Get your violins out for the middle class
Just a quick one today, some extremely bad “reporting” over at the Washington Post (is this the US arm of the Daily Mail?) which was tweeted by Mr Money Mustache the other day.
Read the article here
It is about middle class expenses rising while wages stagnate (despite the apparently phoenix from the flames like recovery of the economy over the last few years, really?). The comments section is predictably harsh on this unwitting family but if you can’t be bothered to read the story or the comments here are some highlights:
- The first sentence: “On a routine drive to the beauty salon, Robin Johnson had one of those life-happens moments” – no further discussion needed really is there!?
- The second sentence: “Her 13-year-old Durango, with 200,000 miles on the odometer, overheated and started sputtering” – Apparently this is an extremely low MPG, gas guzzling SUV, and I am presuming the majority of the miles have been done by this family themselves.
- Later on in the article: “They have one laptop and three iPads, and each girl has a computer in her bedroom. The bill for four cellphones runs about $300 a month.“
So as you can see, they are easy cannon fodder for the readers, and apart from their unwise spending the biggest mistake they’ve made it seems was trusting the WP reporters on either how this article would be portrayed, or the likely reaction they would receive. I actually kinda feel sorry for them on this second point at least!
One other thing which really annoyed me though was the following:
Fewer Americans find themselves in the heart of the middle class with every passing year.
In the mid-1970s, the majority of Americans were in the middle, with 52 percent earning the equivalent (in today’s dollars) of $35,000 to $100,000. Today, according to census figures, the share of households earning under $35,000 is virtually unchanged, 35 percent. The shift has occurred in the other two categories. Households with incomes over $100,000 have doubled, to 22 percent, while less than 44 percent are in the middle cluster.
Ok… so the angle here is that the middle class is being squeezed out, there are fewer of them, which is a bad thing, right? Hang on and look at those figures… there are only less of them because 11% of people have only gone and moved into frigging upper class!!!!
Unbelievable. I’ll leave it at that I think.
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Oh and here was an amusing/amazing story that someone linked to in the comments section which is worth a quick read: http://www.gizmodo.com.au/2013/04/monkeys-make-better-stock-market-traders-than-people-study/
Discussion (12) ¬
I’m somewhat sympathetic with people living in high cost of living areas. Housing in that part of the nation is expensive. That’s the root cause of a lot of their expenses, though certainly a cell phone change would help.
The easy solution to a high cost of living area is either a job change or a location change, unfortunately. People don’t like moving, of course.
To be honest DB40 as someone living in a high cost of living area of the UK, I am not sympathetic to them because of that. I felt sorry because they may have got led down the garden path by the WaPo (as I have just found out it’s correct shortened name is) reporter though.
Reading the article, I felt a bit sorry for them, that they are caught in this life where they have to buy what everyone else is buying, not realising that cutting back just a little, they will have plenty of money. They could do with financial advice to sort out priorities (like fixing the house). Reading some of the comments, I’m inclined to agree that they may have been stitched up a little so that people can do a DM (Daily Mail) type rant at their so-called ‘plight’.
Yea I’ve seen this sort of article many a times… with comments going off on one at them. The thing is generally whatever the persons position is, there are so many other people in different ones out there that you are bound to p*ss some people off that are reading it, and those are the ones most likely to comment. So I guess signing up to be the focus of any article is pretty darn stupid in the first place, unless they just wanted their 15 minutes of fame whatever, and are pretty thick skinned, then I guess there isn’t an issue! They might have loved it and thought all the stick they got was a right old hoot for all I know 🙂
Is not the point of the article that perceived standard of living for the middle class is falling, rather than the shrinkage of the middle class?
The cost of housing is more now relative to a middle class salary of their parents generation. This is because a household has two incomes to spend on that, where previously it had one main breadwinner. The market has therefore lifted the price to match. As a result the middle classes have to pay for or outsource a lot of expenses they used to do themselves as well as spending more on their home. They do have less disposable income, and higher expectations place a much higher claim of that smaller pie. Elizabeth Warren’s book The Two Income Trap sets the case out well. Though you do have to shake your head about the economic muppetry – the school photographs are not more important that eating properly, and the subscriptions are a steady drain.
Hmm… if it was I didn’t really get that but maybe my opinion was already made up before I’d even read it. 🙂
I’m not so certain people do have less disposable income nowadays (notwithstanding single parents). I just think wants have become needs, as you quite rightly alluded to that expectations are now higher. Luxuries that the middle class (well, and everyone else I suppose) are chasing now are much much cheaper than years ago, international flights, 50″ flatscreen TV’s and so on, so even if their disposable income is lower in real nominal terms, I think you can argue that it goes much further nowadays buying them the consumer goods and services they lust after.
Stuff is cheaper, but housing is dearer. And people churn their stuff to a shocking extent. I still have the same hi-fi that I spent far too much money on at the beginning of my working life and it still gives me pleasure. I’ve only ever owned four cars. Someone looking back in 30 years will have had 20 iPhones since they left school, numerous iPads, games consoles and God knows how much other stuff. So although individual items are cheaper, they last for a much shorter time, either as a result of technological obsolescence or that they aren’t serviceable.
But it’s the housing that’s a killer in the UK. Dunno about the US. You go to the US and house prices look like loose change (particularly to Londoners!), but property taxes are much higher I believe.
Sorry, no sympathy here. There is so much waste in their spending and the worst part is that their attitude sounds completely wrong. There is plenty of income to live a wonderful life but it will never happen until they change their “I’m a victim” outlook and learn basic finance skills.
I like your hardline attitude! You should run for the minister of financial education, if there were such a thing. Sigh 🙂
🙂 Did you look at the pictures? I mean if you’re going to be complaining about not having enough money maybe don’t take pictures of your family eating out at a restaurant?
Ah… well at least they can afford to eat out, check out these poor souls: http://www.telegraph.co.uk/finance/personalfinance/10812086/I-make-120000-but-I-cant-recall-the-last-time-we-went-out-for-dinner.html
(Link courtesy of ermine/simple living in suffolk, his deconstuction of the article is well worth a read if you click through on his name above!!!)