The median income in the U.S. if $52,029. At first-glance, that doesn’t seem like alot, especially considering the insane amounts of money those at the very top make. The administration (and many politicians) seem to consider a income about 4-5x the median to be rich. Certainly, regardless of where one lives, making more money, ceteris paribus, results in a higher standard of living. However, “rich” in one locale is absolutely not, no matter what anyone else may try to tell you, necessarily rich in another one.
In order for someone in Manhattan to have the same standard of living as someone making the national median income in St. Louis, they’d have to make over $125,000 a year! The cost of housing is 486% higher in Manhattan than St. Louis, utilities 87% more, groceries 66% more.
Using relatively conservative assumptions for purchase costs, taxes, etc, let’s assume you can afford about $5,500/month or so on housing. $250,000 a year in St Louis gets you over 6,000 sqft, 5 bed, 5 bath mansion. $5,500 (or so) in Manhattan gets you a 3 bedroom, 2 bath,5th floor 1,200 sqft (probably less, in actuality) condo in a decent-to-good location (this particular one is on 28th & 6th). The price/sqft is more than 5x higher for the NYC condo than the St. Louis mansion.
Certainly, there are more $250,000/year jobs in Manhattan than their are in St. Louis, but I think one would be hard pressed to consider raising a family in a 1,100 sqft NYC condo (even one with high-end finishes/appliances) versus raising one in a mansion in St. Louis, it’s hard to consider the former family rich, especially versus the latter. Sure, many people find the allure and cultural benefits of living in Manhattan worth the trade-off, but that’s another story for another time. “Rich,” no matter how you choose to define it, is a relative term when you account for cost of and quality of living. Anyone who says otherwise is likely a pundit and/or politician pandering to “the poor.”
The house in St. Louis is the 10th most expensive home in St. Louis currently listed in the Missouri MLS. The condo in Manhattan is roughly the 1,500th most expensive current listing there. Hell, there’s about 500 current listings in Manhattan for over $5 million, and almost 200 over $10 million, topping out at a stratospheric $60 million! $250,000 in St. Louis and you’re among the top 10 in town. $250,000 in Manhattan and you’re just another middle/upper-middle class guy or gal trying to make it big in the Big City.
Personally – and this concept goes back to when I was but a wee lad – when I think of someone being rich, not just well-off, but RICH, I think of at least a new(ish) S-Class Mercedes and a Range Rover in the garage, if not a Porsche Turbo or Ferrari to drive on weekends up to the house in Westchester or South Hampton or wherever. I don’t consider a family that can afford to live in a nice 1,100 sqft condo in an ok neighborhood in Manhattan to be RICH.
They’re certainly not poor by any stretch of the imagination – please, so saying would be patently ridiculous – but they’re not entertaining dozens of the City’s upper-crust guests for dinner parties (as one could do with the 6,000 sqft in the St. Louis mansion) let alone taking the non-existent Bentley out to the Country Club at which they can’t afford a membership.
Heck, depending on how many children they have and how much they spend on non-essentials, they’re still relegated to flying coach. RICH people don’t fly coach – let alone commercial – unless its by their own volition.
No one should be even remotely considering playing a violin – no matter how tiny – for someone making $250,000 in Manhattan, but no one should think, not for a minute, they’re living the lifestyles of the Rich & Famous, either.
They’re living better than 99.99% of the rest of the World’s population for crying out loud, but a Nationally-uniform standard of “RICH” for tax and policy purposes that ignores cost of living unfairly punishes those who live in high-cost areas far more than it does those who live in lower-cost ones.
*Caveat: The information presented above on cost of living is from the link at the beginning of this article is from ReMax, the real estate brokerage. The data is cited as being from a CNN Money article and the U.S. Census but I have not independently verified the accuracy of these numbers.