Thank goodness the fiscal cliff deal only raises taxes on those making $400,000 (or $450,000 as a household). Because making $235,000 basically means you're just middle class—if you live in Manhattan. A NY Times real estate feature ponders what exactly is middle class in Manhattan, and, as we all know in our hearts, it's depressing. One woman, who rents out her apartment as a performance space, says: "My niece just bought a home in Atlanta for $85,000. I almost spend that on rent and utilities in a year. To them, making $250,000 a year is wealthy. To us, it’s maybe the upper edge of middle-class." Upside: We don't have to live in Atlanta?
The chief economist in the City Comptroller's office, Frank Braconi, says that real estate is what screws over New Yorkers, especially Manhattanites. The article runs down how back in the day, people could buy $200,000 one-bedroms apartments in Tribeca, and how these days, "The average Manhattan apartment, at $3,973 a month, costs almost $2,800 more than the average rental nationwide. The average sale price of a home in Manhattan last year was $1.46 million, according to a recent Douglas Elliman report, while the average sale price for a new home in the United States was just under $230,000." Oh, and "Household incomes in Manhattan are about as evenly distributed as they are in Bolivia or Sierra Leone — the wealthiest fifth of Manhattanites make 40 times more than the lowest fifth, according to 2010 census data." Time for a revolucion? Or more pot-smoking that your neighbors will complain about?
More interesting details:
If you live in Manhattan and you are making more than $790,000 a year, then congratulations, you are the 1 percent.
Most researchers define the middle class by calculating the median income for a place, and grouping people into certain percentages above or below the absolute middle.
By one measure, in cities like Houston or Phoenix — places considered by statisticians to be more typical of average United States incomes than New York — a solidly middle-class life can be had for wages that fall between $33,000 and $100,000 a year.
By the same formula — measuring by who sits in the middle of the income spectrum — Manhattan’s middle class exists somewhere between $45,000 and $134,000.
But if you are defining middle-class by lifestyle, to accommodate the cost of living in Manhattan, that salary would have to fall between $80,000 and $235,000. This means someone making $70,000 a year in other parts of the country would need to make $166,000 in Manhattan to enjoy the same purchasing power.
Using the rule of thumb that buyers should expect to spend two and a half times their annual salary on a home purchase, the properties in Manhattan that could be said to be middle-class would run between $200,000 and $588,000.
And that's still a lot of cheese! The article says sharing housing costs (hello, finding a significant other) helps, but children do not: "Not only do children strain the wallet as that one-bedroom becomes infeasible, but many middle-class families have little confidence in public education. Tuition fees at private schools can reach $40,000 a year."
God, it feels gross when Mitt Romney is right.