Okay, yesterday I couldn’t face commenting on recent news stories, but I have to tackle this one:
You Try to Live on 500K in This Town
Like most readers, I can’t dredge up much sympathy for anyone who thinks it’s tough to get by on $500k a year, even here in NYC. But hidden within the “oh it’s so hard to be rich” crap like how to budget for summers in the Hamptons and a full-time nanny lies this valid point:
[In NYC, it] takes $123,322 to enjoy the same middle-class life as someone earning $50,000 in Houston…
Let’s say you have a family of 4, and you want a 3-bedroom home, and one car. You want to send your kids to a school of decent quality. And maybe you’d like the kids to play a sport after school, and you want to take the whole family to the movies once in a while. For now, just forget all the extras like vacations and keeping up with the Joneses when it comes to designer clothes and spa treatments. If you want to live in Manhattan, or even many parts of the outer boroughs and New Jersey, you absolutely need a six-figure income to afford these things– things which people in other areas might consider the bare minimum of a middle-class life.
I did a quick search for 3-bedroom apartments for rent in Manhattan, with 2 bathrooms and 1500-2000 square feet. Those currently listed on the NY Times website range from $3,000-$20,000 a month, with most probably falling in the $8-10k range. You’d have to pay around that much in monthly costs to buy a place too. If you want to keep housing at 30% of your income, you’d have to be making over $300k a year. (Even in Manhattan, the median income is only around $64k, and the average is about $121k.)
How about the car? Forget the cost of buying it and insurance and maintenance. Let’s just focus on one thing: where are you going to put it? If you want your own driveway, expect to pay more than the housing costs above. That leaves the street or a garage. If you want to drive around in circles and have to move your car twice a week even if you don’t need to use it, and risk damage and break-ins, go ahead and park for free on the street. A garage can easily cost $300 a month and up.
School: New York does have some good public schools, but you can’t take it for granted that you’ll be able to send your kids to one of them, so many middle-class families who want their kids to get into selective colleges opt for private schools. Some Catholic schools may only charge a few thousand a year, but some charge as much as $25,000 a year, and other private schools can be over $30,000 a year. See here for an evaluation of NYC’s public schools– only about a third get an “A” for the percentage of students passing state tests. I don’t have any stats for what these schools offer in terms of sports and activities, but I’m sure budgets will be cut in the coming years given our economic situation.
As for the movies, adult tickets are $12.50 and children are $9.00 these days (over 30% more than ticket prices I found for Houston). Add some popcorn and soda and you’re easily looking at $75 for a night out.
Many people will read this and say “well, it’s crazy for a family of 4 to try to live in NYC,” and however sad that might be, they are probably right. But some people need to work in NYC– my career options would be severely limited in other cities, because most of the publishing industry is based here. If I had kids, I’d definitely have to move further out of the city, but then I’d incur costs of $200-300 a month for a commuter train pass.
But it wasn’t always so– New York was never cheap, but it didn’t used to be this out of whack in relation to middle-class incomes. Those sky-high Wall Street bonuses have been part of the reason– the tax windfall may have helped fill the city’s coffers, but I think NYC is a perfect example of why rising income inequality is a bad thing. I’m not sure salary caps are the best way to fix it, but it will be interesting to see how this might change over the next few years.