Thursday, December 16, 2010

How Rich Is Rich?

A few days ago The Seattle Times ran an interesting article on living in New York City. It profiled a couple who make well over what the new tax bill considers "wealthy" ($250,000/year) but who are still having trouble making ends meet. In their case, "ends" includes schooling for two kids, mortgage payments on a condominium on the East Side, college funds, and expensive orthodontia. These people think of themselves as middle class, not rich.

This is on my mind because I have -- finally! -- sold my house in Rochester, NY. Well, maybe I've sold it. It's a contingency sale and my buyer must find a buyer for her house or the whole thing could collapse. Prices in Rochester, even without a recession, are much lower than in NYC or Seattle, which underlines the fact that money is a relative, not an absolute. Sociologists say that people tend to think they're well-off or not well-off NOT because of their actual salaries or bank accounts, but because of comparisons with other people they know. Change your social circle and you change your view of your financial state.

But there are some actual facts about money, and here they are:

The average American income, based on the calculations of the US census bureau in 2005 (the most recent numbers available), is $43,362 for people above 25.

The median American income is $32,140. Half of working individuals make more, half less.

2.5% of Americans earn more than $250,000/year.

AND: Every study done about happiness comes up with the same relationship of happiness to money: Above a certain modest level (enough to pay basic bills), they do not correlate significantly. The rich are neither happier (one American myth) than the rest of us, nor more miserable (a different American myth).

I did not get as much money as I wanted for my house, not even as much as I paid for it eight years ago. But I got enough to do what I want, which is live in Seattle. It IS all relative.


Suzie Quint said...

Welcome to Seattle, the heart of the banana this winter.

I figured out a long time ago that it's not how much money you have in your pocket that counts; it's what it will buy. So as you point out, rich one place isn't necessarily rich some place else.


Barbara Webb said...

Yay on the house sale! Keeping my fingers crossed.

I, personally, would welcome the opportunity to try to make ends meet on 250k a year. I'd ever pay higher taxes to do it. Cheerfully.

A.R.Yngve said...

Marshall McLuhan (a Canadian) wrote about being rich in America, in UNDERSTANDING MEDIA, and had this theory:

Exposure to mass media has forced the rich of America to live exactly like the "middle class" -- eat basically the same food, live basically the same, adopt basically middle-class attitudes -- because media would hunt the rich down like dogs if they were revealed to live in "luxury" or "decadence".

It's a neat theory... but I also consider the fact that the rich in American are not nobility in the European sense -- landowners with serfs, and the duties that come with lording it over serfs. The rich has not been raised to think of themselves as inherently superior.

You could say that in America, the middle class IS the "upper class".

Ted said...

During the last presidential race John McCain was asked what he considered "rich". Answer? $6 million a year, which was about a million more than he made. Few like to have the label of "rich" or "wealthy" these days.

Wikipedia shows only 1.5% of US households have an income of $250,000 or more (Census Bureau 2005). If not "wealthy", what word should be used? After all, if you're in the top 2% on IQ tests you're a "genius", at least as far as Mensa is concerned. It doesn't matter how you feel about it or if you work at NASA and most of your peers are also geniuses.

If that couple made twice as much they'd just spend twice as much and still have a hard time making ends meet. And, I agree, they probably wouldn't be any happier.


Mary Robinette Kowal said...

Yay on the house sale!

Jane said...

I get tired of hearing how I wouldn't be happier if I had more money. Yes. I. Would. Any why? Because I am blessed enough to have the things that money can't buy: family, friends, a committed and happy relationship, a passion for my work (when I get it - I'm actor, so it's intermittent.) What I don't have, that money would give me, freedom from "survival" work, the ability to travel, a means of not having to live with roommates, the means to take classes, HEALTH INSURANCE, well, that would make me ECSTATIC!