The $120,000 Gap

Paul Hawken has me thinking again about the undeniable link between social justice issues and environmental issues. Together I call them Sustainability issues, as one without the other is impossible. So I’d like to bring a discussion that I have frequently at work to the blogosphere-and it seems have a lot of “hitting power” in making people think.

It usually goes something like this: most Americans think they are “middle class”, but while the extremes of poverty/welfare on one side and the millionaires on the other seem well defined, the middle is awash with layers of wealth. Much of my team, like much of middle America lives in 2 income families. We are able to pay a wage that most consider the low end of living: about $40k annually, or about $20/hr. If you had a dual income family at this level you have $80k annual family income. Here in WI that gets you a decent home in a suburb, two new(ish) cars, and the ability to go out once in a while and put your kids through college with some help or loans. It is a good, satisfying life with moments of monetary concern.

To counter point that, much of more urban America is making significantly more. True their education levels are higher, housing rates are higher, yada, yada, but thier income levels more than make up for it. For simplicity’s sake let’s call their income family income level $200,000. Many dual income families of college education are making at or significantly over this.

Now for discussions sake lets take a brief minute to compare the two. Now granted, housing rates vary wildly from rural to urban settings, but the price of a Camry or a gallon of milk or gas does not. The difference between the two is $120,000. That also works out to $10,000 per month of gross income. Let that sink in for a moment and you suddenly realize how people can afford $50k beemers, 24′ ski boats, and 6000lb SUV’s… and put gas in all of them.

In our family we do budgeting by week, so lets break it down again. To keep the math simple, lets say $10k/mo is $2500 a week. Sweet Jesus! That one week would pay my mortgage, both car payments and most of my monthly grocery and utility bills. And the $200k family still has $7500 left per month to play with. Again, these numbers are only the difference in excess of the $80k families income.  Frankly it is hard to wrap my head around.

The point of the discussion is to lend some perspective on how Congress and The Street can continue to say that “everything is fine”. The policy and decision makers are making far beyond the $200k family- they have no concept of the impact of doubling college tuition rates, tripling gas prices, or the cost of corn meal going up 150%. It simply has no impact on them except maybe getting the 330c instead of the 330x BMW. But, of course, if you are making less than the $80k family gas at $4/gln might mean the difference between getting to work or new clothes for your kids in the fall. This is not hyperbole, it is reality for millions in America, let alone the rest of the world.

The kicker is that most people at the $200k level talk about themselves as Middle Class Americans. And they are, since they are between the uber rich and the uber poor. But the cold, hard truth of our age is that the working poor level is creeping up very close to what my parents would have thought of as Middle Class incomes due to the rising inflation of our times driven by out of control consumption and depleting global resource levels. In other words The Funnel of Peak Resource is closing.

This reality, whether they are willing to admit it or not, is what I believe is driving the Change push from the Middle in this years election. The lower Middle Class knows they are getting screwed and they are (finally) getting pissed.

Something has to change in our thinking, and soon, for us to be able to create the Future that I want for my children

Be The Change!


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