How much income one needs to be considered rich

Americans tend to think of themselves as middle-class, even wealthy and poor Americans who objectively are in the upper or lower ranks of income. So this question occasionally arises: how much income does one have to be earn to be considered “rich”?

The current case in the news:

Todd Henderson feels like he’s barely making ends meet. He’s a law professor at the University of Chicago. His wife’s a doctor at the school’s hospital. Their combined income exceeds $250,000. They have a nice house, a nanny, kids in private school, a retirement account and a lawn guy…

“A quick look at our family budget, which I will happily share with the White House, will show him that, like many Americans, we are just getting by despite seeming to be rich. We aren’t,” Henderson wrote on the blog “Truth on the Market.”

While Henderson meant for his posting to encourage a debate about taxes, it turned into a public flogging, characterizing him as out of touch or arrogant. More broadly, it has provoked a discussion about what it means to be rich, particularly in an economy where many people are suffering.

Henderson’s no longer part of the conversation, though. The firestorm of online hostility compelled him to delete his essay and declare on Tuesday that he will no longer blog. He declined to comment Thursday. Even his wife is angry at him, he acknowledged in a follow-up blog post.

A few thoughts on this:

1. The Chicago Tribune article cites someone saying earning $250,000 a year is in the top 3 percent of American incomes.

2. At the same time, incomes can vary in their purchasing power in different areas. A $150,000 income living in Manhattan can lead to different things than living with that income in Atlanta.

3. Is this a microcosm of how Internet “discussion” works? It seems like a perfect storm of bad economic times plus widespread attention leads to a bad outcome for having made this argument.

4. Perhaps the real issue is whether people making $250,000 feel like they can live the lifestyle that is associated with such income levels. If they feel like they have to pinch pennies or a lot of the money is taken out in taxes, they might not “feel rich.” From those with lower incomes, this seems absurd: just think what could be done with that money. But having certain incomes leads to certain ideas about what that level of income looks like or how it is to be experienced.

UPDATE 9/24/10 3:36 PM: A piece from the Wall Street Journal fits in with my idea about the income and lifestyle not matching up. The overall idea seems to be that people who make this kind of money may not think they have to or don’t want to reign in their spending.