Monday, December 03, 2007

Measuring "Rich" in Income and Wealth

From the WealthReport:

First, let’s get the facts straight. Mr. Obama is only partly right on the numbers. While he’s in the ballpark for single earners — $97,000 would put you in the top 7% or so — he’s way off base when it comes to household incomes, which I believe is a truer measure, since most of us live and spend as part of a household (especially in an age of two-income families).

Measuring households, $97,000 puts you in the top 20%.

So then the question is: Is the top 20% considered “the rich” or upper class?

Of course it depends on where you live. (See this post on “what counts as rich in your town.”) The Washington Post did a nice analysis, pointing out that firefighters in New York can make $90,000 or more. Most school superintendents in New York state make more than $100,000, according to the article.

Call me an elitist if you wish, but I don’t think a $100,000 salary makes you rich in many parts of the country — especially not New York City, where the average condo price has soared past $1 million.

Nationally, I’m not sure that getting into the top 20% makes you “rich” either. To get into the top 20% of households by wealth today, you need $435,000 in net worth, according to the Federal Reserve. That total includes the value of your house and retirement assets. I doubt that anyone with a total net worth of $435,000 (including their house and retirement accounts) would feel “rich” in any part of the country.

But maybe I’m jaded. After all, I live in New York.

Me, too. But I think a majority of my consumer goods come from sources like Target and Costco. Maybe that makes me middle class?

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