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Post by Disciple of Fate on May 18, 2023 8:14:42 GMT -5
It might depend on the country, but I have not really seen the passive income as part of the middle class definition. The OECD defines it as an income between 75-200% of the median income in your country. But just imagine how little money the lower end can be in the current day world.
To get an average mortgage (i.e. the average house price) in the social-democrat Netherlands, you need an average of 200% to even qualify by yourself or need two 100% median incomes as partners. You need double the average income for an average house.
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Post by easye on May 18, 2023 10:32:39 GMT -5
It is currently impossible in the US to pay for a one-bedroom apartment on Federal minimum wage anywhere in the Nation.
Now, imagine trying to buy a house.....
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Post by herzlos on May 18, 2023 16:09:34 GMT -5
It might depend on the country, but I have not really seen the passive income as part of the middle class definition. The OECD defines it as an income between 75-200% of the median income in your country. But just imagine how little money the lower end can be in the current day world. To get an average mortgage (i.e. the average house price) in the social-democrat Netherlands, you need an average of 200% to even qualify by yourself or need two 100% median incomes as partners. You need double the average income for an average house. You're right; I can't see any reference about income now so I'm relying on someone elses interpretation of the archaic English class system, I think from a Stephen Fry book or interview.
Though interestingly it puts teachers and nurses in the middle class too, despite them being awfully paid (nurses more so than teachers), but a lot of the definitions there seem pretty out of date.
I found this interesting too:
I'd need to go and check my pay slips, but that'd put me in the top 20%. Which is the only band that stands a chance of getting a mortgage on the average English house (£251k in 2019); the maximum mortgage a household on £54k would be £243k assuming a 4.5x multiple, with a 10% deposit (£27k) would bring them up to about £270k.
Which is mental. I could only just afford that after 15 years trying to build equity for a deposit.
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Post by Disciple of Fate on May 18, 2023 16:33:11 GMT -5
I feel that it is sort of in the government interest to keep the definition vague and archaic. People like to think of themselves as middle class and their country relatively wealthy. A lot of countries estimate about 60% of citizens are middle class (OECD average is 61%, UK is 58% by their standards), but as you demonstrate with that link, that is an incredibly generous interpretation in today's world.
Nobody likes to think of themselves as poor/working class, but if you define middle class by purchasing power, most of us struggle to be at average purchase power/'middle class' by one income alone.
I feel that labels like middle class sort of create the impression of "I don't have it so bad" or "I have to protect my wealth/standing", which translates into voting behaviour that is not beneficial to actual economic standing in society.
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Post by Haighus on May 18, 2023 16:34:20 GMT -5
Though interestingly it puts teachers and nurses in the middle class too, despite them being awfully paid (nurses more so than teachers), but a lot of the definitions there seem pretty out of date. See points upthread about a shrinking middle class. |
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Post by herzlos on May 19, 2023 8:25:08 GMT -5
I feel that labels like middle class sort of create the impression of "I don't have it so bad" or "I have to protect my wealth/standing", which translates into voting behaviour that is not beneficial to actual economic standing in society. I think you're right there; if you convince people that they are rich they'll vote in favour of the actually rich. Because so few people seem to appreciate that they are closer to being homeless than a millionaire, and even those who are technically millionaires due to their home value can't really access that spending power.
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Post by easye on May 19, 2023 9:02:27 GMT -5
You nailed in Herzlos.
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Post by maddocgrotsnik on May 19, 2023 11:13:54 GMT -5
The USA does seem like a pretty wonderful place to live, if you’re wealthy. But not so much if you’re not.
I mean, I guess the same is true pretty much anywhere, but with your healthcare system it seems particularly somehow ‘extra’ true in the USA.
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Post by maddocgrotsnik on May 19, 2023 11:26:13 GMT -5
I feel that labels like middle class sort of create the impression of "I don't have it so bad" or "I have to protect my wealth/standing", which translates into voting behaviour that is not beneficial to actual economic standing in society. I think you're right there; if you convince people that they are rich they'll vote in favour of the actually rich. Because so few people seem to appreciate that they are closer to being homeless than a millionaire, and even those who are technically millionaires due to their home value can't really access that spending power.
On this, I don’t disagree, but I feel the need to offer a qualifier. As noted on the page over, whilst my current job doesn’t pay megabucks by any stretch? It’s still the best paying job I’ve ever had, and my life is ultimately a Comfortable one. By no means luxurious or one of financial excess. But one where month to month I just don’t need to worry about bills. Sure some bills are unpleasantly high and will impact what I can do that month, but I can still pay each and every one as and when they fall due. I do not kid myself I’m rich. I do not kid myself I’m paid anywhere near fair for what I actually contribute. But…I still consider myself financially privileged, possibly because I’ve been on minimum wage before. Technical Millionaire homeowners absolutely can access it though. Lifetime Mortgages do exist, and they’re….not entirely a good thing. In time, my inheritance will be enough for me to own a modern flat. I have no kids, I have no spouse. Whilst I do kind of hope the latter changes, that means when I pop my clogs in turn, there’s nobody in particular who stands to inherit. So to shore up my pension, I may very well go for an Equity Release Mortgage. Money in my pocket. And the mortgage company get the house when I’m dead. Bit shit overall, but what the fuck will I care? I’ll be dead and probably have had a great time on the resulting Money. But professionally? I’ve seen some poor sods use such a thing as their actual pension - leaving their loved ones with Absolutely Fuck All - especially if the borrower lived like, a really long time after they’d pissed the money up the wall. |
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Post by herzlos on May 19, 2023 16:21:35 GMT -5
Yeah you're right, there are ways to get equity of of property - downsizing too - but both require a lot of effort and cost compared to pulling money out of a savings account.
We're in a similar position where I don't strictly budget month to month - I know roughly what's coming out but we use a credit card which kind of balances it out (a large chunk of my pay comes from bonuses every few months so we build up debt and clear it) and spending is more a case of "is this a good idea?" rather than "Can this wait until pay day?". But I've also come from a position of being totally skint, living in disgusting cheap flats and eating pasta with frozen veg for dinners, making do with free and often broken furniture.
I also see a LOT of poverty locally; we donate a lot of stuff we no longer need to to local folk who do. The most poignant example was a kids table/chair set that's been in the shed for at least a year has gone to a local 2 year old who now has somewhere to sit to eat meals. I can't quite comprehend it because we're comfortable but I can see it and it's difficult to deal with, because I can't help all of them, and the burden shouldn't be on me when there are people hiding more money than I'll ever see in my lifetime into offshore accounts just to avoid contributing to the country they leach their money out of.
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Post by Disciple of Fate on May 19, 2023 18:14:09 GMT -5
I think you're right there; if you convince people that they are rich they'll vote in favour of the actually rich. Because so few people seem to appreciate that they are closer to being homeless than a millionaire, and even those who are technically millionaires due to their home value can't really access that spending power.
On this, I don’t disagree, but I feel the need to offer a qualifier. As noted on the page over, whilst my current job doesn’t pay megabucks by any stretch? It’s still the best paying job I’ve ever had, and my life is ultimately a Comfortable one. By no means luxurious or one of financial excess. But one where month to month I just don’t need to worry about bills. Sure some bills are unpleasantly high and will impact what I can do that month, but I can still pay each and every one as and when they fall due. I do not kid myself I’m rich. I do not kid myself I’m paid anywhere near fair for what I actually contribute. But…I still consider myself financially privileged, possibly because I’ve been on minimum wage before. Technical Millionaire homeowners absolutely can access it though. Lifetime Mortgages do exist, and they’re….not entirely a good thing. In time, my inheritance will be enough for me to own a modern flat. I have no kids, I have no spouse. Whilst I do kind of hope the latter changes, that means when I pop my clogs in turn, there’s nobody in particular who stands to inherit. So to shore up my pension, I may very well go for an Equity Release Mortgage. Money in my pocket. And the mortgage company get the house when I’m dead. Bit shit overall, but what the fuck will I care? I’ll be dead and probably have had a great time on the resulting Money. But professionally? I’ve seen some poor sods use such a thing as their actual pension - leaving their loved ones with Absolutely Fuck All - especially if the borrower lived like, a really long time after they’d pissed the money up the wall. But here comes the generational wealth thing. Even if you have a decent life and lifestyle, you still make relatively less than your parents (the average person at least). If you (or your parents) access the value of their house and eat into it, that leaves less for yourself (what if something happens to your income/savings and your house is not truly yours?)/the next generation. Overall this will start a downward trend, because your generational wealth is decreasing, you or later generations will slip even faster from the 'middle' class. Of course, this only matters if you have children as you say, but plenty of people do. As potentially greedy as it sounds, parents should be keenly aware of financial decisions impacting an inheritance in a major way. Is going on those extra vacations (using it as spending money is how I often see it advertised) by eating into their house's value really worth the potential future financial hardship of their children? That is of course a privileged thing to even be able to consider, but unfortunately in today's world it should be kept in mind. |
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Post by pacific on May 22, 2023 4:54:28 GMT -5
In the U.K., recession is feeling kind of inevitable. Political levers are frantically being pulled to prevent pay rises, whilst inflation and cost of living keeps on going up. So other than essentials (rent/mortgage, bills, food, taxes etc) folk just aren’t spending like they once could. As an example, my combined gas and electric bill is now £100 a month, where it was around £60 this time last year. Petrol is also more expensive. Now, I myself am doing OK. Whilst my disposable income is squeezed, it is still there. But now I’m doing pub once a week, where a pint is up from £3.80 to £4.70, and take away food twice a month. That all trickles down through the economy, as local businesses see higher costs and lower income. But hey, the millionaires and billionaires are doing alright, so I guess everyone else being skint is just the price of doing business, yeah? My question - at what point are we actually classed as being 'in recession'? I am now spending that much more on a mortgage, bills and essentials that my other spending has dropped drastically. My local town is having shops closed left, right and centre (this includes charity shops and a Costa coffee - when things like that can't afford to stay open you know things are bad). I have friends that are renting and their rent, bills and just cost of living are so high that they literally have no money left at the end of the month - saving for that mortgage is now an impossibility. Other people I know I'm pretty sure are bouncing increasing debts from one credit card company to the other each month - it's not sustainable. Huge numbers of people using food banks and living below the poverty line, I honestly can't remember at any time in my adult life things being even close to how bad they are at the moment. I wasn't old enough to know how bad the early 90s recession was, will need to find out how that was in terms of comparison. |
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Post by Haighus on May 22, 2023 6:06:01 GMT -5
Well, it is technically based on growth in the overall economy, so I suspect a recession for everyday folk can be obscured by profits for awhile before it apparently matters to those in charge. Until the stock market starts to hurt, who cares? Not our millionaire PM...
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Post by herzlos on May 22, 2023 6:29:54 GMT -5
A recession is 2+ consecutive quarters of negative economic growth. I don't think that'll necessarily be seen if consumer spending shifts from luxuries to essentials because the money is still spent.
UK growth is apparently at about 0.1% currently so we're just avoiding a recession. Growth in 2022 was 4% but that was more of a return to some of the damage caused by Brexit and Covid.
I'm not sure what we're currently in should be called but obviously the Tories are very keen to push that we're not technically in recession.
I don't remember the 90's but was around for the 2007 house price crash and it definitely didn't seem as bad as this one.
I'm sure it's always the case but I can't see any way out of this one without a massive structural change - as costs rise we'll lose more businesses and costs will go up more. Until housing and utility prices drop compared to income, then it's going to be hard for most people to spend money.
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Post by Haighus on May 22, 2023 7:25:56 GMT -5
A recession is 2+ consecutive quarters of negative economic growth. I don't think that'll necessarily be seen if consumer spending shifts from luxuries to essentials because the money is still spent. UK growth is apparently at about 0.1% currently so we're just avoiding a recession. Growth in 2022 was 4% but that was more of a return to some of the damage caused by Brexit and Covid. I'm not sure what we're currently in should be called but obviously the Tories are very keen to push that we're not technically in recession. I don't remember the 90's but was around for the 2007 house price crash and it definitely didn't seem as bad as this one. I'm sure it's always the case but I can't see any way out of this one without a massive structural change - as costs rise we'll lose more businesses and costs will go up more. Until housing and utility prices drop compared to income, then it's going to be hard for most people to spend money. Well, people were already buying essentials, so they have gone from essentials + some luxuries to just essentials. That should reduce the activity of the economy and lead to a recession. Rich people are richer though, so the economy still appears to be growing (just) at the moment. A lot of that "growth" is probably financial crap that doesn't add any actual value though, investments and the like (particularly buying assets from each other for inflating prices), so I strongly suspect we are actually in a recession that is being hidden through "creative" accounting. |
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