www.businessinsider.com/inflation-cost-of-living-what-is-middle-class-housing-market-2024-4?amp
Inflation is scrambling Americans' perceptions of middle class life. Many Americans have come to feel that a middle-class lifestyle is out of reach.
DiscussionMy car is more than 20 years old. I don't feel like I can afford a new one or even new used. So I rarely drive.
Having an older car isn't necessarily a bad thing. My newest vehicle is 23 years old. Maintenance is WAY cheaper
Keeping a car that you’ve maintained well for 20+ years is great, but buying a used car to save money is hit or miss.
I’m knocking on wood to say that my most recent purchase of a 20 year old car is working out great, but the two prior to that were money puts of repairs. Sometimes you can’t tell what you’ve got until you’ve driven it a few thousand miles. Not the case buying new.
Keeping older cars isn’t necessarily a bad thing. As long as it is safe, reliable and has a lower cost of ownership than new it makes sense to keep. Americans addiction to new vehicles with cars representing personal identity is toxic. For what is effectively an appliance it is a huge drag on middle class wealth.
What are the companies going to do when no one buys their products or services anymore?
Many of them will still have customers, they just won’t be middle class. Expect to see products move upscale for the customers that can afford them.
The auto industry has found that, pretty universally, the best bang-for-but (profit-wise) is with the highest-price-point cars, and the most-affordable cars are the ones with the tightest, most just-barely-breaking-even margins.
Dunno if that's true elsewhere, but in an increasingly "only the rich have fun-money" world, it makes sense that makers of nice things will increasingly prioritize the rich.
I have a knee-jerk dislike of the sound of "big government" but holy cow could this nation use another round of anti-trust-law type oligopoly-breakups.
Google controls the vast majority of internet searches, Microsoft and Apple control virtually all computers and phones, Tyson, P&G, and Unilever make nearly everything sold in groceries... that's all great for profits but bad for people, and it's only going to get worse if left to its own devices.
For a little while we might have some real international consumer product competition. For example, products from Mexico or India that aren’t just the same old conglomerates, but actually different conglomerates.
It worked in the 1970s when Japanese car-makers (big Japanese conglomerates) came into the U.S. markets and competed on quality and price, forcing the American car makers to vastly improve (after they tried every other option first, of course).
It'll be interesting to see the new Chinese EVs whenever they're made to US spec. I know that there are some elsewhere in the world, and I'd love to see that shake up the industry here.
Hopefully they're not tariffed to hell like foreign-made properly-small trucks were with the WW2-era "Chicken Tax."
Yeah, we need significantly more restrictions on the stock market and how it functions. We also need a lot more transparency in the checkout lane as to who owns the company of the products you are buying. Subsidiary brands need to have clear identifying umbrella brands(lookin at you Nestle) on the front of the package.
The SEC is trying to implement a system that allows them to police the market and thwart fraudulent trades... but citadel is tying to stop them because they have been manipulating the market in their favor.. so we will see at the end of the month when it goes live
Not to mention the absurd consolidation among banks over the past 15 years
Dunno if that's true elsewhere, but in an increasingly "only the rich have fun-money" world, it makes sense that makers of nice things will increasingly prioritize the rich.
Except this is not the case because even though the top 10% might earn a disporportionate amount of income, they are not buying an equally disporportionate amount of consumables.
Companies will always be marketing to a wide range of demographics. And if that ever isn't the case, it is a prime opportunity for one of them to start doing it and seize a market share. Cheaper cars might have less margin but the volume is way higher and there are also other ways to get a return such as involvement in the lifecycle (selling the parts and repairs).
I think CEO and executive salaries/bonuses need to be capped. We need a big overhaul of business and wealth distribution.
If it were up to me, the executives of any company would not be paid more than 100 times the lowest-paid employee in terms of total compensation. No exceptions. If the lowliest janitor makes $15,000 a year, then the CEO shouldn't be given more than $1.5 million.
And there shouldn't be any stock or stock options in that compensation. Only actual money.
would not be paid more than 100 times the lowest-paid employee in terms of total compensation.
I can say with absolute certainty that this would result in companies laying off all their lowest paid direct employees and forcing them to come back as third party contractors. (So they are still W2 employees, but for a contracting vendor instead of direct FTE.)
Absolutely correct! This is the USA, the land of the free. Keep the government OFF my back and let me prosper if I’m able to. This is called capitalism. It’s Never been popular with the working class. I was raised lower middle class. Both my mom and my dad had wage paying jobs, and were thankful for them. I worked throughout 7 years of college, but my mom and dad helped with the first 4. The JD was up to me. And boy, did I prosper !!! Enjoying retirement now.
Eh disagree about the stock. At least for publicly traded companies. No reason you couldn’t do $1M base salary with $500k in RSUs. Hell with RSUs they could even lose money over the vestment period. I agree probably not options though because they don’t carry the same downside risk as straight equity comp
Japan and a few US companies used to have this. Japan I think called theirs a "maximum ratio" and it was 20 times the lowest-paid worker in the same company. Ben & Jerry's in the USA used to have this as well.
Most janitors and almost all none core functions are subcontracted. So the janitor would need to not eat more than 100 times the ceo of X janitor services. Typically small outfits with under 100 employees. Same with relocation, food service, some It etc. even HR and CMO marking departments are subcontracted.
They would get around this the same way they currently get around taxes - by taking a low six-figure salary and having the vast majority of their compensation be stock that they can just use as collateral for extremely low interest loans.
I think wealth should be capped. Once you get to a billion $ in assets, you get an "i won capitalism" trophy.
It's disgusting how some people have so much, and others are struggling so much just to afford to live.
People are working on limiting executive compensation, and if you think for a second they're going to distribute that money to lower-level workers, you're dead wrong. They'll eliminate the last sliver of a chance working people have at economic mobility and pocket the profits.
All the companies you stated in your last paragraph sleep in the same bed as the government. They all conspire against the 99%. They'd rather us be obedient slaves than "free" people. We'd have to see a civil war and, unfortunately, a lot of casualties before we see any change for the better for us; the 99%.
It’s almost like monopolies and duopolies have too much pricing power and are using inflation as an excuse to just raise prices as far as they can. No competition and the fact that you can’t live without a car, gas, an apartment, and food means the prices of these things will go up until people die in such large numbers that it impacts bottom lines
(Or government programs get adjusted to reflect the $30-per-hour prevailing cost of being alive. lol)
Same for luxury condos and apartments. Regulations drive the cost up so much you can't make money building low-income housing.
I don't agree that its 'regulations' driving up costs so much as profit concerns and returns for the investors that fund developers. Why build low income housing when you can make so much more by slapping on some nice finishes and calling it luxury- and pricing accordingly? And the landlords/mangement companies that buy these properties use them as tax write-offs if they sit empty.
Having units sit empty is pretty much the worst case scenario for an apartment owner. It loses them money, not saves it.
Some of it though is choice and some of that is buy outs and I think they are different. Google/Microsoft, Apple have competitors, they are just not that good so people don't buy them. You could use Bing, you could use Linux, you could buy a Motorola phone, but the consumers have chosen otherwise.
Now Tyson/P&G etc have bought their competition, thats very different, they have purposefully gotten rid of competition and thats where the Govt should have stepped in and stopped the mergers to begin with.
What we have today is price setting cartels under the guise of “market competition” with one another. If they were truly competitors, price gouging would be more difficult.
holy cow could this nation use another round of anti-trust-law type oligopoly-breakups.
I feel like that is being tested right now with the current antitrust trial against Google. If that succeeds, then expect more of the same. If it fails, that doesn't really bode well for the other suits against Apple, Meta, and Amazon, much less anti-trust actions in other industries.
The car thing...
Someone will come along with an affordable car again, likely electric (fewer moving parts) and will wipe the floor with the greedy auto makers.
The answer may well be some kind of electric trike (technically a motorcycle).
If a large swath of the population has no access to decent public transit and full on automobiles become out of reach, someone will fill the gap and make a fortune.
"Cater to the classes, eat with the masses. Cater to the masses, eat with the classes."
This is 100% true with cars and it’s the first thing I thought of, Chrysler in particular. They don’t have a cheap option anymore, even Chevy kept the Malibu, which while not exactly cheap, is doable. Ford’s bread and butter in the F150 so I think they’ll be fine. But Chrysler discontinuing the Charger is a HUGE mistake.
Unfortunately I don’t think the $800 car payments are going away anytime soon. The problem is really going to hit when poor people can’t get loans on more expensive cars and there’s no cheap option available.
Google also controls an amazing amount of phones. More than apple does.
Only if the last one broken up is the fed.
I agree. We have anti trust laws … they just aren’t enforced
I have a knee-jerk dislike of the sound of "big government"
I think if most people recognized that;
1. that knee-jerk reaction to "big government" is actually a reaction to concentrated and unaccountable power and;
2. that wealth is a power unto itself;
our country might have a much different disposition towards the rich and their vehicles of enrichment.
Most people would be surprised at just how many wealthy people there are that can pay the higher prices without a second thought.
The middle class is shrinking, but it’s shrinking at both ends. This matters because as people become wealthier, they care less about their communities and are more likely to support individualist policies and social norms. This just makes life harder for the less wealthy.
Paywall
Can't wait for McDonald's to become a luxury brand
Like Ford trucks wtf
People really have a hard time understanding this.
It's not just the 1% and the 0.0001%. The whole top 20 - 25% have only done better and better over the last few decades while the rest of us get poorer. That's who can still spend money.
Why do you think consumer magazines and review websites advise "entry level" products that cost $1,900 and think you can pay $95 for T-shirts? It's not for regular people who can barely rent an apartment and pay for healthcare at the same time. It's for the 1 in 4 people who still have money, who if anything have too much money.
It's not just the 1% and the 0.0001%. The whole top 20 - 25% have only done better and better over the last few decades while the rest of us get poorer.
This exactly but there is extreme cognitive dissonance among higher-income professionals. You adjust to raises and most Americans end up living in neighborhoods that "fit their income" so 90% of people end up identifying as middle-income because everyone around them makes the same.
The 0.0001% is absolutely irrelevant. It is politically and socially relevant but none of the wild suggestions people make on how to "handle" them are realistic or would provide for the general public. The top 25% can provide far greater tax revenue, has the bulk of property/wealth, and has the highest potential to build wealth.
This is already happening
I saw an article a while back (which I’m sadly struggling to find) about how the American class is likely to be priced out of global markets for mass affluent luxury goods as their spending power decreases relative to the rest of the world. The example the author cited was business class air travel (not private jets, which wouldn’t have been in reach anyway). That seems like the future you’re envisioning as well.
This is absolutely horseshit just based on the strength of the USD compared to basically every other foreign currency. Most of these luxury goods are even more expensive globally than they are in the US (barring weird things like places where foreigners don't pay VAT).
You're a moron if you think the middle class in Europe is actually flying business class when they have to pay for it lol.
The argument isn’t that the middle class in Europe is / will be buying luxury goods, it’s that the upper class of poor / middle income countries - think “crazy rich Asians” - will be buying those luxury goods instead of Americans. The American upper class might still be the very richest, but slightly less wealthy Americans would be pushed down the ladder and luxury good/service providers would be less interested in catering to them.
The argument is also not about whether it’s cheaper to buy a handbag in, say, Japan right now vs the US because of exchange rates (it is btw), but about who the customers are in the long term.
You can listen to the recent Bloomberg money stuff podcast on how the ultra-luxury real estate market moves independently from local markets to get a sense of another way this trend might manifest. To be clear, I’d be perfectly happy if this all went away or reversed, but it does seem worth considering.
The very upper class of EM countries has been super rich for like, more than 20 years now. They've literally owned their country's ample natural resources for decades. When people talk about the economic progress of EM countries, they mean the emerging middle class lol.
This is the problem when people who don't actually know much about economics listen to a podcast and start parroting it as gospel.
And like, solidly middle class Americans were never the ones buying items that actual rich people buy (I.e. the stuff that actual crazy rich Asians are buying, like 200k watches, million dollar cars). They were buying $300 hand bags from Coach or $5k Omega watches. The emerging middle class in China or Asia still makes much less money than the middle class in the us does.
This is how I felt when I saw 50 dollar phone cases for sale at target the other day 😧😧 the fuck. They were catering to millionaires with that or something
I have a close to $50 phone case, but precisely because I'm nowhere near a millionaire. My phone costs like $800 so why wouldn't I want to protect it with a good case that is a fraction of that price. I also use my phones for 4 ish years and drop them a bunch. It definitely wouldn't last that long if I didn't have a good case.
I think they are saying that $50 case should cost $25. It is a plastic molded piece the crank out by the thousands. But I get your logic. I have one too.
These phone cases I’m talking about are not heavy duty cases that truly protect your phone. I’m talking about this https://www.target.com/p/kate-spade-new-york-apple-iphone-15-plus-iphone-14-plus-protective-case-with-magsafe-black-38-white-floral-with-gems/-/A-89290070
I just don’t get it. To be fair there’s other options for like 15 dollars but I saw these in the store in their glass protective boxes and thought “there must be gold flakes in there right?” And it just looks like a normal plastic case. I got my case from some Chinese online store for like 5 bucks a few years ago.
I was angry at seeing a regular dorito bag for $5.89 today. Gtfo. And this is price gouging not inflation
Probably blame us for their failing, then find a way to convince (bribe) Congress into reimbursing them at our tax paying expense.
This. That's precisely what they did when millennials couldn't afford their overpriced products and services like their parents and grandparents could.
Companies: “Think about the unemployment rate! Think about the election!”
Government: “Oh you little scamps, you’re always right. Sigh, here’s a billion dollars”
The media has been pumping out "Millennials are killing xyz" articles every week since the aughts
What will they do when nobody can afford their product?
1) Gaslight their consumer base to stop buying so much avocado toast of course!
2) Blame the consumer about their poor work ethic. “How can they afford our product when nobody wants to work anymore!”
3) Attach the product to a cause the consumer deeply believes in. “With every purchase of our product, we’ll donate $ 0.1 dollars to the LGBQT+ children in Gaza! You care about the children in Gaza right??? Prove it by buying our product or you are a bad person.”
There is this weird theory, accepted as fact, that if you produce more but consume less this will somehow hurt the economy?
When your economy is an consumer based economy like the US and not based on exports then yes that is correct
Well, Disney World appears to be doing just fine since they transitioned to an upper class vacation destination.
Assuming the decline in demand is not the intentional result of a strategy to move "upmarket" (or if it is, but the attempt to move upmarket fails), then they will reduce their prices.
I see this question asked a lot in discussions around inflation, and honestly it always sounds a bit odd. Broadly speaking, Americans have higher incomes and larger savings now than they did before the pandemic. They are using all of this new money not just to continue buying the same amount of goods and services at higher prices, but to consume more of those goods and services despite the higher prices (i.e. real consumption per capita is still above pre-pandemic levels).
The concern that companies are just raising prices willy-nilly without sensitivity to the willingness or ability of their customers to pay is not correct, and that they will continue to do so until they run out of customers, is not supported by actual economic facts.
Likewise, the concern that companies will all just stop competing for the business of the majority of Americans doesn't seem logical. Gap may earn a huge profit selling premium $40 T-shirts through its Banana Republic brand, but it also knows that many consumers won't buy a $40 T-shirt, so it sells multiple T-shirts in a $20 pack through its Old Navy brand. An egg producer may sell organic eggs from pasture-raised hens for $8/dozen and yet also sell non-organic eggs from caged chickens for $2.50/dozen, because it wants the business of consumers who will purchase the latter but not the former. Companies are very happy to sell to consumers across the economic spectrum, provided they can turn a profit doing so.
If we're looking at mass middle class brands, Starbucks forecasting negative growth is about as much of a bellwether as we can get on middle class spending.
they're just moving their money down market, and the down market money is currently on failing credit.
Also McDonalds saying that poorer customers stopped coming.
https://www.nrn.com/finance/mcdonald-s-ceo-battleground-low-income-consumer
Actually, no, Americans had more savings immediately after the pandemic but they quickly evaporated. I dont think incomes are much higher once you account for inflation.
I said that Americans have more savings today than they did before the pandemic. Not more savings than at the height of accumulated pandemic-era stimulus support. The paper you linked to does not refute this. The paper doesn't even study how much savings the median American has, or even total American savings. Rather, it studies a theoretical subset of those savings, "pandemic excess savings", which is the amount of savings Americans accumulated in excess of what they would have hypothetically accumulated if COVID and the financial stimulus response had never happened.
From the study itself:
Consumers could use their non-pandemic-related savings as another source of funding for their household consumption. Many households saw notable gains in their equity and other asset holdings over the past year (Abdelrahman, Oliveria, and Shapiro 2024). Also, households across the income distribution now own notably more nonfinancial assets, such as real estate holdings and vehicles, relative to pre-pandemic levels, according to Distributional Financial Accounts data from the Federal Reserve Board.
According to the Federal Reserve and other sources, the trend pre-pandemic was that Americans' savings were increasing. The paper's calculated "excess savings" are based on savings trends in the years leading up to the pandemic, meaning they are the savings in excess of the increasing savings that Americans were accumulating every year.
And incomes may not much be much higher across the board after adjusting for inflation, but real wages are higher across the income distribution, which refutes the idea that current price levels are unsustainable.
That's what's been so interesting these past few years. It seems Americans are simultaneously hurting but also unwilling to give up their pre-covid lifestyles. People are still buying. It's just they are putting more than ever on credit cards they aren't paying off and buy now pay later schemes.
If the price is going to rise significantly next year, why wait to buy it when it's more expensive?
Granted, I don't think inflation in this country is bad enough that this should be the case, but this is the mentality behind a lot of people I've talked to who finance things like TVs.
I haven't seen any evidence people are actually cutting back spending because of price hikes at all.
Have you seen car insurance spikes lately? Ours almost tripled with the new policy. Read today my state WA has tons of people dealing with it as well. That right there makes people tighten their belts.
Hopefully you all don’t get to where we are in FL with insurance rates.
It's amazing more people are not talking about this. Home and auto insurance will eventually crush most people. States that used to have mild weather are now getting floods, tornadoes, more hail, etc. Rates are going up everywhere which is seriously eating into budgets. I've lived in numerous cities in the U.S. and there's few places to hide from big increases.
The government will bail them out
Make debt limits more lax. Look around, all these over priced cars, houses, sport event tickets, concert tickets (t swift), etc. are still purchased because people lose their minds and take out credit cards and cash out their retirement accounts.
I look at my income level compared to what the majority of people make and knowing I make more than some of them no way I could afford that shit (and still save for retirement). These people have to be maxing out credit cards and other debt.
I was talking to my grandfather about this, he was middle class worked at a steel mill. He made a good point that during his working years he started working in the 60’s, they didn’t really buy anything. Had a house and a car of course but they rarely made small/ medium size purchases. No Starbucks, no Amazon, no tv subscriptions. Just food, gas, utilities and house payment. They bought one TV and had it for over 20 years. I wonder how much of not feeling middle class is that we blow half are money on nonsense that just wasn’t an option before.
Not to downplay inflation or current financial struggles, but I think there is a lot of truth to this. We used to see mainly those who were similarly situated and our shopping was limited to local stores. I think the middle class lived a simpler life. Now, with social media and the internet, there’s a lot more FOMO and we can access many more products. So we buy stuff we don’t really need and we still feel like everyone else is having more fun and living a better life.
Also - the quality of most things has severely degraded, so sometimes we’re forced to buy the same thing multiple times since things no longer last like they used to.
We've had three refrigerators in 20 years, yes.
Shoes, socks, underwear, dishwashers(!). Flashlights, lead acid batteries.
H&M , fast fashion, toilet paper fabrics…
Stuff can be made better now. Profit snd constant downward pressure labor costs push this too.
Only shareholders and owners deserve 10% profit largins and growth year on year….
The first one lasted 15 years and the other 2 were replaced in the last 5 years, right?
Very salient point. Items are built to fail now (either structurally, or because of obsolete software capabilities), so you have to keep rebuying every few years.
Been using the same vacuum brand begins with a D and ends in an N and the motor and brush are still working but the handle and trigger have all but broken apart.
I have resorted to electrical tape to keep from shocking myself and to get a few more years out of it. Those things are stupid expensive and the only reason it’s coming apart is its plastic. And plastic polymers just break down, becoming brittle.
500bucks for a couple years of use should be illegal. Anything over a certain price point needs to minimum warranty or 5 years or more.
If you need a great vacuum that’ll truly last, check out Miele. Sebo is also a good brand, but I finally bit the bullet and bought a Miele after my Dyson crapped out and couldn’t be happier. I finally don’t yell and curse at my vacuum! It’s great.
I believe that’s a law in Norway.
Should be a law everywhere - 5 years minimum guarantee for anything over a hundred
Modem died on us the other day, had another I had bought a few years back when we thought it was dead but it miraculously started again so we just set it aside for later. Pulled the newer one out, checked the specs, all up to snuff for service, look to see if it’ll actually work… and Xfinity tells me it’s an “end of life” model and they won’t activate it. I had to buy a new one that was “current” and it STILL had the EXACT SAME SPECS as the defunct one.
I just bought a 15 yr old TV for $50 it works great
TVs seem to last in my experience. Mine is 11 years old. Appliances are unfortunately a different story. I replaced a still working, 40 year old JennAir range with a brand new GE Profile range, a moderately higher-end brand about on par with JennAir today. The entire cooktop failed after only two years. $500 repair.
My parents had the same dehumidifier for like 30 years before it died. I've lived in my home for over a decade now, and my dehumidifiers last between 2 and 2.5 years before they stop working (just exceeding the 2 year warranty).
It doesn't matter if I buy a good name or a no-name. Expensive or cheap. They are all garbage. I would gladly pay more to get one that is reliable and will last a long time, but they simply don't exist.
Yeah it’s easy to blame it on overconsumption, and I absolutely agree that’s a problem for many people, but the fact of the matter is, no many how frugal or conscientious you are, in many cases you have to spend more money to buy things that last DRAMATICALLY less long than even 20 or 30 years ago. I see it in my own stuff - I have kitchen appliances I bought in college in the 2000s that are still going strong, but none that I’ve bought in the past decade have lasted more than 5-6 years, and that’s on the long end.
Imagine having the same TV for 20 years. My TV is 7 years old and it’s already fried and lower quality than a $150 tv at Walmart. It was $400 when I bought it.
Makes me think of my silent gen maternal grandparents. Grandpa was a college professor for decades and made solid money. The farm they lived on got surrounded by Phoenix and ended up worth a fortune eventually. They supplemented their income with a citrus grove and breeding sheep. (At one point they raised their own pork, beef, and chickens too.)
They literally never bought new furniture. My entire life, they had the exact same furniture in their family room, living room, and dining room. All of their decor (sand paintings, kachinas, and turquoise) was bought on the rezs in the 1940s and 50s. It was also worth a small fortune by the time they passed, but obviously was not expensive to purchase. They upgraded their TV once, from a console tube to a flat screen.
They never ate out until very late in life. Grandma home cooked almost every meal every day. They never got internet, cable or satellite tv, or more than a basic cell phone. (Most of my life, they had a single land line phone in the middle of the house with a 40 foot cord on it.) My grandpa drove his 1972 ford ranger for over 30 years and knew how to repair virtually every part in it (two of his sons end up in careers in auto repair). (That said, they also had an entire machine shop and welding shop in their barn, which led to nearly all of their kids being highly skilled in various trades.)
They were very firmly middle to upper middle class and lived their whole lives like this.
This is a big part of it. We had the most basic of cable when I was a kid. Google tells me that probably costed ~20 dollars.
Now people pay that much just for one streaming service.
I worked for a local cable franchise in customer service in the early 2000s, and later became a cable commissioner for the city I lived in (the cable company did not like that, as I had a lot of inside knowledge).
Back then, we had frequent internal conversations about how a la carte tv service would be horrible for consumers despite constant demand for it. The home shopping channels on basic cable paid massive subsidies, while the bundling basically made packages break even versus individual channels.
The local franchise manager, in particular, used to talk about his prediction that we would eventually shift to paying a la carte based on technology and everyone would pay more for even less channels but think they were getting a better deal because they were not paying for channels they don't want. (Same guy also predicted that HDTV would be the breakout technology for sports. He probably should have been more than a local franchise manager.)
Incidentally, all of those people were laid off when the state moved to statewide franchises and the company consolidated everything from local call centers and franchises to a single center in Illinois.
Yeah and about that…
I recently went figured out how much I was paying for subscriptions and which subscriptions I had in general. There are so many out there now, that what was once a cheaper alternative to cable, is far more expensive. I’d have a pretty damn good package with cable right now… too bad they don’t air Netflix originals. *Sign
The consumer has a lot of culpability in some price gouging. People paying $5,000 for Taylor Swift tickets or $10,000 over MSRP for a car they want today aren’t exactly victims
It's inflation not only of the dollar, but of our expectations of what being "middle class" even means.
I grew up middle class in the 1990s and we ate out once or twice a month. It was an occasion. Now my friends are doordashing at least several times a week complaining that they don't have much extra money. Wtf?
Yeah my parents rarely went out or did take out while growing up. Even getting something take out twice a month feels just weird to me.
They also definitely only took us to places that were all-you-can-eat with child discounts. All of the kids in our family (five of them!) grew up liking salad because most of our eat out meals were either all you can eat salad bars or pizza buffets.
Our family eats out once a week and that doesn't seem unreasonable to me. We also don't use doordash. I know other people and their families who eat out up to 5 days or sometimes more a week. That can add over 1000 dollars in food costs a month depending on the size of the family .
It's way more than was normal for a middle class family in the 90s.
My sister eats out almost every meal and easily spends over $1000 a month on food and drinks just for herself. She makes $17/hr and lives with my parents. What's crazy is they'd cook dinner for her every night if she wanted. Batshit crazy.
She's gonna regret the opportunity she had to save money now, when she gets older.
I'd argue this should be one of the benefits of modern life, that the average person continues to reap lifestyle improvements as commensurate with productivity increases.
My go to example is the Jetsons. George was the sole breadwinner, working just 9 hours a week pressing a button (he complains when he's overworked by pressing the button 5 times in 3 hours). They can still afford a fully middle class lifestyle: robot maid, detached 'apartment' in the sky, an automated food dispenser, etc. This was seen as a utopia for boomers, having more while doing less work. I don't see the problem with expecting lifestyle improvements like our parents and grandparents did.
Now it's a separate discussion between 'should our standards be higher than our grandparents', and 'given the current state of the economy are people making wise financial decisions'. Though I tend to give people a lot of deference that modern life is stressful, and coping mechanisms are generally expensive.
I'd argue this should be one of the benefits of modern life, that the average person continues to reap lifestyle improvements as commensurate with productivity increases.
I'd agree. And that is absolutely true. We have the sum of human knowledge in our pockets these days. Every new car sold has A/C and many have heated this-and-that. A TV the size of a wall is $600. Things which used to be luxury are now standard.
But that's exactly my point. THINGS which used to be luxury are now standard. The manner in which our understanding of "middle class" has expanded goes well beyond just things. When you eat out and especially have it delivered, you're not doing anything like buying a TV or car created at scale in some modern hyper-efficient factory. You're paying for labor performed by another human being. You're paying for their time, their own cost of living, etc.
The Jetsons is science fiction for a reason. You may notice that the lifestyle improvements the Jetsons enjoy are 100% automated. They indeed have more while doing less work, but they are getting it using devices instead of other people who do that work for them. Until we have robot maids and food replicators, people who want to have their food prepped and their house cleaned are going to be paying ever rising costs for other people to be willing to do these things for them.
And the better off our society gets, the less willing overall people will be to perform this type of labor, meaning it gets ...more expensive.
Should our standards be higher than our grandparents'? Absolutely yes! Notwithstanding housing costs in V/HCOL areas (and people bemoaning that should leave for cheaper pastures anyway), much of the moaning and groaning I hear about the economy being terrible is literally the direct result of other people's labor becoming harder, i.e. more expensive, to obtain. This only happens because the folks who would be doing this labor have more alternatives in their lives, meaning they must be paid more money before to continue to be willing to do it.
It feels like entitlement to me. "The economy feels bad to me because other people used to be willing to wait on me for lower prices," completely ignores the fact that those people are people with better alternatives now.
They indeed have more while doing less work, but they are getting it using devices instead of other people who do that work for them. Until we have robot maids and food replicators, people who want to have their food prepped and their house cleaned are going to be paying ever rising costs for other people to be willing to do these things for them.
Good insight, I agree this is a critical element for whether it's entitlement or not. Especially with services, as you mentioned.
I think a more apples to apples comparison would be to look at typical middle class purchases 10, 15, or 20 years ago. What you're saying is definitely true, but that's not the silver bullet to why our money doesn't go as far anymore.
That sounds.good in theory, but it's not, here's why...
If you make a chart of most people's non discretionary (ie. not optional) expenses to live. It's. Basically. - housing -40% - transportation (cars)~10-15% - energy (gas, heat, electricity) -10% - food - 10-15% - education - 5+10%
So adding up all those percentages you get between 75-90% of someones pay goes to covering those basics your grandfather has covered with one job.
It's not the small or occasional expenses of buying Starbucks or Netflix or buying an iPhone that is the issue,.it's the large recurring expenses of just having a place to live and food to eat..
And college tuition!
People love to sound smart but reality is, big item costs have increased exponentially and income hasn’t; housing, college tuition, healthcare, cars, and insurance. And most of this isn’t included in inflation.
And it’s also a situation where in the 60s or whatever you could live off of one full time income and then any income from the partner was just gravy. Now you really do need two full time incomes to stay ahead or right on the curve
The situation in the 60was wages had been growing at pace with production for 30 years where the situation now is productivity is 10x over 30 years and real wages have not moved.
Yup. I'm so fucking tired of blaming consumer spending.
I have a professional degree and a 'good job' yet even 750 square foot homes in boring lower class neighborhoods here are selling for 50% more than any source I can find says I could afford.
Explain how spending less on food, hobbies, and/or consumer goods can push me all the way into an affordable mortgage. Or even getting approved for a mortgage period , let alone affordable. It fucking can't.
Where do you live that small houses in bad neighborhoods are unaffordable to people with good jobs? It must be one of a handful of extremely expensive metro areas, like NYC or San Francisco.
I grew up in a working class neighborhood in the Philly suburbs. My parents sold their row home in 2005 or 2006 for $115k (ours was one of the nicer, well maintained comes 6) and bought a single family home in a bit nicer neighborhood for $225k.
Today row homes identical to the one they sold in the same neighborhood are going for upwards of $200k. I saw one listed for $280k and that was a reduction in the asking price. Also the neighborhood is not as nice or safe as it used to be. Houses are crazy expensive whether you want to believe it or not.
Not even close to New York or San Francisco prices.
You people seriously do not get it...
Most "good jobs" still do not pay enough to buy homes now.
And let’s not forget that this used to be possible on one income; most can’t even do it as couples with 2 good jobs now.
A lot of that is discretionary to some extent. Most people need a car, but they don’t need the specific car they have, and most people could save a substantial amount of money with something smaller, less luxurious, or older. Everyone needs a place to live, but not necessarily something that big or in that location. The cost difference between a cheap diet and fancy one can easily be 10x.
Again this is all true, but for most folks it isn't the marginal gains arent really that big. Are a lot of folks dumb with money, yep, but many more are not ans still struggle , this issue is really.more systemic than just bad spending habits.
Idk if that's true. They may not have had a lot to fast food or Starbucks, but they certainly had clothes to buy, decor, etc. Your grandfather might not be aware of all that, though because your grandma handled it?
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27d
Hummel figurines Fine China Silver plated Silverware for guests
All the "collectibles" no one wants today
China Hutches Side boards Glassware for every kind of drink Formal tea set Doll collections
They bought...
They bought different things, but they bought.
Oh and antiques
I feel like there is a lot of predatory profit seeking going on right now. Not that people’s expectations of what they can/should buy are always logical. But due to a lack of effort large corps are siphoning huge extra profits.
Grocery stores have a 3:1 spread on the same items depending on whether they put up Anthony Bourdain and Ralph Emerson quotes on the walls (same items).
Coffee is an unnecessary expense at cafes, but pricing is also 2:1 and doesn’t seem quality linked. Restaurants are also disaggregated on quality/price.
Electronics as a category are often basically e-waste that catches on fire at random at the low end. So you’re buying low quality product or paying a huge premium for a bit more longevity.
Subscription services can be cost effective, but will screw you if not actively managed. That means switching cell providers and internet service provider every two years on price. And only holding subscriptions for content for a few months a year.
Medical everyday items (not just services) like glasses and the like have insane markups in excess of jewelry stores.
I think inflation would be less if customers were more price sensitive. But people don’t always have time to manage all this stuff (like I’ve kept a cell phone provider for 3 years straight recently).
The spread is a real feature of the post-covid world, particularly around groceries. To be clear, there was always a range. Maybe a handful of local retailers carried a food product priced between 1.30-1.55 across all of them. Now it's more like 1.99-4.75 for that same item.
Eating out was for a special occasion, not every day x3
People also don’t realize that many of the boomers grew up WITHOUT air conditioning, WITHOUT refrigeration, without microwaves and dish washers and clothes washers, oh and also the house was 1200 sq ft. Speaking as a millennial
Good point. Wood stoves were much more popular as were clothes lines.
I miss clotheslines but not using them!
I totally agree that major purchases are unaffordable (house, car), I also agree that wages have not kept up over time, but a lot of angry young folks (including myself here) never recognize our advancements in quality of life since then.
My Grandma and Grandpa show me photos of their first houses, and the houses they grew up with, and those would be considered junk these days. Standards have raised a lot
Also consider that everything we buy is designed to break in 4 months
no cell and internet either... that's $300 today for a family of 2, not including any streaming services or regular cable
Sounds about right. We are beset upon by capitalist market efficiency 24/7. You have money. People want your money. You either have willpower and hang onto it or every bit of excess you have will be taken.
Somehow worthless consumables have taken on a perceived higher value than basic needs - with that, inflation has gone kookoo bananas.
I think it’s the exact opposite. There is such a glut of worthless consumables that actual necessities, like food, and mandated stuff, like insurance and housing, are completely out of control.
I can definitely admit that I'm incredibly guilty of this. As my salary has risen I've let lifestyle creep up. It's all small purchases that add up quickly. Also built 4 custom mountain bikes in the past 2 years...
Definition of large/small purchase can be relative. A Rolex was considered a medium purchase and even when my dad lost one in the lake, with a pilots salary, it wasn’t out of the question to replace it. Now a Rolex is certainly not attainable by any definition of middle class at $20,000 it would CERTAINLY be an enormous deal if it was lost in a lake and it certainly wouldn’t be replaced. Obviously a trivial example but buying a beater farm truck was a few hundred bucks, weeks salary small purchase, now it’s $5000 needs an engine and full of rust which is large purchase ultimately not even worth it because it will take another $5000 getting it to run.
TLDR, I agree but what was once considered small to medium purchase can often be large/unattainable now.
No going out to eat! I was born in the 60s and don't recall really ever going out. We'd get Chinese take-out maybe once every month or two.
It’s an interesting take and I think that there is some social truth to it. As others have pointed out, it’s the big purchases that seem unattainable. I recently saw a chart showing the median US household income compared to the median home price…doesn’t matter how many avocado toasts I buy, it’s just more expensive for me to buy a house than it was my grandpa.
you're comparing a time where 1 person could afford a family and a house and healthcare and retirement and trips and a car on one income, to 2 people working to afford one rental home, 1 kid, and some discretionary purchases with no pension.
just moving from 40 hours of work to 80 in a family would feel like you dropped a class.
One person could do that because modern day luxuries didn't exist. A lot of houses didn't have television, just a radio. No next day delivery Amazon frivolous purchases. No fast food, no Starbucks, no Neflix, none of the newest trendy furniture. No granite counter tops. They didnt travel the country or explore the world before settling down. The middle class then was poor by our standards today but they were happier because life wasn't as stressful. Until you were drafted for war.
That's precisely it. People blow so much money on shit they don't need and then complain about not having enough money. Same as people complaining about not being able to pay for a family on a single income - you absolutely can if you're willing to live a much lower standard of living, just like our parents and grandparents lived a much lower standard of living.
This is huge part of it. Newly built homes were much smaller, often didn’t have a garage and had no AC. The families had 1 car.
The standard of living was radically different. It wasn’t the peak prosperity of the late 1990’s that everyone is using as a point of reference.
That's because it is. There's no easier way to destroy an economy than print the wealth out from under the middle class.
I make almost 100k and have a small home with a very modest mortgage, my student loans are not too bad with the SAVE plan and I don't go out to eat or travel often. I feel like I'm just across the line for making a living wage. Like I'm doing ok, I am making savings, 401k, pay my bills etc, but I know any big emergency will wipe out my savings (again). When I do travel it's within driving distance and feels overwhelmingly expensive to pay for food and lodging so I mostly go visit friends where I can stay with them. Like, growing up I would have thought 100k was rich AF. I feel like what I thought 65k should have been. I literally don't understand how people live on 40k.
When you were growing up, $100k was worth more than it is today.
$100k in 2000 is the equivalent of $185k in today's dollars.
You stole the words right out of my mouth. I almost make 100k and my spouse is paid well as well. We're both very lucky and fortunate to own a home and save but it just feels like on paper we should be doing better.
Me, living pretty normal on 40K, not understanding how people who make $100K feel like they don’t have enough money lol
Gotta be the cost of living. Also, when people say the contribute to their 401k…that can be 100 bucks or they max out. My husband and I live in a hcol town. We make 300k combined. He maxes out his 401k, I am close to maxing out mine, and we both max out our roth, we save for college for our kids. We’re doing well. But there’s no money left over. No nice cars, no vacation, small cape cod style house among the mult million dollar mansions. It can make it seem like you’re not doing well. Maybe not compared to the Uber rich, but certainly compared to people living pay check to pay check.
Yeah I’m single with no kids, and I rent. I do live in a HCOL area tho but I make it swing. I don’t worry a whole lot about retirement savings since it’s just me and I don’t plan on having kids or marrying, so my contributions are the minimum lol. It’s WAY easier to survive on a small amount when you’re just one person, for sure!
How are you able to still contribute to Roth with 300K income if joint limit is 240K? Or, are you filling separately and both under 161K?
HCoL?
Most Americans are actually Middle Class. The Middle Class lifestyle that most people want it’s Upper Class Lifestyle.
I think what most people mean by middle class is the "American dream": home ownership, retirement covered by either savings or pension, access to medical care and enough left over to raise a couple kids. Now, I agree with you that all of those things are effectively becoming luxuries, but I do not think they count as what most people envision as upper class (fancy new cars, extravigent travel, making most of your income from wealth)
The American Dream was a blip in time after ww2 when most of the West and Asia was in ruins and North America had the only first world countries not in ruins.
Doomer nonsense. My income is up $300k and my penis grew 4".
Damn. Look at this guy and his 4.5” swinging dick
This is so garbage.
No perception of anything was scrambled. Costs have very-really risen as a result of inflation, devouring wage gains - and surpassing that. I realize its under control now but that doesn't change the massive setback we suffered alongside cost increases.
But I'm TOLD that everything is great and fine. That's the extent of freaking politics. I'm told that just because it MIGHT be worse if the other guy did something I have no right to think this fucking sucks and expect better policy and leadership.
So we'll never improve anything because we're not allowed to have expectations anymore.
Look, things are bad but I don't know how anyone can legitimately defend that "middle class" bar hasn't moved. The amount people eat out, the types of vacations, the type of cars they buy, the size and features of the houses they live in, etc. I've seen thread after thread that says if you can't max out your 401k, take expensive vacations, own a $500k house, and have 2 new cars you are not middle class... that seems to be the "new" bar for middle class which I had maybe 2 friends growing up that were ever able to achieve that..
That's exactly what the middle class was in the past dude. I grew up middle class in the 90s and that meant going on vacations, living in an actual house, and having one car for each parent. You really don't understand how rough it's gotten. A 500k house nowadays is the middle class house I grew up in because prices just won't stop skyrocketing
If a company makes billions in profits yearly but do not pay their workers enough to be alive, their tax rate should be 95%.
I don’t understand why so many people are okay with tax payers subsidizing the labor costs of those corporations. They don’t pay enough so their workers need assistance from the government. Why are tax payers footing the bill for labor costs at those corporations…
It’s called socialism for the rich. They’re too big to fail. They don’t want the average person to have it. We are not too big to fail.
Major corporations have onboarding videos showing new hires how to apply for food stamps because they know they don't pay enough to feed themselves and also know that Uncle Sam is happy to subsidize while increasing taxes on the working class and lowering them for the rich.
“Growth, hiring, and financial markets are strong, while wage growth has started to exceed the pace of inflation. “
Erm … hiring ??? Hiring is strong? Excuse me, where? Taco Bell?
I live in a high manufacturing area and they are laying off people in the factories left and right including my own. Manufacturing is the canary in the cole mine in a few to six months this is going to hit other industries as well.
Agreed. Also seeing logistics and packaging companies doing layoffs or just closing their business for good. I wouldn’t have noticed if it wasn’t for looking up my states WARN notices.
Unemployment has been below 4% for almost 3 years.
That’s the longest period of unemployment that low since the 1950s.
It doesn’t matter if it’s mostly shit jobs
It certainly does, during the great depression people would do anything to get even a part of these shitty jobs. Shitty is always better than nothing, but that doesn't mean that is doesn't suck to have shitty job.
I disagree watch me flex my middle class status.
Only 20k in debt and own a home for under 3k a month.
Definition of “middle class” has changed, a lot. In 1950 middle class was a 750 sq ft Levittown house with no mod cons except a telephone.
I'm not into more taxes and more regulation but holy hell companies need to be audited for scalping. Feels like they are just charging anything because they can.
Define middle class.
I grew up middle class. We didn’t go out to eat or order in more than twice a month. We didn’t pay for a million subscription fees. We had two relatively cheap Japanese cars and lived in a 1600 sq ft house.
Also you could support a family on a 60k income so I guess that has changed quite a bit with everything else bringing us back to inflation but I do think a large factor is spending
Inflation is pretty low honestly, no sure where are feeling pinched still
I watched a coworker get a raise and a promotion at work. This entered her into the next tax bracket and due to the taxation percentage she LOST money per paycheck. Stuff like that is why people feel like they can't get ahead.
This makes no sense. You don’t lose money going up a tax bracket… tax brackets are graduated.
Single: Your first $11,600 gets taxed at 10% $11,601 to $47,150 gets taxed at 12% $47,151 to $100,526 gets taxed at 22% Etc.
It’s not a lump sum taxation.
Greedflation!!!
Cars cost more because dealers are gouging on price and manufacturers dropped incentives. Used car inventory at auction are at an all time high and are selling for little to nothing - used car prices are at all time highs.
Grocery stores got busted by researchers earlier this year for artificially keeping food prices inflated.
This shit has to stop. “Inflation” is being manufactured for profit.
I also feel like our standards of what is middle class have changed.
Other than homeownership, I see more people living more luxuriously than I did growing up middle class.
New cars, food deliveries, constantly eating out, newest phones/tvs/computers.
Middle class seems out of reach because people believe amenities are necessities
I have none of those amenities and am still nowhere near middle class.
Same.
More articles? Is this sub going to turn like every other finance sub where it's just a bunch of rage bait articles.
why is it the lower middle class the one who wants to believe the most they are completely fine lol
Isn’t even lower middle, just your run of the mill working class. They want to believe they are middle and that they had always been. I grew up in poverty with a taste of lower middle class life and had to escape by any means. I remember having friends that were legitimately middle class and it was so shocking, then I dated a girl from an upper middle class family and it was absolutely beyond my wildest imagination. I still can barely comprehend it. I moved up to middle-middle, now down to lower-middle, but trying to claw further up. It’s just hard with a constantly bad economy and difficulty maintaining decent primary incomes.
It’s cognitive dissonance to protect themselves from a harsh reality. I believe the working class is anyone who clocks into work and does an honest day of work. Lower, middle, and upper class terms are part of the class divide. The upper middle class wants to act like they’re Bezos or soon to be like him. The lower class thinks they’re temporarily inconvenienced millionaires and the true middle class is cash strapped but with a good income and retirement. All 3 groups are screwed by inflation and taxes the most. Let’s say you have a house with a low interest rate and a paid off car, a couple financial burdens and a totaled car will drop you from that high horse right back into reality of 8% rates and 35k base trim SUVs. Not so fancy anymore. Anyone making 30k-200k should be on the same page but of course they’re not. Also needs to be said, a lot of people living on credit while their checking account is loaded with cash are actually losing money paying interest but don’t tell them that.
My spouse and I make a combined $135k a year.
We live in the smallest two bedroom apartment at our modest apartment complex. We have one paid off car, and one car payment.
We budget, don't really go on vacations or anything.
I only recently went from $65k a year to $90k. So we have credit card debt to pay off and such but even once it's paid off I look at what we could spend our money on, after saving of course, and it's all so damn expensive it still feels as unaffordable as it did before the pandemic when we made $70k combined.
When I think of "middle class" I think of a house with a small yard, able to go on vacations once a year and not having to coupon at grocery stores. I still browse the grocery store ads every week looking for deals, can't even qualify for a house that feels move in ready, and once a year vacation would have to be camping.
It's all so damn stupid.
Maybe not having a real raise since 1976 has more to do with “scrambling perceptions” than does inflation.
Family has two over priced SUV’s in the driveway with $600 car notes each. Inflation is killing us 🤦🏽♂️
Too many people think middle class is the same as the Kardashians. Too many with unrealistic expectations.
“Inflation is always and everywhere a monetary phenomenon.” I.e. if you want to stop inflation stop supporting liberal and progressive economic policies that require a lot of government spending and therefore exacerbate inflation.
If I have to hear from my FIL how his salary in 1983 was $30k 1 more time 🤦🏻♂️. Yeah, his wife was a SAHM, 2 kids in private school, a boat, pool, vacations.
Hey Boomer, that’s $164k in todays dollars! I’m sorry daycare costs me $1200/month, my car cost more then your 1st house, and combined me and you daughter still don’t make as much as you did.
Nah, it feels like a lower-middle-class lifestyle is out of reach.
Wish people would stop posting shitty news articles on this sub.
Not helpful, no data/facts just a headline to get people going
I’ll never come even close to middle class, that’s a dream
If you made it to the middle class, you might be prone then to wish you were another step above. Thats human existence for a lot of people. It’s hard to shake feelings of envy, even the very wealthy still grapple with it I assume.
Yeah you’re probably right, it’s never good enough for most people
I’m a very simple person I don’t want much, just enough to do the little things I enjoy
You will as the expectations get lowered :(
Basically being middle class or the majority or average in wage class will mean you get to rent a tiny one bedroom one bathroom 500 sq foot place for 50% of take home pay or more. And live off rice and beans. If you need 1 or 2 roommates…then that is lower middle class. Lower class or poverty means you’re living in tent camps and cities with the undocumented citizens who are working the fast food and retail jobs now for lower pay to keep costs kinda low but McDonalds is charging $40 for a quarter pounder with cheese meal.
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