Could it matter where we live? I’m near a big city in the midwest.
Also, long commutes to work (longer than 20 minutes) do a great harm to the world. Both in opportunity cost from being able to do other things through to things like climate change.
Edit-Also, I want to live in a world where spending the morning in a coffee shop with a scone is affordable on at least a weekly basis for people. Cafes, restaurants, and other such places are cultural bases. We should be insulating them from destruction.
Say I'm living in Nowhereville, USA, and working for the tech company there. If anything goes wrong, for example, an overall tech downturn, this company hits hard times, or I have a job-ending disagreement with my boss, then getting a new job likely means a 6+ month job search, uprooting my family and moving. I know this is true because I have lived in several towns like this. It sucks.
In the Bay Area, if things don't work out with a particular company, I can apply to hundreds of others next door. I'm in for a 3-6 month job search, and at the end of the day I don't have the hassle of moving to a different city.
In 2012, I walked out on a contract job on Monday during lunch (long story), called a recruiter and I had a job offer with what was then a Fortune 10 company by Thursday evening making 10K more.
In late 2014, I called recruiters and had two job offers making 25K more.
Earlier this year, it took 10 days and now I'm making yet another 20K more.
I'm no special snowflake. I'm still just making the median salary for Atlanta, a lot of my former coworkers can tell a similar story.
When I'm looking for a job, usually I'm juggling between 5-10 opportunities. I always use recruiters, so I am not blindly submitting resumes.
Stay near one of the top 100 cities in the country and there are almost no issues with employment if you keep your skills somewhat updated.
Edit: I should mention I, and all my co-workers, also don’t work remote. Turns out companies everywhere use technology :)
You might be able to pick up a new job overnight in the Bay Area, but conversely your employer can replace you overnight in the Bay Area. Friends who went out there are constantly jumping between companies as they run the risk of being laid off, of running into stack ranking, of their firm getting bought out or all other kinds of nonsense.
Midwestern friends? All still working for the same spot they got out of college. Pay might be low, but the stress is low as well since employers know that it's hard work to replace a competent developer (probably have to pay someone to move there). If they walk out, it's the firm that's going to be in a harder place then they will be -- so no one is going to ask them to work overtime, check their e-mails, or do anything to upset their applecart.
I think the biggest 2 things that have happened that requires people to have a lot more money to be part of this “dream” is the complete dissapearance of the Pension and the dramatic increase in the cost of College tuition (in the 60s-90s, sending your kid to College meant supporting them a few more years, tuition wasn’t even really a factor). The Pension being lost is a double hit, because you lost the guaranteed retirement safety net, and you have to now save a huge portion of your own paycheck to make up the difference.
+http://news.gallup.com/poll/212660/middle-class-identificati...
Everyone lives inside their own social bubbles and think that their lifestyle is average. In this bubble, vacations to Europe every year are normal; "Everyone" send their kids to private school, dines out three times a week etc.
$700/mo/person is $7.65 per meal, which is quite reasonable. $250/mo/person is about $2.70 per meal, which is not.
"In 2005, sociologists William Thompson and Joseph Hickey estimate an income range of roughly $35,000 to $75,000 for the lower middle class and $100,000 or more for the upper middle class."[0]
In 2018 dollars, that's $44,800 to $96,000 for lower middle class and $128,000 for upper middle class.
[0] https://en.wikipedia.org/wiki/American_middle_class#Income
It's plenty. I just looked at my mint. I've averaged $678/month on groceries for my 3 person family over the last year. One of those 3 people is a toddler so I'm obviously saving some money there. We eat out occasionally (so not part of this budget item) but rarely more than once a week. And I'm not in a position where I have to scrimp. My wife and I had lobster last night.
2.70 doesn't sound like much if by "meal" you think of "dinner" but it's a ton if you're eating eggs or cereal for breakfast and a sandwich for lunch.
An assumption in the article was that both parents were too busy with work to cook reliably.
I agree it's plenty for most households. Just may not be for the households this author is talking about. It's a good illustration of how a higher paid job may not net that much more: you lose a lot of the income in extra taxes + extra lifestyle expenses to support the job.
The only people I know that spend in the 700 / person are eating out 3-4 times a week at 20+/plate restaurants. Doesn't sound middle class to me.
I find it interesting that 500CAD (~400USD) is completely unreasonable to me (I frequently get frustrated with myself for spending this much when I know I could get it down lower if I stop eating out), whereas your 'reasonable' ceiling is much, much higher.
This isn't even taking into account the cost savings of cooking for multiple people, vs. cooking for one person, too! Per person costs will definitely change depending on context.
Are you eating out literally every meal? Because otherwise that's not bad at all. I eat on about $5/day and I'm not even trying to be frugal about it.
I live in NYC. Try eating less than $3/meal for a month here. Groceries cost more here. I eat at home for most meals, too.
Breakfast will be your cheapest meal, eggs $3/dozen. Yogurt 99c each or get a larger container to save more money. Oatmeal, bananas. Bacon will be pricey, but let's splurge $6. Avocado, toast is relatively cheap.
Lunch, chicken breast, thighs whatever. You can get them for $5-6/lb and even less at Chinatown. That'll go for lunch/dinner. Toss in salad, rice, etc. Canned veggies like chickpeas and beans are just a buck each at Whole Foods. Ground beef is pretty cheap. Veggies like kale, broccoli are a bit more expensive, but again, only a few bucks and you can use it for multiple meals.
Grocery might cost more, but definitely possible to churn out meals at $3 price points. Of course there's the upfront cost of having basic things like salt, pepper, oil, spices, butter, etc.
He acks that in the article,
> When you are a dual job household with a baby, there’s little time to cook. > However, food is where this family can cut expenses if they start feeling a little tight.
I would say that more accurately it means that a portion of your income is made passively (which that buffer provides) alongside having a working income. The working-class, as the name implies, make all of their income by working, and the upper-class make all of their income passively.
But the fun thing about middle-class is that it has no generally accepted definition, so it can mean whatever you want it to.
I do agree that 300/dinner and so on is choosing an expensive middle class lifestyle. But the authors argument stands - a "decent" lifestyle (non poverty) and a "middle class" lifestyle have all got more expensive without us noticing - and pay has not kept pace.
Personally I think there is something wrong with inflation measures. I should do some research but the annual 2% target or whatever is missing a lot - we should be referencing weighted decade long averages or something.
for example I found an old pub prices menu from my year of birth - a pint of well know brnad lager was 5pence. It is now heading for 5 pounds in similar outlets - that's a 100x inflation leap in my lifetime.
if inflation at 4% was shown as double the price by the time your kids reach college then it might have more "real" impact
2100/month for a family of 3 for food. No. Not even close. If I bought the best of the best stuff from the high end grocer in my town (burbs between Ann Arbor and Detroit), I'd be hard pressed to break 1k/month for 3.
Car ... volvo? No. 1-3 year old used vehicles for me. And soon I am buying another one so I can give my daughter my 9 year old car.
Child care? She's in college now, so lets call that tuition and room/board. This works out to $30k/year in state. If I take an out of state offer, that shoots up to about $100k/year. We looked this up last night as it turns out. Tuition + room/board goes from $14k/semester to $46k/semester.
Most of the rest of the expenses are not relevant.
This all said, the point the article is making is fair and correct, maybe not quantitatively for everyone, but I'd argue the order of magnitude is correct. Some multiple of $100k is needed to raise a family in a middle class scenario while saving for retirement and servicing large debt.
One of the huge turnoffs for the left coast is the real estate issue. This forces me to ask for salary adjustments to make sure I am not impoverishing myself by taking a "better paying" job in CA. I've helped recruiters through the math, similar to this, in my last year job search. The cost of living delta, just from that aspect, was huge. I explained to them that they could leave me where I was, and not deal with that.
It is so bad right now, I could sell my $220k house, and not have enough money for a down payment on a modest similar sized house/property in a reasonable, not upscale, neighborhood in CA. Much less of an issue in NY area, though you have to deal with the traffic getting to/from the trains.
I understand the article was aimed at the left and right coast folks. And the numbers may be more accurate for young families there. For the rest of us in fly over country, this delta means that the larger salaries still generate an often (much) lower quality of life in those locations. It is far worse in CA than NY area. Definitely a disincentive to give those locations significant consideration without dealing with the massive delta in costs. Which most companies are loathe to do.
My question was which careers force you to live in one of the most expensive cities in the world. I don't think your example of public transportation employees is a very good one.
Media - New York
Tech for a BigCo - Seattle/Bay Area.
You can of course move to Europe (Visa permitting) but you will find your salary gets much lower too.
This is not accurate.
I'm a Midwest non-tech worker. I live in one of the 5 largest cities in my state. It's very foreign to me that such a large income wouldn't allow you to feel financially secure.
A starting engineering salary in the area is ~65,000. 1, 2, and 3 bedroom apartments in my complex are $830, $1200, and $1500 respectively. I'm ~2.5 miles from work (7 minute commute via car) and <0.5 miles from a grocery store. Houses in the area with a really good school system are 200-400k typically.
Monthly Rent : 3300 ( east bay 45 minute train ride into SF)
Utlities : 350
BART riding : 260
BART parking : 60-100
or Drive to SF and Car parking $500 ( instead of the 360 BART )
Groceries : 1400 ( 2 teenage boys eat )
Car payments + insurance : 800 ( 2 cars )
renters insurance : 120
Clothing : 300 ( teenagers outgrow stuff fast )
Cell phones : 300
6930 so far... no savings, vacations, entertainment or misc taken out
4670/4 = 1167 per person a month / 4 is 291 a week per person left for savings vacation misc and entertainment
1 family outing in the bay will run $300 to $ 500 easily
BTW to buy a house you typically had to come in with an offer 10-25% over ask and typically a full cash offer would get the house. Good luck buying a house with a mortgage ( the house across the street, in the east bay, went for 699k and it was only 900 sq ft )
But it's also true that if you're starting with nothing, saving for a down payment in such a housing market is unattainable.
Life is different when you arent single
Living paycheck-to-paycheck means if you miss one paycheck, you'll have bills you can't pay. With the numbers you've provided, I don't see how your income and essentials would force you to not have savings to cover a few months. You didn't mention how many income sources your household has; even if 75% is from one source, having a second source does add a lot of security.
Example: $2100/mo to feed 3 people is ridiculous. Instead of buying prepared foods, cook meals. You can feed 3 people on $750/mo. If you're spending $300/wk on date night dinner, find something less expensive to do for date night.
Similarly for some of the other budgets. Drive a used Honda instead of a new Volvo. Find less expensive ways to entertain yourselves. If you insist on living in an expensive housing market, accept that middle class family living in a dense city means (and has always meant) a (cramped to midwestern suburban sensibilities but quite livable) 2BR without outdoor space, not a house with a lawn; and consider renting instead of buying.
Middle class living means making compromises. If you're not making compromises, that's upper class living. And yeah, that can cost $300k/yr easily.