Home / General / People who make 400K A Year: Very Affluent

People who make 400K A Year: Very Affluent


Prof. Brad Deling has an excellent post on a particular type of rich person rage, i.e. “$400,000 a year isn’t really that much money, so any increase in marginal tax rates is outrageous.” In this case the argument seems to be that if you don’t have an unlimited budget for luxury trinkets and vacations after buying an extremely expensive house in a good neighborhood in a terrific city and sending your kids to extremely expensive schools, you’re not really rich. I trust that this is self-refuting.

A central problem with the idea that 300 or 400 grand a year doesn’t go as far if you live in a desirable urban location is that living in a desirable location is something you’re getting with your money. If it’s really important to you to have money left over for ivory backscratchers, you can move to the periphery of the urban area; being very affluent doesn’t mean not having to make any tradeoffs. This goes double for Manhattan, where a status cost above and beyond actual amenities is built into the price of real estate. I mean, if you’re paying a huge premium to live on the Upper West Side instead of Brooklyn or Queens, it sure ain’t for the restaurants.

…Fallows has more.

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  • mark f

    Have some compassion. After this guy pays someone else to mow his lawn, clean his house, and raise his baby, he only has a few hundred dollars left to spend on himself.

  • I think those who suffer from the “rich person rage” also suffer from the “I want it all and I want it NOW” syndrome (to paraphrase Freddy Mercury from Queen). They should have to pay the same percentage of their income in taxes as the middle classes do – they don’t work any harder for their money than those in the middle classes, why should they get to keep more of their income? My husband makes $55K a year, and almost half of that is his Navy pension (20 years and 20 days he gave for his country) but even claiming no one on his W2s, we end up paying the federal government at the end of the year – is that fair for a veteran who can’t live on his retirement and has to work, and works 12-hour days in a warehouse? And these people making $400K a year and living the life of Riley are bitching about having to pay higher taxes? Come live in our world, asshats, and see how you like it.

    • Anonymous

      Your just stupid.

      • Anonymous


        • annon

          I agree..choose a career that makes more money then…stop deciding how to spend other people’s money! I make a crappy income and don’t expect anyone else to pay more taxes. If we all just paid our taxes and the rich corps didn’t find a hundred loopholes to reduce their contribution to 8-10% or whatever they do, we would all be much better.

  • As Patrick Ewing once said, “Sure NBA players make a lot of money, but we spend a lot too.” Thus they clearly deserved a raise!

    • jdkbrown

      Well, between giving it to them and giving it owners…

      • witless chum


  • R.Johnston

    Actually, I think the argument goes as follows:

    1) I’m a financially irresponsible schmuck who by the grace of a roll of the dice makes $400,000/yr.

    2) I spend every penny of it and never bother to retire debt. I deserve to consume like a starving lion with a fresh kill. I proudly live paycheck to paycheck, and will do so no matter how much take-home pay I make.

    3) Therefore, cutting my taxes will stimulate the economy rather than result in excess savings, so why don’t you just go ahead and do it already?

    • elm

      This isn’t quite fair to the guy: part of the reason why he claims to have so little disposable income is because of the extremely large amount of money he is putting in his (non-taxed) retirement fund and for “building equity” in his house.

      If he decided to scale back either of these areas of savings, he could still afford the gardener or nanny or housekeeper even after a tax increase!

      • DrDick

        Yeah, if you look at the breakdown of his “expenses” much of it is in savings and other investments (particularly if you include insurance and elite private education for his 3 kids). Not a lot of “stimulus” in there.

  • Davis

    I think Delong had it right when he said that his problem comes from looking up at the 10% above him rather than the 90% below. Rich people have private jets and second homes in Tuscany, so he’s not really rich.

    • DrDick

      It is more like the 0.1% above and 99% below as he is well into the top 1% of the income distribution.

      • Anonymous

        u r wrong ppl

  • Holden Pattern

    I will make the same points I made at Balloon Juice.

    1) This Henderson jackass is a jackass.

    2) As a “small business owner” who makes a very nice, though unpredictable living, but is tied to a very high-cost area, I don’t mind paying slightly higher taxes, with the caveats below. I have worked pretty hard and have been very lucky to be able to move into the upper middle class from the (roughly) lower middle class of my childhood. I’m particularly aware of the luck part of that equation.

    3) I am “rich” but I don’t *feel* rich, which has nothing to do with keeping up with the Riches. My main concern is that the savings I have can be wiped out very quickly by a health problem or a car accident, or that the economy will just collapse because we’re ruled by a shifting coalition of the crazy and the feckless. So I save really very aggressively because of that insecurity.

    4) I know that the extra taxes that I might pay if the Bush tax cuts expire won’t go to a meaningful safety net for me or my fellow citizens, or better roads or better schools, or repaired sewers or water systems. They’ll go to retiring the massive debt caused largely by 2 pointless wars that I fervently opposed, paying off war profiteers, massive military Keynesianism, subsidizing the extractive industries instead of preparing for the transition away from a petro-economy, tax breaks for the well connected, etc. etc. So I really resent that. I don’t resent the taxes, but I do resent that money that I could be saving against the insecurity caused by our rulers instead goes to prop up the stupid policies of those rulers which *create* that insecurity.

    5) All that said, I still vote for people who, though largely feckless, at least nod toward sane policies, which includes revenue solutions. We can’t stop the bleeding, but maybe we can at least slow it some.

  • Holden Pattern

    As a quick follow up, the difference between rich and not-rich, is that the rich can’t be made poor by one piece of bad luck, and they don’t have to work for a living. The real problem in the US (as in any high-inequality, low-safety-net society) is that the class warfare promoted by the actual rich pits different segments of the not-rich against each other as they fight to climb out of the risk-susceptible classes.

  • DivGuy

    As a quick follow up, the difference between rich and not-rich, is that the rich can’t be made poor by one piece of bad luck, and they don’t have to work for a living.

    Basically, you’ve restricted “rich” to refer to less than 1% of society. I don’t really see any utility to the term so used.

    At the very least, can we say that folks in the top 5% or whatever of income/wealth are “upper class”? Or should “upper class” also be restricted to a tiny portion, so that almost everyone gets called “middle class” and the term gradually becomes useless? At some point, there has to be more than a couple thousand people to put into one of these categories, otherwise the categories stop being useful for social analysis.

    • Holden Pattern

      I guess that all depends on your goals, right? My goal would be for people in my position to understand that they actually have more in common with a janitor than with Charles Munger, and to vote accordingly.

      Instead, we have a lot of people in the US actually voting against their long term interests because they’re worried about losing what they have. I mean, look at the numbers over the last 30 years. The exponential differences in the percentage of income (and wealth) by percentile, even across the top 10%, is a dead giveaway about what’s actually going on.

      So, sure, there are useful distinctions to be made across income levels for social analysis. But the reality is that everyone who can be made poor by one stroke of bad luck, whoever they are, have more in common with each other than with the top 1%.

      • DrDick

        You have some valid points here, in particular that class definition is about more than simply income. It is also true that the interests of the working rich diverge markedly (though far from entirely) from those of the rentier class. On the other hand, income in the top 1-2% is still very affluent and places your interests in most regards very far away from those of that janitor.

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  • DrDick

    Have to say that I spent a quite delightful afternoon in those threads yesterday, enjoying one of the most epic smack downs I have had the pleasure of participating in.

  • mike in dc

    On the margin, it is at least possible that someone living in a non-exclusive but still expensive area, carrying heavy debt including six figure student loans and a modest mortgage, could have a combined household income of, say, 250,000 and yet be merely at the upper end of upper middle class, in practice if not in theory. How do I know this? Because that would be the best case scenario for my wife and I, once I finish law school next year: me making 160k+40k bonus as a biglaw associate, her making 50-75k as a licensed social worker, with 550k in mortgage+loan debt(the loan debt being the larger portion of that), living in DC metro. Are we paying a premium to live 150 yards away from lower income housing and a quarter mile from a cluster of registered sex offenders? yes, probably. If I actually got that kind of job and made that kind of money, we’d have some spending money, true, but in practice we wouldn’t have the kind of spending money that someone with 250k/year in income and half the debt load might have. In point of fact, we couldn’t afford a 500+k home, or a 50k+ car, and so forth. But I wouldn’t presume to lump us as middle class but only situationally upper middle class, until the debt goes down. That’s the only proviso I’d attach–try to be cognizant of student loan debt and locality costs which attach even if you don’t live in manhattan(and which you pay in order to have that high-paying job).

  • L2P

    One thing I’d like people to keep in mind before joining this dogpile. I would never complain about my life the way that Henderson does, but there’s a certain amount of feeling “trapped” that leads to that sort of thinking.

    Most people in the (let’s call it) “Henderson Plateau” are pretty specialized. There’s not a lot of places you can go and do your job. They’re stuck in a major city working insane hours, usually with rocketing real estate prices, and crappy schools. Those luxury expenses (like a $1M house, private schools, and childcare) don’t feel like luxuries when that gets you a 3 bedroom house that needs a lot of work, a school that is basically what suburban kids get for free, and the childcare just lets you work the insane hours you need to work.

    IMO this is like reverse real murkinism. I’ve never heard someone complain that they aren’t making Trump money and so they “aren’t rich.” I’ve heard lots of complaints that someone’s getting paid a ton for some high-stress, high-credential job, but has basically the same life they’d have being a cop straight out of high school.

    Envy of Donald Trump doesn’t drive this; it’s envy of a successful insurance salesman in Cincinnati or a middle executive in Pittsburgh. It “feels” like the same lifestyle, except you pay a ton in taxes.

    • DrDick

      Everybody I work with works insane hours and nobody makes more than a fraction of what the Hendersons do. Several have childcare during the day, mostly students, and a few have a house cleaner in once a week. Few send their kids to private schools even though the local schools are only OK. They have made choices and live within their incomes, unlike the Hendersons.

      • L2P

        Um, not to debate the “everyone you work with works insane hours,” but the point is that the sacrifice of working insane hours sometimes doesn’t get you very much. As you say, you get exactly the same lifestyle, except it costs 8 times as much. Busting your hump for a 3 bedroom house and putting your kid in a mediocre school doesn’t make you feel “rich,” even if you make $300k. It makes you wonder why you bothered getting that M.D.

        • DrDick

          Ummm, these are college professors (anthropologists actually), just like Henderson (he’s a law prof, the wife is the physician). The point is that a lot of people bust their asses at their jobs and are nowhere nearly as well compensated as he is (nor do they have anything like the lifestyle he does), but are generally happy in their lives and do not constantly whine about how unfair it is. He is quite simply a pampered, over privileged, self-indulgent upper class twit who should STFU.

    • PhoenixRising

      Envy of Donald Trump doesn’t drive this; it’s envy of a successful insurance salesman in Cincinnati or a middle executive in Pittsburgh.

      May as well cite envy of unicorns. There are no more of either of these things, largely due to the extraction of wealth we call ‘the housing bubble’.

      I used to run a business serving those guys, now I have a job, barely. We broke the economy. The highest earners are not the only ones busting their asses for what feels like nothing.

      • DrDick

        The difference is that, for folks toward the bottom, it increasingly really is nothing.

        • cer

          I think people like Henderson tend to overlook the number of choices available to them to change their situation. Not only have they made lifestyle choices about where and how to live but so too have they made choices about work that are not available to others. And I get annoyed when people imagine that only high-earners work insane hours and tread water. Do they really imagine that the people who earn under six-figures work 20-hour weeks and spend their time leisurely futzing around? If so then quit your job and see what it is like still busting your ass working insane hours and not being able to pay rent, not a mortgage, and being unable to buy your kids new shoes. Underneath the rich-class’s whining is a belief that they work so much harder and are so much more important than everyone else that they deserve a much better life than everyone else. That sentiment comes through quite clearly in the contrast between the doctor and police officer. Not only is it an inaccurate view of the lifestyle of most police officers but it is an assumption that you deserve so much more and resent that people you find yourself superior to might have a similar life.

          • DrDick

            Yep. I have done those kinds of soul killing menial jobs in the past and would rather work 60-80 hour weeks at my current job than a 40 hour week there. This of course does not take into consideration coerced overtime and the growing number of people working 2-3 jobs (often all full time) just to get by.

          • Malaclypse

            Do they really imagine that the people who earn under six-figures work 20-hour weeks and spend their time leisurely futzing around?

            From the good doctor’s comments at Deling’s place:

            The nanny is a must for two-income couples with kids.

            Clearly, anybody who cannot afford a nanny MUST have more free time than Henderson.

            I pay my “gardener,” who just arrived from Mexico, $20 per week to cut my grass etc… My housecleaner is a dear Polish immigrant who employs dozens just like her.

            That’s three servants.

    • djw

      They’re stuck in a major city working insane hours, usually with rocketing real estate prices, and crappy schools.

      I believe Henderson is a tenured law professor, so if he’s working insane hours that’s by choice rather than necessity.

  • rickhavoc

    We’ve lost touch with the very useful old-timey moniker “useless rich,” which is what Henderson, with consternation, sees he is not.

    The Fallows comment re self-pity is a rule/caveat for the road.

  • LuckyJim JD

    Farbissiner paskudnyaks like Henderson are exactly why I spend as little time as possible in the company of other law professors.

  • PhoenixRising

    I went from DeLong’s place to read Professor Todd’s statements in defense of his whinge. And my God, all I can recommend is that anyone who has been ‘taught’ anything about the fields of law and economics by this yahoo is owed a full refund by the U of Chicago.

    Guess what, Todd–everyone saving and spending less than you feels anxious about the future, just like you do. I can promise you that your wife and yourself cannot object more strongly than my wife and I do to the fact that someone is going to have to pay a bit more in taxes to retroactively fund the fiscal bender of 2001-2007. As we’re paying a higher percentage of our total income in total taxes and fees, and still only got the same two votes the two of you got, we may object more than you do.

    • Holden Pattern

      And Henderson’s solution to this problem is the classic randroid “tax me less” whine, as opposed to the “wouldn’t it be fucking awesome if we had healthcare for everyone, and the public schools were really really great everywhere”?

      That’s (among other things, I’m sure) is what makes him an asshat.

  • Murc

    I would like to note that Holden Pattern, in more than one thread above me, has kind of a point; there’s a difference between ‘rich’ and WEALTHY. I think that Chris Rock put it best.

    Money quote; “Wealth is passed down from generation to generation. You can’t get RID of wealth. Rich is some shit you could lose with a crazy summer and a drug habit. Fuck, Rick James was -rich-.”

    Mr. Hendersen is rich. Low-end rich, but rich. And credit where credit is due; he seems to be real responsible with his money. He’s paying off his house, saving for his retirement, and educating his children well.

    But he’s not wealthy, and it seems like he resents the hell out of that and is directing his resentment in unhealthy ways. Other have made both the moral and practical argument for why he’s wrong much more cogently and eloquently than I ever could, but I’d like to add that I feel kind of sorry for him. He seems very angry and without a good reason.

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  • Chris

    I’m still perplexed that the Democratic counterattack on GOP whining about tax hikes isn’t, “In the rare case that you, personally, experience a tax increase, we recommend you thank your lucky stars that you’re (1) employed, and (2) making over a quarter million dollars a year. Most people aren’t, and you sound like an asshole by complaining.”

    Of course, Democrats would also need to explain to people what the threshold for not getting your tax cuts extended is — since most people who think Democrats raised their taxes are, in fact, spectacularly wrong, by which I mean, full of shit through ignorance or denial.

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  • Boomer

    Don’t assume everyone who earns $400k is like this. My wife & I earn $450k, I earn $400k & she earns $50k and yes she still works. We eat 3 meals a day at home, seldom eat out, mow our own lawn, clean are own home, wash our cars by hand, do most home repairs ourselves, fly coach, get $10 haircuts, etc. I write this sitting in shorts with holes in them and an old shirt. We do live in a $700k home and have nice vehicles that are paid for. Oh as far as college debt…$0 as we didn’t go to college. Got married at 19 and worked our ass off 70-80hrs a week and worked our way up the ladder. We live in Kansas so the cost of living is very low. Make our own coffee each morning as we can’t fathom paying Starbucks prices. How many of you complaining about being broke go to Starbucks or similar each day? It really isn’t about how much you make, it’s about how you spend it. If you met up with us somewhere you would assume we’re middle class folks but in reality we’re worth several million…

    • Ronan

      where the hells all your money going? (if you dont mind me asking)
      or is it a lifestyle choice to live relatively frugally, and its being saved instead?

      • where the hells all your money going?

        Hey, it takes work—lots and lots of unpaid work—to resurrect 3-year-old threads! I myself can only afford it thanks to my lavish Social Security checksdirect deposits!!

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