Rich people love few things like they love making up reasons for why they are not in fact rich. Personal Capital, a web-based money management application similar to Mint, has one doozy of a post in this genre on their company blog/newsletter today:
A six-figure salary still means you’re rich
Dylan Matthews was a senior correspondent and head writer for Vox’s Future Perfect section. He is particularly interested in global health and pandemic prevention, anti-poverty efforts, economic policy and theory, and conflicts about the right way to do philanthropy.
The argument boils down to “$100,000 gets spent more quickly if you make extremely expensive consumption choices like living in Manhattan,” which is fair enough. But people making six figures are rich. Don’t take my word for it: the American people are remarkably consistent on this point.
A December 2011 Gallup poll found that 53 percent of Americans think they’d be rich if they made $100-150,000 a year; in fact, 18 percent said the cutoff was somewhere below $60,000 a year, 12 percent that it was between $60,000 and $99,999 a year, and 23 percent that it was between $100 and $150,000 a year. Only four percent of respondents said they’d need over $1 million a year to feel rich.
(Kim Parker / Pew Social Trends)
Similarly, in April 2012, Pew Research Center’s Social and Demographic Trends project found that the median income respondents cited as necessary to be considered “wealthy in their area” was $150,000 a year.
There was interesting variation within the responses: People who self-identified as upper or middle class put the median at $200,000, whereas those identifying as lower class put it at $150,000. Suburb residents put the number at $200,000, while city-dwellers put it at $180,000, and people in rural areas put it at $125,000. People in the West put the cutoff at $160,000, those in the Midwest and South put it at $150,000, and people in the Northeast cited a cutoff of $200,000, reflecting the Acela corridor’s tendency to be huge whiners on this particular point. But no one put it above $1 million.
UCLA political scientist Lynn Vavreck and the polling firm YouGov recently conducted a survey on this point that found somewhat higher numbers. But intriguingly, they also broke down responses by the respondents’ income. Those in household making less than $25,000 a year, $293,000 was the cutoff; for those making $25,000 to $60,000, it was $394,000; for those making $60,001 to $120,000, it was $426,000, and for those making over $120,000, it was $501,000. Rich people, in other words, tend to have more stringent definitions of “rich.”
A 2011 poll from Reason-Rupe found the same. People in households making under $25,000 gave cutoffs ranging from $100,000 to $500,000 a year, while those making $200,000 or more gave cutoffs between $250,000 and $1 million (both interquartile ranges). Some of this appears to result from confusion among rich people about the actual shape of the US income distribution. A 2012 Ipsos poll of Americans making $250,000 or over found that they, on average, thought the cutoff to be in the top one percent of Americans by income was $1.67 million a year — about five times the actual cutoff.
For record, according to the Census Bureau a six-figure salary still means you’re rich. 78 percent of households in 2012 made less than $100,000 a year, 90.5 percent of households made less than $150,000, and 95.5 percent made less than $200,000. If your household makes $100,000 or more, you are doing better than the vast majority of Americans. So don’t complain when people call you rich.
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