Tag Archives: middle class

The American middle class and a high salary to “live comfortably” in a city with a 50/30/20 budget

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SmartAsset recently looked at the salary needed to “live comfortably” in American metro areas. The numbers are pretty high:

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Key Findings

  • On average, an individual needs $96,500 for sustainable comfort in a major U.S. city. This includes being able to pay off debt and invest for the future. It’s even more expensive for families, who need to make an average combined income of about $235,000 to support two adults and two children without the pressure of living paycheck to paycheck.
  • A family must make over $300k to raise two kids comfortably in six cities. Two working adults need to make a particularly high combined income in San Francisco ($339,123); San Jose ($334,547); Boston ($319,738); Arlington, VA ($318,573); New York City ($318,406); and Oakland, CA ($316,243) to raise two children with enough money for needs, wants and savings.
  • It takes the most money to live comfortably as a single person in New York City. This breaks down to $66.62 in hourly wages, or an annual salary of $138,570. To cover necessities as a single person in New York City, you’ll need an estimated $70,000 in wages. 

Here are the budget calculations:

SmartAsset used MIT Living Wage Calculator data to gather the basic cost of living for an individual with no children and for two working adults with two children. Data includes cost of necessities including housing, food, transportation and income taxes. It was last updated to reflect the most recent data available on Feb. 14, 2024.

Applying these costs to the 50/30/20 budget for 99 of the largest U.S. cities, MIT’s living wage is assumed to cover needs (i.e. 50% of one’s budget). From there the total wage was extrapolated for individuals and families to spend 30% of the total on wants and 20% on savings or debt payments.

I would be interested to see how this compares with how different people or groups over time have defined the American middle class. Is it a particular income band or an ability to have certain kinds of experiences? Do Americans in the middle class interpret their own lives as living comfortable?

Since most residents in cities do not have the salaries listed above, one conclusion is that many people are not able to live comfortably. Do these numbers mean that people below these salary points are living paycheck to paycheck (or think they are)?

This could lead to helpful discussions of social class, pay, and conditions in American cities. If Americans should be able to live on a 50/30/20 budget, what could be changed to help people achieve this?

Great Quotes in Homeownership #4: Obama in 2013

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Speaking at a Arizona high school in August 2013, President Obama both addressed specific policies he hoped Congress would pass regarding homeownership as well as the dream of middle-class homeownership. Here is part of the speech connecting middle-class aspirations and homeownership:

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What we want to do is put forward ideas that will help millions of responsible, middle-class homeowners who still need relief.  And we want to help hardworking Americans who dream of owning their own home fair and square, have a down payment, are willing to make those payments, understand that owning a home requires responsibility.  And there are some immediate actions we could take right now that would help on that front, that would make a difference.  So let me just list a couple of them…

So I want to be honest with you.  No program or policy is going to solve all the problems in a multi-trillion dollar housing market.  The housing bubble went up so high, the heights it reached before it burst were so unsustainable, that we knew it was going to take some time for us to fully recover.  But if we take the steps that I talked about today, then I know we will restore not just our home values, but also our common values.  We’ll make owning a home a symbol of responsibility, not speculation — a source of security for generations to come, just like it was for my grandparents.  I want it to be just like that for all the young people who are here today and their children and their grandchildren.  (Applause.)

These sections echo common themes of how the American public often thinks about housing:

  1. Homeownership is a symbol of successful hard work and responsibility. Put it in the time and effort and it should lead to a home.
  2. Systems and particular actors can conspire against possible homeowners – financial speculators, irresponsible people – but the government should be in the business of helping people achieve homeownership.
  3. Homeownership is a goal across American generations, from grandparents to current adults to future children.
  4. The middle class and homeownership are intertwined.

Even as President Obama sought specific actions, he appealed to cultural goals and narratives very familiar in American life.

(This is part of a very occasional series of quotes about homeownership. See #1 featuring William Levitt, #2 featuring Herbert Hoover, and #3 involving George W. Bush.)

Who is affordable housing for? Biden Build Back Better edition

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The Biden administration includes affordable housing as an important part of the Build Back Better initiative. Under the heading “The most significant effort to bring down costs and strengthen the middle class in generations,” here is how whitehouse.gov describes the affordable housing plans:

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Makes the single largest and most comprehensive investment in affordable housing in history.

The framework will enable the construction, rehabilitation, and improvement of more than 1 million affordable homes, boosting housing supply and reducing price pressures for renters and homeowners. It will address the capital needs of the public housing stock in big cities and rural communities all across America and ensure it is not only safe and habitable but healthier and more energy efficient as well. It will make a historic investment in rental assistance, expanding vouchers to hundreds of thousands of additional families. And, it includes one of the largest investments in down payment assistance in history, enabling hundreds of thousands of first-generation homebuyers to purchase their first home and build wealth. This legislation will create more equitable communities, through investing in community-led redevelopments projects in historically under-resourced neighborhoods and removing lead paint from hundreds of thousands of homes, as well as by incentivizing state and local zoning reforms that enable more families to reside in higher opportunity neighborhoods.

There is certainly a need for affordable housing throughout the United States as well as in specific places. What interests me at the moment here is the references to how this investment in affordable housing will benefit the middle class. The whole package is aimed at the middle class. The introduction states, “President Biden promised to rebuild the backbone of the country – the middle class – so that this time everyone comes along.”

On one hand, affordable housing is important to the middle class. For decades, homeownership has been a marker of being in the middle-class. The postwar suburban housing boom was driven in part by attainable mortgages. This middle-class homeownership is then often related to a number of middle-class goals. Since housing is such a big expense in many household budgets, having cheaper housing enables spending in other areas.

On the other hand, many people need housing assistance, not just the middle class. Middle class is a broad category and some in that group have plenty of resources (this is a little different in high housing cost areas). Housing is foundational need as good stable shelter is connected to a number of other positive outcomes. If this money is aimed at the middle class, will it go to educated young professionals or older downsizers (as it sometimes discussed in suburban communities)? Or, would it be more needed for those who work lower-wage wages or have fewer family and community resources to draw on?

Perhaps the devil is in the details and where exactly this money goes. Or, middle-class here is intentionally broad as many Americans like to think of themselves even if their circumstances suggest they are not and some Americans are averse to resources directed to narrower groups. Regardless, if the plan comes to fruition, it will be worth seeing whether these efforts can make a significant dent in the affordable housing needs in the United States.

“Dream Hoarders” in exclusive locations

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The 2018 book Dream Hoarders connects the actions of the top 20% in income to where they live and how they control who lives near them. Excerpts from the book:

https://www.brookings.edu/book/dream-hoarders/

The physical segregation of the upper middle class noted in chapter 2 is, for the most part, not the result of the free workings of the housing market. This inverse ghettoization is a product of a complex web of local rules and regulations regarding the use of land. The rise of “exclusionary zoning,” designed to protect the home values, schools, and neighborhoods of the affluent, has badly distorted the American property market. As Lee Anne Fennell points out, these rules have become “a central organizing feature in American metropolitan life.” (102)

Zoning ordinances, which began life as explicitly racist tools, have become important mechanisms for incorporating class divisions into urban physical geographies. This is not a partisan point. If anything, zoning is more exclusionary in liberal cities. (103)

So, those of us with high earnings are able to convert our income into wealth through the housing market, with assistance from the tax code. We then become highly defensive – almost paranoid – about the value of our property and turn to local policies, especially exclusionary zoning ordinances, to fend off any encroachment by lower-income citizens and even the slightest risk to the desirability of our neighborhoods. These exclusionary processes rarely require us to confront public criticism or judgment. They take place quietly and politely in municipal offices and usually simply require us to defend the status quo. (106)

There are numerous connections in this section to earlier posts. Here are a few:

–One of the reasons Americans love suburbs is that suburban life allowed for excluding people they do not want to live near.

–There is bipartisan white suburban support for homes rather than apartments.

-Housing rarely comes up in national political conversations. It may get a few minutes at debates or occasionally come up in trying to appeal to some voters.

-Tackling this at the state (example of California) or local level is difficult (example of Naperville, Illinois and suburban New Jersey).

In sum, it is hard to understand the life of wealthier Americans without also addressing how this wealth and the opportunities that come with it are closely connected to particular locations.

Best sociological finding I heard at ASA 2019

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Not surprisingly, the most interesting sociological finding I heard at the annual ASA meetings this past weekend involved research into suburban life. More specifically, Weininger and Lareau looked at how middle-class parents choose where to live:

ASAsession19

As they explained in their presentation, we might imagine these relatively educated and well-off families would look at all sorts of data regarding neighborhoods, compare their relative merits, and then choose one. Instead, they found these families would rely on limited vouching for particular locations from ties in their social networks – sometimes fairly weak ties – and then make decisions based on that. This could even occasionally lead to mistakes.

I look forward to hearing more about how this all works and what this leads to. There is interesting material to consider here including:

-What if there are conflicting network recommendations (either different preferred locations or different opinions on the same location)?

-How does the process change when the respondents do or do not have much local knowledge of the communities they are considering?

-Does this effect hold for middle-class residents of different racial and ethnic groups?

-Can networks help people move into more hetereogeneous locations or do they primarily help reinforce homogeneity?

More upper middle class Americans are renting rather than owning

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Homeownership is down in recent years in the United States (with a recent uptick) and this has affected even among relatively high-income earners:

Families such as the Bauerles who want to live in solid middle-class neighborhoods with good schools and reasonable commutes are increasingly renting single-family homes. Taking advantage of this trend, the private-equity firm Blackstone Group Inc., with other investors, launched a business that is now the nation’s largest renter of single-family houses.

The number of households that have inflation-adjusted annual incomes of $100,000 or greater but are renters nearly doubled from 2006 to 2016, according to the Joint Center for Housing Studies of Harvard University.

Domonic Purviance, a senior financial specialist at the Federal Reserve Bank of Atlanta, said people earning the median income can no longer afford the median-priced new home, costing $323,000 last year, and barely have the means to buy the median existing home, which now about $278,000.

The overall focus of the article in on the major sources of debt facing middle-class families today: housing, student loans, and cars. Out of this trio, the suggestion is that mortgage debt may come last out of these three. Many believe they need a college education (at least) for decent jobs and to maximize their earnings. A car loan is often a top priority as driving is necessary in many locations. Even if the majority of Americans desire to own a home, they can put that off until later.

Hence, renting is on the rise. This raises two big questions in my mind:

1. It could be interesting to see in the next few decades how upper middle class residents react to not having as easy access to homeownership. Will it turn them off to owning? Will they feel resentment and, if so, who do they think is to blame? Will this change spread to other groups since the upper middle class is one hat others would aspire to?

2. For the middle class and above, renting is often viewed negatively, particularly in wealthier communities. The perception is that renters are less invested in their community and property. If more people of means rent single-family homes instead of own them, could perceptions change?

Defining middle class in an era of economic uncertainty

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Understanding the middle class requires looking not just at resources but also how the middle-class life is lived:

By the 1990s, the world that Mills had documented was coming apart as corporate downsizing and disinvestment upended the neat equation of secure work and praiseworthy home life. Social thinkers writing in that decade, including the sociologist Katherine Newman and the journalist Barbara Ehrenreich, followed Mills in charting the social and psychological shape of that in-between class. But they found that loss had replaced dependency as the most conspicuous feeling associated with middling workers’ place in the hierarchy.

Today anguish over lost social standing has, in turn, been replaced by a pervasive sense of insecurity…

Aspiring to stability and respectability today means not only navigating the landscape of eroded and contingent work, but of managing debts. Trying to give children a shot, parents take on financial burdens that can destabilize their own future security.

Class has always been partly about income, but debt is now an equal component of the middle-class story, leading to a central paradox of aspirational lives: Striving for stability and respectability means inhabiting insecurity both socially and psychologically. Economic metrics alone can only tell a shallow story, but at the very least, debt should join income in any attempt at definition.

If this is true, perhaps social class should be accompanied by a different sort of measure. Here are a few options:

  1. Economic security or economic insecurity. Perhaps there would be a certain bar to meet – having a certain amount of savings, the ability to find another job, or something else.
  2. Some measure of anxiety or well-being about current economic conditions.

Two households with similar sets of resources could be quite different on these measures based on the particulars of certain jobs, family situations, debt, etc.

The biggest downsides to such measures could be that they remove the baselines that social class measures often have as well as affect the value judgments made about social class. We know that less income or lower wealth matters; a household with $20,000 of income is going to be different than one with $100,000. (Yes, this could be contextual based on cost of living.) But, if we start including some measures of the lived experience of class, is there a baseline? Similarly, what if financial measures were similar for two groups but one group had a higher level of anxiety or insecurity; would researchers and pundits be quick to judge whether that anxiety is justified?

Of course, if the insecurity/anxiety questions are asked alongside more traditional measures of social class, researchers can look at the relationships and determine what a consistent and valid measure of social class should be.

Researchers say half the world is middle class or higher

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A new report suggests a majority of humans are middle class or above:

For the first time since agriculture-based civilization began 10,000 years ago, the majority of humankind is no longer poor or vulnerable to falling into poverty. By our calculations, as of this month, just over 50 percent of the world’s population, or some 3.8 billion people, live in households with enough discretionary expenditure to be considered “middle class” or “rich.” About the same number of people are living in households that are poor or vulnerable to poverty. So September 2018 marks a global tipping point. After this, for the first time ever, the poor and vulnerable will no longer be a majority in the world. Barring some unfortunate global economic setback, this marks the start of a new era of a middle-class majority.

We make these claims based on a classification of households into those in extreme poverty (households spending below $1.90 per person per day) and those in the middle class (households spending $11-110 per day per person in 2011 purchasing power parity, or PPP). Two other groups round out our classification: vulnerable households fall between those in poverty and the middle class; and those who are at the top of the distribution who are classified as “rich.”

The consequences could be interesting:

Why does it matter that a middle-class tipping point has been reached and that the middle class is the most rapidly growing segment of the global income distribution? Because the middle class drive demand in the global economy and because the middle class are far more demanding of their governments…

In most countries, there is a clear relationship between the fate of the middle class and the happiness of the population. According to the Gallup World Poll, new entrants into the middle class are noticeably happier than those stuck in poverty or in vulnerable households. Conversely, individuals in countries where the middle class is shrinking report greater degrees of personal stress. The middle class also puts pressure on governments to perform better. They look to their governments to provide affordable housing, education, and universal health care. They rely on public safety nets to help them in sickness, unemployment or old age. But they resist efforts of governments to impose taxes to pay the bills. This complicates the politics of middle-class societies, so they range from autocratic to liberal democracies. Many advanced and middle-income countries today are struggling to find a set of politics that can satisfy a broad middle-class majority.

There are multiple issues to consider here: how all of this is measured, whether the majority is relatively evenly spread across countries or is concentrated in certain areas, and what this might bring.

But, I will point to another feature of this study: it suggests relatively good news. For much of human history, larger-scale collectives – from kingdoms to empires to countries – have consisted of some elites, perhaps a limited middle class, and a larger poor and working-class population. If these figures are true, more people have access to resources and opportunities to do things.

This would fit nicely with some materials I have heard in recent years about a good amount of good news about the global system. On one hand, there are still major problems and sizable poor and vulnerable populations (the less well-off half in this study). On the other hand, global health is improving, economic conditions on the whole are improving, violence is down (in relative terms), and people around the world may be paying attention to the plight of others like never before.

Perhaps this is why even Google has ways of providing some of good news. Even if much news revolves around problems, there is plenty of good news to find.

Why Americans love suburbs #4: middle-class utopia

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If race and ethnicity in the suburbs has often served to keep residents out, the more inclusive message of the American suburbs is this: it is a place where the middle-class can live a good life. Of course, there are issues with this, including numerous exclusive wealthy communities as well as a lack of affordable housing or rental units for those who are not quite middle-class. Yet, the suburban life is held up as both attainable and ideal for the American middle-class.

It wasn’t always this way. Early suburbanites had to have the resources to make it back and forth to the city. This changed with the numerous transportation inventions (railroads, streetcars, electric lines) that steadily brought the costs of traveling in and out of the city down as well as led to the development of more land outside the city. With other developments, particularly the quick spread of cars and highways and mortgages with fewer upfront barriers, the suburbs became the space for the middle-class by the 1950s.

The key to the middle-class suburban dream is its affordability. The typical logic is that the farther a family moves from the big city, the cheaper and bigger the home can be. This explanation echoes the Chicago School and the concentric rings model developed by Burgess: land is more expensive in the city center and the progressively cheaper in zones further from the city. While moving further from the city has its costs (owning and maintaining a car is not cheap, the costs of providing city services in a sprawling location can be pricey), the goal is to get a sizable home.

This middle-class paradise has drawn its share of critics due to its mass-produced nature, lack of highbrow taste and sophistication, and façade of pleasantness that supposedly hides all sorts of sordid activity. Particularly in comparison to lively urban neighborhoods, the suburban middle-class life is often portrayed as dull if not outright oppressive. My favorite response to this is in sociologist Bennett Berger’s 1960 study of a working-class California suburb:

The critic waves the prophet’s long and accusing finger and warns: ‘You may think you’re happy, you smug and prosperous striver, but I tell you that the anxieties of status mobility are too much; they impoverish you psychologically, they alienate you from your family’; and so on. And the suburbanite looks at his new house, his new car, his new freezer, his lawn and patio, and, to be sure, his good credit, and scratches his head bewildered. (103)

Almost sixty years later, this rings true: many Americans still believe their suburban home full of stuff makes for a good life.

Protecting this middle-class land can be quite a task. Suburbanites are often opposed to new development near their homes, smaller housing, apartments, or affordable housing that could possibly lower their property values and threaten the middle-class character of the community. Some of the concern with people of difference races and ethnicities involves class. As anthropologist Rachel Heiman suggests, there is plenty of class-based anxiety in the suburbs, even in better-off ones. Open conflict should be avoided even as social control is desirable. The rise of homeowner’s associations to help police the actions of neighbors through a third party is one way to keep nearby residents in line.

For a society where the vast majority of citizens say they are middle-class (recent data here and here), the suburbs are the primary geographic and social space for middle-class lives. Obtaining a suburban single-family home still signals a middle-class life.

“[American] Dream Hoarders”

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A Brookings Institution scholar examines the upper-middle class and how their choices separate themselves from the middle class:

A great, short book by Richard V. Reeves of the Brookings Institution helps to flesh out why these stories provoke such rage. In Dream Hoarders, released this week, Reeves agrees that the 20 percent are not the one percent: The higher you go up the income or wealth distribution, the bigger the gains made in the past three or four decades. Still, the top quintile of earners—those making more than roughly $112,000 a year—have been big beneficiaries of the country’s growth. To make matters worse, this group of Americans engages in a variety of practices that don’t just help their families, but harm the other 80 percent of Americans…

The book traces the way that the upper-middle class has pulled away from the middle class and the poor on five dimensions: income and wealth, educational attainment, family structure, geography, and health and longevity. The top 20 percent of earners might not have seen the kinds of income gains made by the top one percent and America’s billionaires. Still, their wage and investment increases have proven sizable. They dominate the country’s top colleges, sequester themselves in wealthy neighborhoods with excellent public schools and public services, and enjoy healthy bodies and long lives. “It would be an exaggeration to say that the upper-middle class is full of gluten-avoiding, normal-BMI joggers who are only marginally more likely to smoke a cigarette than to hit their children,” Reeves writes. “But it would be just that—an exaggeration, not a fiction.”

They then pass those advantages onto their children, with parents placing a “glass floor” under their kids. They ensure they grow up in nice zip codes, provide social connections that make a difference when entering the labor force, help with internships, aid with tuition and home-buying, and schmooze with college admissions officers. All the while, they support policies and practices that protect their economic position and prevent poorer kids from climbing the income ladder: legacy admissions, the preferential tax treatment of investment income, 529 college savings plans, exclusionary zoning, occupational licensing, and restrictions on the immigration of white-collar professionals.

As a result, America is becoming a class-based society, more like fin-de-siècle England than most would care to admit, Reeves argues. Higher income kids stay up at the sticky top of the income distribution. Lower income kids stay down at the bottom. The one percent have well and truly trounced the 99 percent, but the 20 percent have done their part to immiserate the 80 percent, as well—an arguably more relevant but less recognized class distinction.

The anxiety of being upper middle class: never quite wealthy enough to have all the goods and experiences of the highest group and always striving to stay above the normal/middle people.

Four quick thoughts:

  1. There is a certain lifestyle to be had here. See, my post a few days ago about a healthy lifestyle may have had some merit…
  2. As described here, many of the efforts appear aimed at avoiding downward mobility. In other words, there is some point in income, education, and lifestyle that cannot be crossed going the wrong way. But, there must be people who have this happen through events like losing a job or a major illness. What happens to them? For the “average” upper middle class person, what really are the odds that they would fall down a rung?
  3. There is a suggestion from the author that Americans shouldn’t and/or can’t just ask the 1% to sacrifice; the top 20% need to sacrifice as well. To put it mildly, this would not go over well. Given their anxieties as well as their tendencies to pull up the bridge after crossing the moat, efforts like affordable housing or school integration or significant increases in taxes will be met with opposition. They would use the rhetoric of the middle class – “we worked hard to get here – anyone could do it” – while pushing hard to protect their own status.
  4. Is the ultimate goal of this group to become truly wealthy? Most of them won’t have that opportunity and must know it. Or, is the goal is to simply not be middle class and have some more advantages than most people? Perhaps it really is about the children: is this the group that more than any other tries to give their kids every advantage as a supposed act of sacrifice?