One of the great mythologies of unregulated, late-stage capitalism is the aphorism “A rising tide lifts all boats.” It is decidedly not true. Some of the least sympathetic figures in our current economic climate are well-to-do individuals who are not superrich and definitely not ultra-wealthy, but bitch and moan about how average they are. The median annual household salary is somewhere just above $60,000; but the cost of living has risen, as have the costs of health care, and no one can afford to save anything. Almost two-thirds of Americans cannot afford to handle a $500 emergency.
“Economically conservative” Americans, in their Ayn Randian delusion, believe that they are one big payday away from leaving behind all of their economic worries. Unfortunately, while there used to be something like an attainable middle class to aspire to, those days are over. In fact, as the Financial Samurai website explains, a big problem for people making “10x the median household income” in big cities like New York City is becoming intoxicated by “big bucks,” only to find themselves living “paycheck-to-paycheck” and “scraping by.” According to the Samurai, a couple with two children, making around $500,000 a year, have a lot of expenses. This is not a hypothetical couple; according to the Financial Samurai, they are “a real couple who shared with me their financial details to anonymously share with you.”
The Samurai sets the net salary of this family at $278,400. This is after the maximum contributions to both adults’ 401(k)s are met, and a 40% effective tax rate is applied. From there, here are a few of those expenses.
- Child care for two children: $42,000
- Food (including twice monthly date nights): $23,000
- Mortgage: $60,000
- Home maintenance: $5,000
- Property taxes on $1.5 million home: $20,000
The list goes on, with gas and car payments for a BMW and an SUV. There’s $18,000 for three yearly family vacations. There are student loan payments, because you don’t become a lawyer making $250k in your 30s without a little bit of fancy school and the debt that comes with it. The Samurai also includes charity donations and lessons for the kids in music or sports or dancing. A modest amount is also spent on clothing for everyone—$9,500. In the end, this couple is left with a paltry $7,300 each year to do with as they please.
Since this is a finance story, the important thing is that they need to save this money! One of the great absurdities to watch is financial news outlets, filled with experts, telling everybody to consume consume consume, and then admonishing everybody about how they need to be responsible and save save save. It’s a difficult and amnesiac cloud to live in, but these financial “experts” have the short-term memories of guppies! CNBC calls this couple’s financial woes “lifestyle creep,” which must mean something about increasing your lifestyle costs too quickly for your means.
It’s easy to get bent out of shape about these very privileged folks, as well as this couple who only make $180,000 a year but still feel like the poors. But there is something very important to remember here: The world we are supposed to be living in, as well as the bogus economic American dream that we are all supposed to have access to, is disappearing for everyone but the .01 percent. Economic inequality doesn’t simply mean that most people have no money; it means that the richest in our society collect so much of the definable wealth that anything not approaching it is rendered almost worthless.
For the sake of argument, I’m not going to point out that there were no medical costs or insurance costs in this budget. I will also not bring up the reality that sending the kids to public schools or having subsidized early child care would solve lots of problems—even for people making $500,000. The fact is that even with all things being decidedly unequal, even the people winning in our country are losing. The only reason to make $500,000 is so that you can comfortably take three vacations a year, can afford to have two family cars, and can afford a home and enrichment programs for your children while still saving tons for retirement and investment. In the past, being modestly wealthy like this would allow you to easily save for college and live in a big city like New York. And before you tell them to move, remember that not every job can be telecommuted to, and being a lawyer in New York City usually means you have to be a lawyer working in a building in New York City.
All of this is not to sympathize or empathize with wealthy people who cry about taxes, and don’t want to give money to public schools. It’s to point out that the income inequality we are dealing with—at historic levels—means that nobody can get ahead ... except those people living in the tallest towers.