The Middle Class Life Style Is Putting You In Debt?

[Nika]

This is really the key question - Can a median income earner today afford a lifestyle that is comparable to that of a median income earner in the past? I would argue that they can. The problem is that the lifestyle that median earner is trying to live today is far more luxurious than their counterparts in the past.

Disneysteve, you are not comparing the same things. Luxuries cost little compared to necessities. Clothing and entertainment went down in price relative to income. But housing, medical care, college education, etc.. went up a lot.

True, I can afford much more luxurious vacations than middle class generation ago, but if I completely forego those, that won't make enough difference to buy a house in Bronx (2-3 million in my area), and taxes and maintenance on top of that. So it would be wrong to say that I cannot afford to buy a basic house because I choose luxuries like coffee, nice lunches out and vacations. My older friend's mother raised their family as a single mom in a 3 br apartment on upper west side that she bought and paid off working in the laundromat! They had no vacations, but she could afford 3 br in the city as a laundry worker. If I never drink coffee again, buying apartment like that in Manhattan would still be a financial insanity.

So yes, I buy lattes every morning, but I put more into my child's college fund every month than I spend on all my coffee/work lunches. And I feel I had to do it from the day he was born, and we are still not secure that we will have enough to afford him decent education. You could work your way through college when baby boomers were getting their degrees. They did not have to worry about those things as much.

Things like that...

[corn18]

I'm having a difficult time discerning what the 2 sides of the argument are. Are we trying to determine if it's more difficult to be middle class today vs. the past? And why it's more difficult?

If everyone is so hard up these days, why don't we have more engineers? Our company has thousands of open req's for engineers that we can't fill because they are all working. If someone wants to make a good living, get an engineering degree and I will start them at a salary 50% over the median income with the opportunity to make 6 figures before you turn 26. And we're just a defense company. The Googles of the world offer way more than that.

Is there something that I'm missing? I guess I'll hear about how not everyone can go to college, or everyone is not cut out for engineering or how people should pursue their passion without regard for the earning potential of their degree.

Harrumph.

[Weird Tolkienish Figure]

Disneysteve, you are not comparing the same things. Luxuries cost little compared to necessities. Clothing and entertainment went down in price relative to income. But housing, medical care, college education, etc.. went up a lot.

True, I can afford much more luxurious vacations than middle class generation ago, but if I completely forego those, that won't make enough difference to buy a house in Bronx (2-3 million in my area), and taxes and maintenance on top of that. So it would be wrong to say that I cannot afford to buy a basic house because I choose luxuries like coffee, nice lunches out and vacations. My older friend's mother raised their family as a single mom in a 3 br apartment on upper west side that she bought and paid off working in the laundromat! They had no vacations, but she could afford 3 br in the city as a laundry worker. If I never drink coffee again, buying apartment like that in Manhattan would still be a financial insanity.

So yes, I buy lattes every morning, but I put more into my child's college fund every month than I spend on all my coffee/work lunches. And I feel I had to do it from the day he was born, and we are still not secure that we will have enough to afford him decent education. You could work your way through college when baby boomers were getting their degrees. They did not have to worry about those things as much.

Things like that...

So your opinion is that the middle class is bad off in the US because you cannot afford to buy a house in the Bronx working in a laundromat and your old friend's mother, could?

Do I have that right?

[Fishindude77]

When the jobs aren't there that pay you enough to be able to afford living there, it's time to move the heck out of there.

I can't understand why folks don't get the heck out of these HCOL areas?

[disneysteve]

True, I can afford much more luxurious vacations than middle class generation ago, but if I completely forego those, that won't make enough difference to buy a house in Bronx (2-3 million in my area)

Nika, your post highlights what I keep saying: location, location, location. You're absolutely right that the cost of living in the Bronx is high. According to the latest census data, the median household income there is $34,000. The median home value is $375,000, which explains a home ownership rate of less than 20%. It also explains why 90% of housing units are in multi-unit dwellings. Home ownership isn't the norm in that area - renting is. I have several friends and relatives in the Bronx. Not one of them owns their home, but they've got beautiful apartments and love their surroundings. Does any of that mean they don't qualify as middle class? I don't think so at all. They all live very comfortable lifestyles that just don't happen to include home ownership. What constitutes middle class is very dependent on where you are located.

You just can't compare that to the situation in my area in south Jersey or in Beverly Hills, CA or Miami Beach, FL or Lincoln, NE.

[disneysteve]

I put more into my child's college fund every month than I spend on all my coffee/work lunches. And I feel I had to do it from the day he was born, and we are still not secure that we will have enough to afford him decent education. You could work your way through college when baby boomers were getting their degrees. They did not have to worry about those things as much.

College costs certainly have risen faster than inflation. I will say, though, that my thoughts on college have evolved since our daughter entered college last year. I was among the folks worried by the statistics constantly appearing that a 4-year degree would cost well over $200,000. What I've since learned is that virtually nobody pays list price. At all of the schools we visited, upwards of 95% of students receive some degree of financial aid. My daughter's scholarship covers about 40% of the cost bringing it much more in line with where it ought to be. We could never afford to send her to that school if we had to pay the full list price - but nobody really pays that. So don't get freaked out by the posted tuition numbers as you look ahead to your kids going to college. It won't really cost that much.

[feh]

If everyone is so hard up these days, why don't we have more engineers? Our company has thousands of open req's for engineers that we can't fill because they are all working. If someone wants to make a good living, get an engineering degree and I will start them at a salary 50% over the median income with the opportunity to make 6 figures before you turn 26. And we're just a defense company. The Googles of the world offer way more than that.

Is there something that I'm missing? I guess I'll hear about how not everyone can go to college, or everyone is not cut out for engineering

Well, yes. That would be my response. Not everybody has the talent/skills to be an engineer. And not everybody can afford to get a degree in that field, even if they have the talent.

40 years ago, an unskilled worker w/ a HS diploma had a good chance of getting a decent paying blue collar job. That's much more difficult today.

[feh]

College costs certainly have risen faster than inflation. I will say, though, that my thoughts on college have evolved since our daughter entered college last year. I was among the folks worried by the statistics constantly appearing that a 4-year degree would cost well over $200,000. What I've since learned is that virtually nobody pays list price. At all of the schools we visited, upwards of 95% of students receive some degree of financial aid. My daughter's scholarship covers about 40% of the cost bringing it much more in line with where it ought to be. We could never afford to send her to that school if we had to pay the full list price - but nobody really pays that. So don't get freaked out by the posted tuition numbers as you look ahead to your kids going to college. It won't really cost that much.

I think this is often the case at private schools DS. I think it's much, much less common at public schools.

[disneysteve]

I think this is often the case at private schools DS. I think it's much, much less common at public schools.

I agree, but private schools are a lot more expensive (at least at list price). Public/state schools don't give that kind of aid but it also isn't as needed since the cost is a lot lower to begin with.

With her scholarship, we are only paying about $5,000/year more than the nearby state school would cost so she's getting a private school education at nearly a state school price.

[Weird Tolkienish Figure]

Well, yes. That would be my response. Not everybody has the talent/skills to be an engineer. And not everybody can afford to get a degree in that field, even if they have the talent.

40 years ago, an unskilled worker w/ a HS diploma had a good chance of getting a decent paying blue collar job. That's much more difficult today.

I will grant you this, and what I think you're getting at is that these jobs were offshored (or a lot of them), and I grant you that as well, however I think these jobs were doomed to automation anyway. So unless you outlawed technology, these jobs were pretty much doomed, even if they didn't go to Asia/Mexico.

The answer is that the economy is different these days, and that public schools, and secondary education need to do a better job giving kids the skills they need in the workforce.

We also need to stop relying on the 4 year bachelor's degree so much and look at other solutions.

[Fishindude77]

40 years ago, an unskilled worker w/ a HS diploma had a good chance of getting a decent paying blue collar job. That's much more difficult today.

This is simply not true. I am in the industrial construction industry and we are starved for labor in all areas. I'm not talking about riff raff crews slapping down shingles or building houses, those jobs suck, don't pay much and have no benefits.

There are thousands of good paying jobs in our industry and similar that only require a high school education, basic math, reading and writing skills, a good attitude, clean driving record, reliability, and being drug free.

You get on the job training and may need to enroll in an apprenticeship program and do some evening training, but the education cost is a bargain and lead men, supervisors and skilled technicians in these trades often make equal or better money than their college educated counterparts.

The issue is that our public education systems has demonized working a trade or working with your hands for the last 40 years and have tried to convince the public that everyone needs to go to college to be successful and that if you go to work and get a little dirty, rather than sitting in an office you are somehow a second class citizen.

[Weird Tolkienish Figure]

40 years ago, an unskilled worker w/ a HS diploma had a good chance of getting a decent paying blue collar job. That's much more difficult today.

This is simply not true. I am in the industrial construction industry and we are starved for labor in all areas. I'm not talking about riff raff crews slapping down shingles or building houses, those jobs suck, don't pay much and have no benefits.

There are thousands of good paying jobs in our industry and similar that only require a high school education, basic math, reading and writing skills, a good attitude, clean driving record, reliability, and being drug free.

You get on the job training and may need to enroll in an apprenticeship program and do some evening training, but the education cost is a bargain and lead men, supervisors and skilled technicians in these trades often make equal or better money than their college educated counterparts.

The issue is that our public education systems has demonized working a trade or working with your hands for the last 40 years and have tried to convince the public that everyone needs to go to college to be successful and that if you go to work and get a little dirty, rather than sitting in an office you are somehow a second class citizen.

Trucking and transportation is a huge "blue collar" field right now, along with energy (the oil price crash has mitigated this somewhat right now), those two fields have trouble filling positions. They both have their own problem as they usually involve "long haul" work which is unpopular for various reasons.

[Nika]

Disneysteve, Bronx is just as different as Miami Beach and Lincoln, NE. So that data is very misleading.
Where I live, home ownership is close to 99% (only 2 apartments for rent in that area online) It is either houses(out of reach) or co-ops that are extremely restrictive on subletting.
(They are very nice places to live, but it is not a house with a yard and no freedom to rent out and no control over underlying mortgage and management.)

But there are also areas where all the shootings happen. And there are some in between. But that "median" data is very misleading. It is a combination of people who make nothing and lots of housing projects, and neighborhoods like Fieldston, with three fantastic 46K per year private schools within 1 mile radius.

[disneysteve]

Disneysteve, Bronx is just as different as Miami Beach and Lincoln, NE. So that data is very misleading.
Where I live, home ownership is close to 99% (only 2 apartments for rent in that area online) It is either houses(out of reach) or co-ops that are extremely restrictive on subletting.
(They are very nice places to live, but it is not a house with a yard and no freedom to rent out and no control over underlying mortgage and management.)

But there are also areas where all the shootings happen. And there are some in between. But that "median" data is very misleading. It is a combination of people who make nothing and lots of housing projects, and neighborhoods like Fieldston, with three fantastic 46K per year private schools within 1 mile radius.

Again, your post totally highlights the point I keep trying to make. The median data, while technically true, is essentially meaningless. If you really want to know what's going on, you need to zoom in to the zip code level and maybe even finer than that.

[ua_guy]

So your opinion is that the middle class is bad off in the US because you cannot afford to buy a house in the Bronx working in a laundromat and your old friend's mother, could?

Do I have that right?

What she's getting at is kind of a separate issue, but related. All big urban cores are dealing with gentrification. It's what happens when real estate keeps increasing in value...it pushes out all but the highest earners. There's good and bad to it...

40 years ago, an unskilled worker w/ a HS diploma had a good chance of getting a decent paying blue collar job. That's much more difficult today.

This is simply not true. I am in the industrial construction industry and we are starved for labor in all areas. I'm not talking about riff raff crews slapping down shingles or building houses, those jobs suck, don't pay much and have no benefits.

There are thousands of good paying jobs in our industry and similar that only require a high school education, basic math, reading and writing skills, a good attitude, clean driving record, reliability, and being drug free.

You get on the job training and may need to enroll in an apprenticeship program and do some evening training, but the education cost is a bargain and lead men, supervisors and skilled technicians in these trades often make equal or better money than their college educated counterparts.

The issue is that our public education systems has demonized working a trade or working with your hands for the last 40 years and have tried to convince the public that everyone needs to go to college to be successful and that if you go to work and get a little dirty, rather than sitting in an office you are somehow a second class citizen.

At present, only about 45% of people 25 and older in the workforce have a bachelor's degree. 60% of jobs require some form of higher education. You do the math.

It's not that people are afraid of getting a little dirty. It's that there is still better opportunity in having higher education. Earning potential over time is higher and I've witnessed the same even having a nonspecific degree.