Home › Forums › Financial Markets/Economics › The end of the world (or at least the US middle class) as we know it….
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September 15, 2008 at 9:32 PM #271032September 15, 2008 at 9:32 PM #271058bjensenParticipant
I can assure you all that my idea of middle class involves vacations close to home, no air travel, and a used car.
I left a sales career in preparation for law school and now work in a non-sales role where I barely break 50k. I know others who have strong resumes from fortune 500 companies in my same position that only negotiated salaries around 38-40k. I have 1 car payment on a 5 year old car. I live in a 2 bed apartment that is WAY below market rent @ $1150. These days we struggle to make it.
I don’t think my worldview of middle class is much (if any) different than my father’s was in 1970. He managed it on one income, and he is a Farmer. I can’t accomplish half what he did financially by my age, even with a bachelors degree and a professional position. They didn’t have Ipods back then, but I don’t either. I guess the only thing I can think of that I “need” that they didn’t is a computer and an internet connection.
I don’t think it’s all that easy out there for the average American these days. If Americans outside the professional class make less in inflation adjusted dollars than they did in 2000, just think what it would look like if the govt. included housing and energy in the CPI.
September 16, 2008 at 6:33 PM #271090DWCAPParticipant[quote=DaCounselor]Great post DWCAP re the definition of “middle class”. In addition to what I believe are changes in the parameters of the defined “class” over generations, I think you could ask 10 different people today how they define middle class and probably get 10 different parameters.[/quote]
Thanks. I totally agree. I have been trying to come up with something that fits here, but wasnt able to come up with a really good definition of middle class. I guess it really boils down to how the person themselves define themselves. The rich generally know who they are, and the poor can be defined as those unable to support themselves due to their incomes at the bottom of the financial ladder (as opposed to the idoits who just spend too much). But Middle class really is a catch all phrase more than a definition, encompasing “everyone else”.
[quote=DaCounselor]It goes without saying (but i’ll say it anyway) that class definitions seem to be tied by many observers to visible material possessions and lifestyle actions as opposed to stock portfolio balances and personal net worth. Back in the day of more limited credit availability, people were essentially forced to live within parameters set by their income. With the advent of the age of easy credit, it became increasingly easier to magically transform oneself up a level or two in class, in terms of visible class indicators, that is.
So now we have these huge numbers of people who have been using credit to raise their visible class standing, which for many has acted as a detriment to their actual net worth. Ironically, the inevitable ‘come to Jesus’ moments facing many of these folks will come to pass and may deposit them back at a class lower than where they started. What a journey.[/quote]
I think the baby boom generation fits this perfectly. I worry about their retirment, and the fact that many cant afford it. On a farmers budget my grandfather was able to pay for all 4 of his kids to go to school and to LOAN them the money to buy their first house. I cannot say that about many in my parent generation. I doubt it even more for my generation. Saving is just so out of style and at somepoint people will stop lending you money. I have always really liked the quote I read on here that the only thing that will really come out of this downturn is that alot of people will learn that they are not as wealthy as they thought they were. That is only so true.
[quote=DaCounselor]Which leaves me with the question that dove tails into DWCAP’s commentary – what is “middle class”? Is a family with two newer cars, with a 42″ flat screen, eat out once a week, one two week vacation a year involving air travel, blah blah blah – is that middle class? What if the same family has a negative net worth? Can they still be middle class?
I think class definitions are almost irrecovably tainted, especially when viewed through the eyes of the younger generation, due to the over-consumption of the typical American, the Age of Entitlement effect, the keeping up with the Jones mentality, etc. In this instance, perception is most certainly not reality. [/quote]
Ill leave my first response to stand about the definition of “middle class” cept to add that I believe it to also be very regional. Middle class in CA could easly be defined as someone makeing 150k a year. Almost anywhere in the midwest outside of Chicago and a very few other cities you would be rich as hell according to most people.
The most responsible and frankly coolest people I have known were the people who didnt have everything handed to them.
September 16, 2008 at 6:33 PM #271326DWCAPParticipant[quote=DaCounselor]Great post DWCAP re the definition of “middle class”. In addition to what I believe are changes in the parameters of the defined “class” over generations, I think you could ask 10 different people today how they define middle class and probably get 10 different parameters.[/quote]
Thanks. I totally agree. I have been trying to come up with something that fits here, but wasnt able to come up with a really good definition of middle class. I guess it really boils down to how the person themselves define themselves. The rich generally know who they are, and the poor can be defined as those unable to support themselves due to their incomes at the bottom of the financial ladder (as opposed to the idoits who just spend too much). But Middle class really is a catch all phrase more than a definition, encompasing “everyone else”.
[quote=DaCounselor]It goes without saying (but i’ll say it anyway) that class definitions seem to be tied by many observers to visible material possessions and lifestyle actions as opposed to stock portfolio balances and personal net worth. Back in the day of more limited credit availability, people were essentially forced to live within parameters set by their income. With the advent of the age of easy credit, it became increasingly easier to magically transform oneself up a level or two in class, in terms of visible class indicators, that is.
So now we have these huge numbers of people who have been using credit to raise their visible class standing, which for many has acted as a detriment to their actual net worth. Ironically, the inevitable ‘come to Jesus’ moments facing many of these folks will come to pass and may deposit them back at a class lower than where they started. What a journey.[/quote]
I think the baby boom generation fits this perfectly. I worry about their retirment, and the fact that many cant afford it. On a farmers budget my grandfather was able to pay for all 4 of his kids to go to school and to LOAN them the money to buy their first house. I cannot say that about many in my parent generation. I doubt it even more for my generation. Saving is just so out of style and at somepoint people will stop lending you money. I have always really liked the quote I read on here that the only thing that will really come out of this downturn is that alot of people will learn that they are not as wealthy as they thought they were. That is only so true.
[quote=DaCounselor]Which leaves me with the question that dove tails into DWCAP’s commentary – what is “middle class”? Is a family with two newer cars, with a 42″ flat screen, eat out once a week, one two week vacation a year involving air travel, blah blah blah – is that middle class? What if the same family has a negative net worth? Can they still be middle class?
I think class definitions are almost irrecovably tainted, especially when viewed through the eyes of the younger generation, due to the over-consumption of the typical American, the Age of Entitlement effect, the keeping up with the Jones mentality, etc. In this instance, perception is most certainly not reality. [/quote]
Ill leave my first response to stand about the definition of “middle class” cept to add that I believe it to also be very regional. Middle class in CA could easly be defined as someone makeing 150k a year. Almost anywhere in the midwest outside of Chicago and a very few other cities you would be rich as hell according to most people.
The most responsible and frankly coolest people I have known were the people who didnt have everything handed to them.
September 16, 2008 at 6:33 PM #271338DWCAPParticipant[quote=DaCounselor]Great post DWCAP re the definition of “middle class”. In addition to what I believe are changes in the parameters of the defined “class” over generations, I think you could ask 10 different people today how they define middle class and probably get 10 different parameters.[/quote]
Thanks. I totally agree. I have been trying to come up with something that fits here, but wasnt able to come up with a really good definition of middle class. I guess it really boils down to how the person themselves define themselves. The rich generally know who they are, and the poor can be defined as those unable to support themselves due to their incomes at the bottom of the financial ladder (as opposed to the idoits who just spend too much). But Middle class really is a catch all phrase more than a definition, encompasing “everyone else”.
[quote=DaCounselor]It goes without saying (but i’ll say it anyway) that class definitions seem to be tied by many observers to visible material possessions and lifestyle actions as opposed to stock portfolio balances and personal net worth. Back in the day of more limited credit availability, people were essentially forced to live within parameters set by their income. With the advent of the age of easy credit, it became increasingly easier to magically transform oneself up a level or two in class, in terms of visible class indicators, that is.
So now we have these huge numbers of people who have been using credit to raise their visible class standing, which for many has acted as a detriment to their actual net worth. Ironically, the inevitable ‘come to Jesus’ moments facing many of these folks will come to pass and may deposit them back at a class lower than where they started. What a journey.[/quote]
I think the baby boom generation fits this perfectly. I worry about their retirment, and the fact that many cant afford it. On a farmers budget my grandfather was able to pay for all 4 of his kids to go to school and to LOAN them the money to buy their first house. I cannot say that about many in my parent generation. I doubt it even more for my generation. Saving is just so out of style and at somepoint people will stop lending you money. I have always really liked the quote I read on here that the only thing that will really come out of this downturn is that alot of people will learn that they are not as wealthy as they thought they were. That is only so true.
[quote=DaCounselor]Which leaves me with the question that dove tails into DWCAP’s commentary – what is “middle class”? Is a family with two newer cars, with a 42″ flat screen, eat out once a week, one two week vacation a year involving air travel, blah blah blah – is that middle class? What if the same family has a negative net worth? Can they still be middle class?
I think class definitions are almost irrecovably tainted, especially when viewed through the eyes of the younger generation, due to the over-consumption of the typical American, the Age of Entitlement effect, the keeping up with the Jones mentality, etc. In this instance, perception is most certainly not reality. [/quote]
Ill leave my first response to stand about the definition of “middle class” cept to add that I believe it to also be very regional. Middle class in CA could easly be defined as someone makeing 150k a year. Almost anywhere in the midwest outside of Chicago and a very few other cities you would be rich as hell according to most people.
The most responsible and frankly coolest people I have known were the people who didnt have everything handed to them.
September 16, 2008 at 6:33 PM #271377DWCAPParticipant[quote=DaCounselor]Great post DWCAP re the definition of “middle class”. In addition to what I believe are changes in the parameters of the defined “class” over generations, I think you could ask 10 different people today how they define middle class and probably get 10 different parameters.[/quote]
Thanks. I totally agree. I have been trying to come up with something that fits here, but wasnt able to come up with a really good definition of middle class. I guess it really boils down to how the person themselves define themselves. The rich generally know who they are, and the poor can be defined as those unable to support themselves due to their incomes at the bottom of the financial ladder (as opposed to the idoits who just spend too much). But Middle class really is a catch all phrase more than a definition, encompasing “everyone else”.
[quote=DaCounselor]It goes without saying (but i’ll say it anyway) that class definitions seem to be tied by many observers to visible material possessions and lifestyle actions as opposed to stock portfolio balances and personal net worth. Back in the day of more limited credit availability, people were essentially forced to live within parameters set by their income. With the advent of the age of easy credit, it became increasingly easier to magically transform oneself up a level or two in class, in terms of visible class indicators, that is.
So now we have these huge numbers of people who have been using credit to raise their visible class standing, which for many has acted as a detriment to their actual net worth. Ironically, the inevitable ‘come to Jesus’ moments facing many of these folks will come to pass and may deposit them back at a class lower than where they started. What a journey.[/quote]
I think the baby boom generation fits this perfectly. I worry about their retirment, and the fact that many cant afford it. On a farmers budget my grandfather was able to pay for all 4 of his kids to go to school and to LOAN them the money to buy their first house. I cannot say that about many in my parent generation. I doubt it even more for my generation. Saving is just so out of style and at somepoint people will stop lending you money. I have always really liked the quote I read on here that the only thing that will really come out of this downturn is that alot of people will learn that they are not as wealthy as they thought they were. That is only so true.
[quote=DaCounselor]Which leaves me with the question that dove tails into DWCAP’s commentary – what is “middle class”? Is a family with two newer cars, with a 42″ flat screen, eat out once a week, one two week vacation a year involving air travel, blah blah blah – is that middle class? What if the same family has a negative net worth? Can they still be middle class?
I think class definitions are almost irrecovably tainted, especially when viewed through the eyes of the younger generation, due to the over-consumption of the typical American, the Age of Entitlement effect, the keeping up with the Jones mentality, etc. In this instance, perception is most certainly not reality. [/quote]
Ill leave my first response to stand about the definition of “middle class” cept to add that I believe it to also be very regional. Middle class in CA could easly be defined as someone makeing 150k a year. Almost anywhere in the midwest outside of Chicago and a very few other cities you would be rich as hell according to most people.
The most responsible and frankly coolest people I have known were the people who didnt have everything handed to them.
September 16, 2008 at 6:33 PM #271402DWCAPParticipant[quote=DaCounselor]Great post DWCAP re the definition of “middle class”. In addition to what I believe are changes in the parameters of the defined “class” over generations, I think you could ask 10 different people today how they define middle class and probably get 10 different parameters.[/quote]
Thanks. I totally agree. I have been trying to come up with something that fits here, but wasnt able to come up with a really good definition of middle class. I guess it really boils down to how the person themselves define themselves. The rich generally know who they are, and the poor can be defined as those unable to support themselves due to their incomes at the bottom of the financial ladder (as opposed to the idoits who just spend too much). But Middle class really is a catch all phrase more than a definition, encompasing “everyone else”.
[quote=DaCounselor]It goes without saying (but i’ll say it anyway) that class definitions seem to be tied by many observers to visible material possessions and lifestyle actions as opposed to stock portfolio balances and personal net worth. Back in the day of more limited credit availability, people were essentially forced to live within parameters set by their income. With the advent of the age of easy credit, it became increasingly easier to magically transform oneself up a level or two in class, in terms of visible class indicators, that is.
So now we have these huge numbers of people who have been using credit to raise their visible class standing, which for many has acted as a detriment to their actual net worth. Ironically, the inevitable ‘come to Jesus’ moments facing many of these folks will come to pass and may deposit them back at a class lower than where they started. What a journey.[/quote]
I think the baby boom generation fits this perfectly. I worry about their retirment, and the fact that many cant afford it. On a farmers budget my grandfather was able to pay for all 4 of his kids to go to school and to LOAN them the money to buy their first house. I cannot say that about many in my parent generation. I doubt it even more for my generation. Saving is just so out of style and at somepoint people will stop lending you money. I have always really liked the quote I read on here that the only thing that will really come out of this downturn is that alot of people will learn that they are not as wealthy as they thought they were. That is only so true.
[quote=DaCounselor]Which leaves me with the question that dove tails into DWCAP’s commentary – what is “middle class”? Is a family with two newer cars, with a 42″ flat screen, eat out once a week, one two week vacation a year involving air travel, blah blah blah – is that middle class? What if the same family has a negative net worth? Can they still be middle class?
I think class definitions are almost irrecovably tainted, especially when viewed through the eyes of the younger generation, due to the over-consumption of the typical American, the Age of Entitlement effect, the keeping up with the Jones mentality, etc. In this instance, perception is most certainly not reality. [/quote]
Ill leave my first response to stand about the definition of “middle class” cept to add that I believe it to also be very regional. Middle class in CA could easly be defined as someone makeing 150k a year. Almost anywhere in the midwest outside of Chicago and a very few other cities you would be rich as hell according to most people.
The most responsible and frankly coolest people I have known were the people who didnt have everything handed to them.
September 16, 2008 at 7:20 PM #271105EugeneParticipantMiddle class is working-age families that make around median income for their age cohort. Median family income of a married-couple family in San Diego is around 80k.
Double-income engineer couples are not middle class. Lawyers are not middle class. Middle class families don’t buy houses in 4S Ranch and Encinitas, don’t shop in Whole Foods Market, and don’t drive luxury cars, they can’t afford that without mortgage equity withdrawals. Their children attend average schools in San Marcos and La Mesa, because they can’t afford to live in areas with top 20th percentile schools. Because, obviously, 2/3 of school-age kids in the city can’t all attend the same 20% of schools.
September 16, 2008 at 7:20 PM #271341EugeneParticipantMiddle class is working-age families that make around median income for their age cohort. Median family income of a married-couple family in San Diego is around 80k.
Double-income engineer couples are not middle class. Lawyers are not middle class. Middle class families don’t buy houses in 4S Ranch and Encinitas, don’t shop in Whole Foods Market, and don’t drive luxury cars, they can’t afford that without mortgage equity withdrawals. Their children attend average schools in San Marcos and La Mesa, because they can’t afford to live in areas with top 20th percentile schools. Because, obviously, 2/3 of school-age kids in the city can’t all attend the same 20% of schools.
September 16, 2008 at 7:20 PM #271354EugeneParticipantMiddle class is working-age families that make around median income for their age cohort. Median family income of a married-couple family in San Diego is around 80k.
Double-income engineer couples are not middle class. Lawyers are not middle class. Middle class families don’t buy houses in 4S Ranch and Encinitas, don’t shop in Whole Foods Market, and don’t drive luxury cars, they can’t afford that without mortgage equity withdrawals. Their children attend average schools in San Marcos and La Mesa, because they can’t afford to live in areas with top 20th percentile schools. Because, obviously, 2/3 of school-age kids in the city can’t all attend the same 20% of schools.
September 16, 2008 at 7:20 PM #271393EugeneParticipantMiddle class is working-age families that make around median income for their age cohort. Median family income of a married-couple family in San Diego is around 80k.
Double-income engineer couples are not middle class. Lawyers are not middle class. Middle class families don’t buy houses in 4S Ranch and Encinitas, don’t shop in Whole Foods Market, and don’t drive luxury cars, they can’t afford that without mortgage equity withdrawals. Their children attend average schools in San Marcos and La Mesa, because they can’t afford to live in areas with top 20th percentile schools. Because, obviously, 2/3 of school-age kids in the city can’t all attend the same 20% of schools.
September 16, 2008 at 7:20 PM #271417EugeneParticipantMiddle class is working-age families that make around median income for their age cohort. Median family income of a married-couple family in San Diego is around 80k.
Double-income engineer couples are not middle class. Lawyers are not middle class. Middle class families don’t buy houses in 4S Ranch and Encinitas, don’t shop in Whole Foods Market, and don’t drive luxury cars, they can’t afford that without mortgage equity withdrawals. Their children attend average schools in San Marcos and La Mesa, because they can’t afford to live in areas with top 20th percentile schools. Because, obviously, 2/3 of school-age kids in the city can’t all attend the same 20% of schools.
September 17, 2008 at 3:07 AM #271290CA renterParticipantExcellent thread and commentary!
Loved bjensen’s observations and concur. By forcing more people to get formal educations and then pursue white-collar work, we have effectively reduced our standard of living (more educated people = lower wages for what labor is offering).
Also, I think the difference between the items that have increased in price vs. decreased is that the inflationary items (housing, healthcare, education, etc.) are less likely to be outsourced to cheap labor.
Additionally, the expansion of credit, especially since the early 80s, has pushed prices higher for things that are usually bought with credit (housing).
The 70s marked a time when more and more companies started looking at outsourcing to cheap countries (or insourcing with cheap, illegal-immigrant labor). It also saw the beginning of the demise of labor unions (worst thing that ever happened to us, IMHO).
While Americans were competing with poor peoples’ wages, they were still able to consume the same amounts (or more) due to credit expansion.
The spread between cheap labor and the prices Americans were willing to pay (with credit masking the deflationary effects of lower wages) is what made companies so profitable and enabled them to “grow” they way they did.
I think we are about to see the unwinding of these events.
September 17, 2008 at 3:07 AM #271526CA renterParticipantExcellent thread and commentary!
Loved bjensen’s observations and concur. By forcing more people to get formal educations and then pursue white-collar work, we have effectively reduced our standard of living (more educated people = lower wages for what labor is offering).
Also, I think the difference between the items that have increased in price vs. decreased is that the inflationary items (housing, healthcare, education, etc.) are less likely to be outsourced to cheap labor.
Additionally, the expansion of credit, especially since the early 80s, has pushed prices higher for things that are usually bought with credit (housing).
The 70s marked a time when more and more companies started looking at outsourcing to cheap countries (or insourcing with cheap, illegal-immigrant labor). It also saw the beginning of the demise of labor unions (worst thing that ever happened to us, IMHO).
While Americans were competing with poor peoples’ wages, they were still able to consume the same amounts (or more) due to credit expansion.
The spread between cheap labor and the prices Americans were willing to pay (with credit masking the deflationary effects of lower wages) is what made companies so profitable and enabled them to “grow” they way they did.
I think we are about to see the unwinding of these events.
September 17, 2008 at 3:07 AM #271538CA renterParticipantExcellent thread and commentary!
Loved bjensen’s observations and concur. By forcing more people to get formal educations and then pursue white-collar work, we have effectively reduced our standard of living (more educated people = lower wages for what labor is offering).
Also, I think the difference between the items that have increased in price vs. decreased is that the inflationary items (housing, healthcare, education, etc.) are less likely to be outsourced to cheap labor.
Additionally, the expansion of credit, especially since the early 80s, has pushed prices higher for things that are usually bought with credit (housing).
The 70s marked a time when more and more companies started looking at outsourcing to cheap countries (or insourcing with cheap, illegal-immigrant labor). It also saw the beginning of the demise of labor unions (worst thing that ever happened to us, IMHO).
While Americans were competing with poor peoples’ wages, they were still able to consume the same amounts (or more) due to credit expansion.
The spread between cheap labor and the prices Americans were willing to pay (with credit masking the deflationary effects of lower wages) is what made companies so profitable and enabled them to “grow” they way they did.
I think we are about to see the unwinding of these events.
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