the thing that doesn't compute for me is that the definition of upper middle class here is 5-15x the federal poverty line, ok, but in 1970 the federal poverty line was like ~$3k (and ~$22k today) 10x in 1970 (~33k/year) in nyc you could buy a 2,000 sqft apt for like 2.75x your salary [1] today, that same apartment is like >10x - so while perhaps more people are earning "upper middle class" incomes, what that gets you has declined significantly.
The poverty line, as established in the 60s, is simply 3x the minimum food budget. Food as a percentage of spending has decreased, while housing and other expenses have dramatically increased.
If the poverty line were to be adjusted to reflect the share that food takes up of income today, from ~30% in 1963 to ~6% today, the threshold for a family of four would go from ~30k a year to ~150k.
It's true that lower income families spend a higher proportion of money on food [0], but that was equally true in 1963. It's a static fact about income brackets at any time, and doesn't explain the change in average share.
Food share dropped from ~30% to ~6% because real incomes have risen and food has become cheaper relative to housing, healthcare, education, and so on. That shift affects all income levels, including the poor. Your point doesn't contradict the article's, that the poverty line, based on 1960s food budgets, no longer reflect current costs of living.
Could you send the article where the author revises their claim?
In the 1950's poor people in America may have had housing, but there's a good chance that housing didn't have plumbing. Poor people in the 50's spent roughly 0% of their income on childcare. Much of the article is complaining about the cost of child care.
You may think that poor people should be able to afford child care. That's a valid thought. But then you can't compare that to a 1950's definition of poverty where child care is definitely not affordable by the poor.
In the 60s (and 50s, though not sure why we're moving backwards) most households were single income; childcare costs were virtually nonexistent because mothers typically stayed at home to raise children, and a family would get by on the father's income alone.
That actually illustrates the point nicely: typical economic and living situations from when the metric was created were very different from today in a variety of ways, and once again, the reason the 3x food costs number was chosen -- that roughly 1/3 of income of low-income households was spent on food -- is simply no longer true.
Now, what the poverty line should be is a whole 'nother topic -- for the record the ~150k number is more as an demonstration of how broken the metric is than an actual suggestion, at least as I see it. This discussion doesn't seem to be going anywhere though so I'm tapping out, but I would still appreciate it if you would link to the article you mentioned.
That sounds specifically like the housing shortage that is afflicting some of the most dynamic, productive parts of the country, like NYC and the California Bay Area.
Driven by NIMBYism and some other things, those areas stopped building anything like enough housing, with the obvious result that demand outstripped supply and prices rose, putting them out of reach of many.
That's kind of the origin story of the YIMBY movement, which started forming to fight that trend.
I don't disagree but i also think in terms of actual numbers, the majority of the people that earn these upper middle income salaries are living in more expensive urban areas (at least before work from home)
Comparing NYC in the 1970s to today isn't a "big apple to big apple" comparison.
NYC in 1970s was on the verge of bankruptcy [0] and federal receivership, saw 1,000 industrial firms leave annually leading to 500K jobs lost from 1969-76 [1], and saw around 880K residents [2] leave for suburbs or other states. NYC didn't recover until the 2000s [3].
For your discussion, a better comparison should be cities+towns that were rich in the 1970s that remained rich in the 2020s, and cities+towns that were poor in the 1970s and remained poor in the 2020s. Similarly, a better contemporary comparison for NYC in the 1970s would be Detroit or potentially even Los Angeles.
yeah that was a pretty cheap time to buy in nyc for sure - but i don't think that anyone would argue that the the ratio of home price/income has stayed flat/decreased over the past five decades
Few people had air conditioning. Cars might last 100,000 miles, if you got a good one. They performed poorly, got awful mileage, and crushed the passenger compartment if you got into an accident.
Many people smoked, and people died younger. Medicine wasn’t as good.
Rich kids might have a giant set of books called an ‘encyclopedia’. It was about the only way to learn things that were outside your circle, there was no internet.
TV came in 3 channels, and you had to be sitting in front of it when your show came on. There was no way to record a show for later viewing.
Of course race relations were much worse then. So were things for women and others. Job advancement wasn’t the same as it is today.
I wouldn’t go back for anything. The poorest people today ( even the homeless, who seem to often have really nice tents and weather gear, relatively ) have it better than in 1970.
I don’t care what things cost. Practically everybody is richer today.
The 1970s energy crisis as a result of issues in Israel and Iran did indeed help improve cars.
We had this thing called a 'library', with 'books', which helped me learn things outside my circle. Our schools even had a full-time librarian to help us with the technology. Even our church had a library, with a bunch of Tom Swift books.
We didn't live in the boonies like you did. On VHF we had 3 commercial network TV stations, an independent station, and PBS. On UHF there were more, including another PBS station, another independent station, and a commercial station in the Spanish International Network (SIN).
My parents could afford to buy a home and raise a family on a single income from my high school educated father. He died 10 years ago. My mother still gets benefits from his pension plan.
It's also true that cheap ass nylon tents are better than the canvas tents we used to camp in. While we metaphorically drown in plastic as the anthropogenic global warming predicted by the 1970s tightens its grip ever more.
Am I misunderstanding something or is your point - Poor people have air conditioning and better (but certainly not cheaper) medical outcomes, and netflix today, therefore they have a better quality of life than 1970? And people without homes have better tents and jackets, today?
At least in my mind - if we were talking about statistical segmentation of income I think that’s right - but “middle class” and “upper middle class” denote a level of economic security, social status, lifestyle, disposable income whatever that I do think correlates with cost of living.
The headline is a remarkably rosy spin on it when the subheading is "Research shows that ranks of higher earners have grown markedly over last 50 years, while lower rungs of middle class have shrunk". The article is behind a paywall but it makes it sound like inequality is increasing.
That's the whole point. When people hear "the middle class is shrinking" they intuitively believe people are slipping down a rung and joining the ranks of the working poor. The data doesn't back that up. The middle class is shrinking, but more people are moving up a rung than falling down one.
Which isn't to say that you're wrong about wealth inequality increasing. The share of wealth controlled by the ultra wealthy IS increasing, but the specifics of how that is playing out are nuanced and, at times, counter-intuitive.
But, Doctor, the data does back that up. The US middle class is shrinking, and most of the shrinkage is on the low end. There's no mystery about this, only potential for distractions.
Pretty much. It's reiterating an observation of mine [0] that we now live in a K-shaped economy where the 70th percentile and above are distinct from the 50th percentile and below.
Most HNers and their social peers are in the 70th percentile and above.
My son graduates college next month. Although he has an ok job lined up, he and most of his cohorts are incredibly pessimistic about the future and I'm not sure I can say that I blame them.
It's the norm now, depressingly. Prior to 2020, It seemed like it might be eventually possible for some of us if we make smart decisions in terms of careers, saving money, and everything else.
Post 2020, and now especially with the economy being propped up by AI that appears to be on the verge of killing (or at least significantly wounding) one of the last viable career paths that would allow for homeownership, I've accepted that it probably just won't happen. Same with having children. Somehow having both feels like a pipe dream.
It's also why I'm not shocked that a significant number of startups lately are just young people doing whatever they can to grab some wealth before things get even worse. Overall, there's an expectation that things will simply keep getting worse with little chance of turning around. It'll be interesting (in a morbid way) to see how this affects the kids currently growing up today.
>Inequality doesn't materially harm anyone as long as it's caused by the rich
Asset inflation disagrees with you. You end up in a situation where you make more money, and you can buy more stuff, except stuff in a few particular but important categories. For example physical properties.
The term you're looking for is "real wages". Obviously I'm not claiming that someone making the same nominal wage in 1980 as they do now in 2026 is just as well off. That would count as "getting poorer".
That doesn't account for the growing asymmetry in the CPI. In the CPI, the asset bubble really only shows up as housing and perhaps transportation. Meanwhile consumer goods go down to compensate (as you'd expect from CPI being in the feedback path for the monetary creation "operational amplifier"). So we're left with everyday expenses continuing to be affordable (eg food, toiletries) while life expenses become ever more unaffordable (eg buying a house).
If you want to refute the argument, you have to find a graph of wages normalized in terms of the cost of a starter home in areas with active economies. But I suspect that is going to be hard.
Yes, if you cherry pick a few things that are disproportionately going up in price and say inflation should be calculated based solely on those things then you can make the numbers look worse. Or the reverse if you cherry pick things that are going down in price. I don't think either of those would be a more reasonable approach than looking at CPI.
It's not a "cherry pick" - the critique is specifically about the asset bubble. Owning assets is what it takes to be economically enfranchised in our system. Even though the asset bubble encompasses much more than just housing, I was meeting you halfway by focusing on where the asset bubble connects to the CPI metric. But with this response it seems as if you're intentionally trying to dodge the issue by focusing on the CPI.
I guess I would just disagree and say that having money makes you "economically enfranchised" by definition. That's why I'm talking about CPI.
If you ignore CPI in favor of solely looking at who can afford to buy real estate in big cities ("areas with active economies") then yes, perhaps things have gotten worse, but I'm saying that's the wrong metric to be looking at.
Note that a similar effect has now moved into traditionally consumer markets as well. It started showing at the grassroots with hoarding toilet paper and whatnot during the first Grump catastrophe, but has now solidified with things like completely fucking up the market for computing hardware.
I think I liked it better when the elites mainly conspired while playing mega golf - having that as the social attractor made for a naturally limiting effect on the imaginations of the people poised to do damage. If you would have gone to most coaches of distance-pissing teams (eg Gold Mansacks) in the 90's and asked for trillions of dollars to buy up all the RAM chips, you would have gotten answers on the order of "Kernel who?!". Now they're like "this guy looks like a serious nerd, we better not get left behind!"
Inequality is inherently bad for dynamic market economies. Often the argument is that increasing inequality is fine if the economy is growing and the lower classes aren't losing income but inequality also slows growth as more of the investment goes to consumption for fewer and fewer people. So economically I agree that inequality is not zero sum but it seems like inequality lowers the total productivity of the economy in the long term (so it's net-negative sum).
This is in addition there are effects on the civics and reduction in welfare of people. Like many things in economics, inequality is a hard thing to do good experiments on but the data suggest that inequality itself has a host of effects that you're ignoring.
Edit: there's a lot of literature on this. If you use Google scholar you can find tons of articles talking about the various effects of inequality (though as always with economics, the papers struggle to get good data). Modern economics definitely doesn't view it as an isolated and benign thing.
If the size of the pie is growing then it might be ok for the 'poor'. They get a smaller share of the bigger pie that is still bigger than what they had before.
However if the pie hasn't grown as fast as the inequality has grown, then their share has been on a continuous decline.
The US is not a high pie growth economy.
Rich getting richer can very much better a serious problem when the pie does not grow to keep up.
No, inequality is bad because money buys political power. Using some made-up numbers:
Say a typical cost of living is $50,000 per year. If you make $100,000 per year after tax, you can spend that extra $50,000 per year on political efforts - Lobbying, propaganda, political campaigns, soft power, hard power, land-grabs, etc.
If you have a billion dollars, you make about 30 million per year in returns. Cost of living is a rounding error.
Every billionaire is capable of outspending 600 six-figure software engineers, while sitting on their ass all day every day, or networking, or playing tennis. I think they realize this.
Do you think it is dangerous for a civilization when someone can dedicate all their waking hours to amassing power through any means possible, while they have more financial power than 600 middle-class people?
"For the first decade of his career, he lived in an apartment and worried about paying for vacations. Then, in his early 30s (...)"
... here is America, without paid vacation guaranteed by law since the government does not truly care about the middle or working class. It's amazing how serious media can write articles about economy, while the blatant obvious deficits slip right by their nose..
As someone that thinks of myself as a low-caste, middle class American it's interesting seeing all of these people listed in the article making less than me
85 comments
[1]https://www.elikarealestate.com/blog/tracing-buying-real-est...
If the poverty line were to be adjusted to reflect the share that food takes up of income today, from ~30% in 1963 to ~6% today, the threshold for a family of four would go from ~30k a year to ~150k.
More in-depth explanation here: https://www.yesigiveafig.com/p/part-1-my-life-is-a-lie
The main reason the share went from 30% to 6% is because people are richer. Poor people spend more money on food than rich people.
Food share dropped from ~30% to ~6% because real incomes have risen and food has become cheaper relative to housing, healthcare, education, and so on. That shift affects all income levels, including the poor. Your point doesn't contradict the article's, that the poverty line, based on 1960s food budgets, no longer reflect current costs of living.
Could you send the article where the author revises their claim?
[0] https://en.wikipedia.org/wiki/Engel%27s_law
You may think that poor people should be able to afford child care. That's a valid thought. But then you can't compare that to a 1950's definition of poverty where child care is definitely not affordable by the poor.
That actually illustrates the point nicely: typical economic and living situations from when the metric was created were very different from today in a variety of ways, and once again, the reason the 3x food costs number was chosen -- that roughly 1/3 of income of low-income households was spent on food -- is simply no longer true.
Now, what the poverty line should be is a whole 'nother topic -- for the record the ~150k number is more as an demonstration of how broken the metric is than an actual suggestion, at least as I see it. This discussion doesn't seem to be going anywhere though so I'm tapping out, but I would still appreciate it if you would link to the article you mentioned.
Driven by NIMBYism and some other things, those areas stopped building anything like enough housing, with the obvious result that demand outstripped supply and prices rose, putting them out of reach of many.
That's kind of the origin story of the YIMBY movement, which started forming to fight that trend.
> in 1970 (~33k/year) in nyc
Comparing NYC in the 1970s to today isn't a "big apple to big apple" comparison.
NYC in 1970s was on the verge of bankruptcy [0] and federal receivership, saw 1,000 industrial firms leave annually leading to 500K jobs lost from 1969-76 [1], and saw around 880K residents [2] leave for suburbs or other states. NYC didn't recover until the 2000s [3].
For your discussion, a better comparison should be cities+towns that were rich in the 1970s that remained rich in the 2020s, and cities+towns that were poor in the 1970s and remained poor in the 2020s. Similarly, a better contemporary comparison for NYC in the 1970s would be Detroit or potentially even Los Angeles.
[0] - https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article...
[1] - https://www.polyarchives.hosting.nyu.edu/exhibits/show/strug...
[2] - https://www.pbs.org/wgbh/americanexperience/features/blackou...
[3] - https://www.osc.ny.gov/files/local-government/publications/p...
Few people had air conditioning. Cars might last 100,000 miles, if you got a good one. They performed poorly, got awful mileage, and crushed the passenger compartment if you got into an accident.
Many people smoked, and people died younger. Medicine wasn’t as good.
Rich kids might have a giant set of books called an ‘encyclopedia’. It was about the only way to learn things that were outside your circle, there was no internet.
TV came in 3 channels, and you had to be sitting in front of it when your show came on. There was no way to record a show for later viewing.
Of course race relations were much worse then. So were things for women and others. Job advancement wasn’t the same as it is today.
I wouldn’t go back for anything. The poorest people today ( even the homeless, who seem to often have really nice tents and weather gear, relatively ) have it better than in 1970.
I don’t care what things cost. Practically everybody is richer today.
We had this thing called a 'library', with 'books', which helped me learn things outside my circle. Our schools even had a full-time librarian to help us with the technology. Even our church had a library, with a bunch of Tom Swift books.
We didn't live in the boonies like you did. On VHF we had 3 commercial network TV stations, an independent station, and PBS. On UHF there were more, including another PBS station, another independent station, and a commercial station in the Spanish International Network (SIN).
My parents could afford to buy a home and raise a family on a single income from my high school educated father. He died 10 years ago. My mother still gets benefits from his pension plan.
It's also true that cheap ass nylon tents are better than the canvas tents we used to camp in. While we metaphorically drown in plastic as the anthropogenic global warming predicted by the 1970s tightens its grip ever more.
Should "upper-middle class income" refer to your income regardless of COL, or should it refer to an arbitrary measure of what you can buy with it?
Which isn't to say that you're wrong about wealth inequality increasing. The share of wealth controlled by the ultra wealthy IS increasing, but the specifics of how that is playing out are nuanced and, at times, counter-intuitive.
> more people are moving up a rung than falling down one.
How do you figure that? Do we have any data that backs that up?
Most HNers and their social peers are in the 70th percentile and above.
[0] - https://news.ycombinator.com/item?id=47064222
Post 2020, and now especially with the economy being propped up by AI that appears to be on the verge of killing (or at least significantly wounding) one of the last viable career paths that would allow for homeownership, I've accepted that it probably just won't happen. Same with having children. Somehow having both feels like a pipe dream.
It's also why I'm not shocked that a significant number of startups lately are just young people doing whatever they can to grab some wealth before things get even worse. Overall, there's an expectation that things will simply keep getting worse with little chance of turning around. It'll be interesting (in a morbid way) to see how this affects the kids currently growing up today.
>Inequality doesn't materially harm anyone as long as it's caused by the rich
Asset inflation disagrees with you. You end up in a situation where you make more money, and you can buy more stuff, except stuff in a few particular but important categories. For example physical properties.
US median real wages, for reference: https://fred.stlouisfed.org/series/LES1252881600Q
If you want to refute the argument, you have to find a graph of wages normalized in terms of the cost of a starter home in areas with active economies. But I suspect that is going to be hard.
If you ignore CPI in favor of solely looking at who can afford to buy real estate in big cities ("areas with active economies") then yes, perhaps things have gotten worse, but I'm saying that's the wrong metric to be looking at.
I think I liked it better when the elites mainly conspired while playing mega golf - having that as the social attractor made for a naturally limiting effect on the imaginations of the people poised to do damage. If you would have gone to most coaches of distance-pissing teams (eg Gold Mansacks) in the 90's and asked for trillions of dollars to buy up all the RAM chips, you would have gotten answers on the order of "Kernel who?!". Now they're like "this guy looks like a serious nerd, we better not get left behind!"
This is in addition there are effects on the civics and reduction in welfare of people. Like many things in economics, inequality is a hard thing to do good experiments on but the data suggest that inequality itself has a host of effects that you're ignoring.
This article is a decent primer on the effect of inequality and what we know and don't know (and also some of the difficulties studying it): https://en.wikipedia.org/wiki/Effects_of_economic_inequality
Edit: there's a lot of literature on this. If you use Google scholar you can find tons of articles talking about the various effects of inequality (though as always with economics, the papers struggle to get good data). Modern economics definitely doesn't view it as an isolated and benign thing.
If the size of the pie is growing then it might be ok for the 'poor'. They get a smaller share of the bigger pie that is still bigger than what they had before.
However if the pie hasn't grown as fast as the inequality has grown, then their share has been on a continuous decline.
The US is not a high pie growth economy.
Rich getting richer can very much better a serious problem when the pie does not grow to keep up.
Say a typical cost of living is $50,000 per year. If you make $100,000 per year after tax, you can spend that extra $50,000 per year on political efforts - Lobbying, propaganda, political campaigns, soft power, hard power, land-grabs, etc.
If you have a billion dollars, you make about 30 million per year in returns. Cost of living is a rounding error.
Every billionaire is capable of outspending 600 six-figure software engineers, while sitting on their ass all day every day, or networking, or playing tennis. I think they realize this.
Do you think it is dangerous for a civilization when someone can dedicate all their waking hours to amassing power through any means possible, while they have more financial power than 600 middle-class people?
I thought I did well for myself, finding myself among the middle class, the end is on the horizon.
> Research shows [...]
In American mice, perhaps.
More winners, but even more losers.
But hey, you only ever hear about the winners, so it's great for the image. America is doing great!