expenses are hitting hard, as are the $3,000-a-month mortgage and the $2,000 he still pays monthly to whittle down his $160,000 medical school debt. A six-year residency gave Hammer a delayed start saving for retirement, so he worries if he's stashing enough in his 401(k). By the time the couple contributes to the children's college fund, there's little extra at the end of the month.
According to the Census Bureau, in 2006, there were 203,051 families in Montgomery County, of which 20,828 had incomes over $200,000, let alone the $300,000 that Dr. and Mrs. hammer pull down annually. The Hammers paid $655,000 for their home in August 2004. In 2006, 34,552 owner-occupied homes out of 225,939 in the county had values over $500,000. If the Hammers are feeling pressures from the economy, it is because they paid a lot for a house that is a lot nicer than most of the houses in the area.
A second family lives in Pelham, New York, and its patriarch makes a truly astounding claim.
[F]or many close to that $250,000 cusp, what sounds like a lot of money often doesn't feel like it. "Depending on where you live, $250,000 is middle class, at best," says Michael Ginn, 49, a longtime media executive who lives with his wife, Dafne, 34, and 3-year-old daughter, Erin, in the New York suburb of Pelham; their second daughter is due in July. Though his income has topped $300,000 for more than a decade, Ginn says he's never felt so stretched. With the cost of everything from health insurance to upkeep on his 90-year-old home surging, even as he takes on new expenses for his growing family, Ginn can't stash away anything near what he once did for retirement, let alone save for college. "We're just dog paddling now," he says. He argues that if Washington is going to raise high-end taxes, then the local cost of living should be taken into account.
Pelham is a bit different from much of the country. In 1999, the median family income nationwide was just over $50,000, but it was over $111,000 in Pelham. But the idea that "$250,000 is middle class, at best" should be accompanied, by any magazine that takes itself seriously, with a rhetorical smackdown. Let us grant Mr. Ginn some room and not wonder whether he thinks $250,000 is working class or lower middle class; let us assume that "at best" slipped his lips wholly in error.
In 2000, there were 4,141 households in the town of Pelham. Of this number, 890 had $200,000 or more of annual household income. It is about right to equate $200,000 in 2000 with $250,000 in 2008, after inflation—in fact, the consumer price index increase from January 2000 to January 2008 was 25.04%.
Now, 21.5 percent of households in the $200,000 and up category means that Pelham has a lot of affluent people. But even here, these folks are in the top quintile of income.
Cry poor if you want, but if you are pulling in $300,000, you have very little truly in common with ordinary people. How hard would it have been for Business Week to have done even a bit of fact-checking about these claims?
Labels: Business Week, so-called middle class, stupid financial tricks
