Losing Track of House Keys--and of the Middle Class

How many houses does it take to be rich? Let me count the addresses…….
When John McCain was recently asked how many houses he owned, he seemed to have a senior moment--or was he just embarrassed to admit that he has more houses than most people have rooms in their one house. Turns out, he and his wife own at least eight domiciles [sources don’t agree on the number], ranging from a home in the trendy, resort area of Sedona, Ariz., to luxury condos in Washington, D.C., and in Phoenix, as well as several other abodes.

Now it doesn’t really matter how many houses he owns [let’s hope he and his family enjoy them all]. What really matters is his comment that he thought being rich meant earning around $5 million a year. The candidates were both asked to define “the income at which you move from middle class to rich?” Well, if someone making $3 million to $4 million in America is still middle class, McCain hasn’t done much reading of the Census Bureau’s economic statistics for household wealth. Obama pegged the transformation to rich at $150,000, a lot less [and a lot more realistic, but still not quite accurate]. By Census Bureau definition, the middle class ranges from around $40,000 to $95,000 [okay, go ahead and stretch that to $100,000 if you like] a year. So for those folks actually in the middle class, $100,000 might look like the threshold to the upper class--or to becoming rich, if not being rich.

America has a rapidly shrinking middle class, for a host of complicated reasons. But it seems that the definition of middle class has gotten muddled. No doubt, it takes at least $100,000 for a family of four, today, to maintain a solid middle-class lifestyle with a comfortable, but not extravagant home [one home] in a decent neighborhood, two cars, quality education for the kids and summer vacations at Disneyland. For most families making $100,000, the country club membership, trip to Europe and clothing with designer labels are not attainable--without going into debt. The mortgage, gasoline, food and medical bills take up all but a small amount of that $100,000, and with prices going up as they are now, the part that remains and is available for discretionary purchases is becoming less and less. In America today, families making less than $100,000 have to pinch pennies, and many making less than $50,000 simply cannot make ends meet.  So how does someone making $5 million even relate to the middle class and their problems (financial or otherwise)? The answer is they probably don’t.

The wealthy and the poor both have a disconnect with the middle class. Riding on a Manhattan city bus, a few years ago, I overheard a conversation between two African-American guys in their early 20s. As the bus passed an elegant high-rise condo building on Third Avenue, one guy commented to the other: “Wow, I bet it costs $100,000-a-year to live there.” Boy, was he wrong--the minimum price of a unit in the building was more than $700,000. It’s hard to imagine how the other-half lives, whether that other half is richer--or poorer.

McCain reports $405,409 in income, and on the most recent tax form, his wife Cindy, who files separately, reports income of $6 million. Obama and his wife, who file jointly, report income of $4.2 million. So, I guess by McCain's definition, he is rich and the Obamas are middle class. I’m sure it is easier for the Obamas to keep up with the keys to their one house, though. In the interests of being nonpartisan, maybe both candidates could do a little brushing up on middle class mathematics.

--Diva

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