Kwitcherbellyakin

At Bloomberg Justin Fox echoes the point I made yesterday:

Now, I realize that $100,000 or $200,000 or even $423,090 doesn’t go nearly as far in New York City or San Francisco as it does in, say, McAllen, Texas. There are lots of people making that kind of money in big cities and fancy suburbs who don’t have much in the way of savings and are stretching to make their mortgage payments.

These are the folks my former Fortune magazine colleague Shawn Tully dubbed “HENRYs” (for high earners, not rich yet), and economists Greg Kaplan, Giovanni L. Violante and Justin Weidner called “the wealthy hand-to-mouth.” They work long hours, they make big investments in education for themselves and their kids, and they pay among the country’s highest tax rates (the federal tax system is progressive up to somewhere high in the One Percent, where capital gains income and tax shelters begin to bring rates down). They’re not spending their days lounging poolside or eating bon bons — although I can report from personal experience that some of them permit themselves a piece or two of dark chocolate before bed.

But are these people affluent? Heck yeah! The median household income in the U.S. in 2014 was $53,657. If you’re making twice that, or more, you are doing quite well from the perspective of your fellow citizens in what happens to be one of the richest nations on earth.

I continue to think we have a major problem of unrealistic expectations. Our wherewithal says “rent” while the society says “buy”. Our earnings say “Versa” while our aspirations say “Mercedes”. And there’s all of that lovely credit leading you to borrow more and more.