The middle class in America is in a hard place

[MillCreek]

https://www.vox.com/the-goods/22166381/hollow-middle-class-american-dream

I have believed for many a year that one of the superhighways to American prosperity are economic/governmental policies that support the growth of a large middle-class that spends money. Economic policies that concentrate more and more non-productive wealth at the apex of the pyramid or lead to the demise of middle-class jobs do not generally assist the middle-class.

[Nick1911]

I've typed up a few different replies to this, but think I'll leave it at this:

A lot of this article is sad but true, and I see a lot of it in my daily life.  I've managed to avoid this myself, despite being middle class.

[JN01]

I think a lot of the problems are self inflicted:

There’s also the difficulty of significantly shifting your family’s consumption patterns. Once set, many find it impossible to change their own expectations for vacations, activities, and schooling — let alone those of their partners or children. Why? Because the middle class is spectacularly bad at talking honestly about money. Readily available credit facilitates our worst habits, our most convenient lies, our most cowardly selves.

People want it all, and they want it now.  There are expectations of being entertained every minute of the day. Kids have to be involved in every sport, club, or other activity.  Saying no once in a while might help to stay on a budget.

If you don’t have scholarships or grants, then perhaps waiting or finding an alternative to college would be a better option.  If you do go to college and major in something that is “fun” but doesn’t provide you with any marketable skills, don’t cry about having no job and huge loan debts.

Health care and prescription drugs are probably the biggest uncontrollable expense for everyone, but part of those problems are due to unhealthy choices.

Most of the world’s people live much harder lives than most Americans. In spite of all our problems, we are pretty lucky.

[Nick1911]

I think a lot of the problems are self inflicted

Well, yes ultimately.  In that each person makes their own decisions with their money.  But that's not a particularly insightful view into why people make the choices they do.  Many people find themselves underwater.  Sure, it's because they are spending more than they take in.  Most don't take steps to fix it.  Why?

I think as an outsider without these issues, it's easy to look in and say "Well duh, have some self discipline and spend less money."  "You're fat?  Have some self discipline and eat less calories, obviously."  But, there are many factors that lead to people having made bad decisions, and continuing to do so in the future.  If we want to understand the choices they make, we need to dig a little deeper.

The article suggests in part that even as the middle class shrinks away, people in it have much of their identity tied to being middle class and accepting that your socioeconomic status is falling is very shameful and emotionally tumultuous.  Because of that, folks attempt to continue to live the perceived middle class lifestyle, even to their own financial ruin.  Financial ruin is less objectionable than accepting and admitting that despite a college education and a good career, they do not have the same standard of living that the same would have bought your parents.  To them, it feels like a personal failing, not a symptom of the economic realities they live within.

[dogmush]

The other question is what do we do about it?

If you suddenly cut off access to easy credit a bunch of folks are going to realize they are poor, and likely be unhappy about it.  We've talked a lot on here, and in society writ large, about college debt but it seems like everyone locks onto "Make the taxpayers pay it" instead of addressing the actual problem that due to decades of subsidies many college degrees cost significantly more than they are worth (in terms of economic gain via a good job). As long as we allow students to take on 150k-200k in debt to qualify  for a 50k/yr job, they will have problems paying that back.

School choice/vouchers would help the private elementary and secondary education  costs, but some powerful lobbies are against that.

Car loans are their own issue, but everyone driving expensive cars has it's own layered set of causes, not all of which are people "needing" an expensive ride.

Health Care in America is very good, but very very expensive. We are clearly unsure how to lower costs without impacting quality.


So yeah, the middle class is in a bad place. But what do we do about it?

[Ron]

Fix yourself and then encourage your loved ones and friends to fix themselves.

Most of the country is very "fragile" financially. Very little ability to withstand a big unforseen shock.

Make yourself robust. Trade fragility for robustness.

"Poorer" with no debt and peace of mind beats "rich" with high debt and anxiety any day.

https://www.daveramsey.com/get-started?snid=home.takecontrol

http://www.bobbrinker.com/

[Kingcreek]

We are on pretty solid ground but my stepdaughter and her husband are living in a big nice house, have too many vehicles and boats and a secondary weekend place on a lake. And probably little or no savings.
She would be better but SIL spends money like crazy without even consulting her. He was fooling around on the internet and said “pack your bags” she asked why and he said he just bought a 1 week Hawaii vacation package and their flight was to leave in 3 hours!
Their combined income is at least double what we make. Their net worth is probably less than my annual income.

[RocketMan]

One of the big contributors is the high inflation not being reported.  Government crafts low inflation numbers by carefully selecting the items reported into core inflation.  They purposefully ignore foodstuffs, calling that category too "volatile", and yet it is a major chunk of every middle class budget.  Falling package quantities to hide price increases are glaringly apparent to anyone shopping for groceries and household items.

[MillCreek]

I look at my parents: Dad came home from being a Corsair pilot in WWII and went to school on the GI Bill. He married my mother in 1948, the first kid arrived in 1950 and my mom left the workforce.  They moved to Seattle in 1950, and he spent the next 40 years in the engineering workforce at Boeing.  A solid middle-class life based on one income.  When he retired in 1990, their yearly income from Social Security and his SPEEA pension from Boeing was about 2/3rds of his last annual salary from Boeing.

My wife and I are well off by any measure but it has taken both of us working hard and a lot of luck to reach that status. I think my parents had it easier than we do, and I don't think our retirement is as assured as theirs.

[charby]

I read the article..  the part that really bothered me is this.

They’re also paying private school tuition for their two daughters, which takes up a “huge chunk” of their income. They could pull their kids from private school and put them in public, but the kids have made their friends, and Delia’s intent on giving them the opportunity to get out of the same claustrophobic town where she grew up.

“If the girls want to come back and live here, that’s fine,” Delia explained. “But I want them to be able to write their own story and invent themselves as they see fit. Private school might give them access to better colleges, by which I mean better job opportunities or travel opportunities or meeting-different-people opportunities.”

No pull your kids out of private school, send them to public, be a good parent to them at home. They will end up on the right path in adulthood.

[MillCreek]

https://www.usnews.com/news/best-states/articles/2020-12-24/heres-what-the-middle-class-earns-in-your-state

Some recent data on the middle-class income range for each state.  The cost of living in each state is the primary driver of what income is considered middle class.

[dogmush]

https://www.usnews.com/news/best-states/articles/2020-12-24/heres-what-the-middle-class-earns-in-your-state

Some recent data on the middle-class income range for each state.  The cost of living in each state is the primary driver of what income is considered middle class.

Those are some pretty wide bands.  Also, at least in FL, living on $26k would be pretty grim.  Not sure I'd call that comfortable middle class.

[Boomhauer]

https://www.usnews.com/news/best-states/articles/2020-12-24/heres-what-the-middle-class-earns-in-your-state

Some recent data on the middle-class income range for each state.  The cost of living in each state is the primary driver of what income is considered middle class.

Those bands make no sense at all.

[Ben]

Those are some pretty wide bands.  Also, at least in FL, living on $26k would be pretty grim.  Not sure I'd call that comfortable middle class.

That was my first thought. The $20-$30K range isn't really middle class anywhere in the country, even here in Idaho, which appears to have some of the lowest numbers on the list. Especially if it's a family.

I hate to use something Obama-ish, but maybe a good lower cutoff for middle class is that $38K or whatever that cuts people off the Obamacare.

[Boomhauer]

Here in SC the low end of the middle class is $40-$50k.

What’s really killing us is taxes, especially federal taxes. If I had no taxes I’d bring home a good bit more each paycheck. And Obamacare is some bullshit it costs me $250 a month for health insurance for just me. If I added my wife to my plan it would balloon to $700 a month. I’d love to be able to kick the *expletive deleted*it out of anyone who says Obamacare is a good thing.

And that doesn’t even get to my property taxes on my house and cars

[Kingcreek]

Here in SC the low end of the middle class is $40-$50k.

What’s really killing us is taxes, especially federal taxes. If I had no taxes I’d bring home a good bit more each paycheck. And Obamacare is some bullshit it costs me $250 a month for health insurance for just me. If I added my wife to my plan it would balloon to $700 a month. I’d love to be able to kick the *expletive deleted*it out of anyone who says Obamacare is a good thing.

And that doesn’t even get to my property taxes on my house and cars

My $6500 deductible HSA qualified health insurance plan is $700 per month. One person. Me alone.
Property taxes are crazy high because a broke state shifted the burden for many things to local government and still raised state sales and income taxes and fees on everything.

[MillCreek]

A real estate listing popped up in my Facebook feed:

Single bedroom, 3/4 bath condo, 443 square feet on Queen Anne (an upscale part of downtown Seattle) for $ 366,000.  Built in 2001, includes one parking spot and the pictures of the building and the unit are nothing special.  But it is close to the downtown core and the tech centers, so I bet it will sell quickly, even at $826/square foot.

[Boomhauer]

But is it CHAZ adjacent?

[lee n. field]

https://www.usnews.com/news/best-states/articles/2020-12-24/heres-what-the-middle-class-earns-in-your-state

Some recent data on the middle-class income range for each state.  The cost of living in each state is the primary driver of what income is considered middle class.

As others have noted, the low edge numbers are insane.  You'll be able to feed yourself, have a room to park your stuff, and maybe an old beater car you'll be paying on for 4 more years.

[RoadKingLarry]

A good many of those low end numbers are below the US "poverty line" for a family of 3.

https://20somethingfinance.com/what-is-the-united-states-poverty-line/