Well that must be very cheerful. David Sirota at Salon points out that super-rich people think they’re not super-rich.
By Treasury Secretary Jack Lew’s reckoning, being a millionaire does not constitute living high above the ranks of ordinary people. Lew said last week that back when he was in the private sector enjoying six- and seven-figure pay packages, “My own compensation was never in the stratosphere.”
Lew made that pronouncement as he sought to defend President Barack Obama’s embattled Treasury undersecretary nominee Antonio Weiss from charges that as a financial executive, he is out of touch with the interests of regular people. Lew was seeking to cast his own lot with the ranks of ordinary Americans at a time of growing economic inequality.
Seven figure pay packages? And he thinks that’s not the stratosphere?
According to IRS data, 99 percent of American households make less than $388,000 a year, and 95 percent make less than $167,000 a year. The true middle in terms of income — that is, the cutoff to be in the top 50 percent of earners — is roughly $35,000 a year.
Sirota must think that’s basically lunch money, walking-around money.
According to New York University records, Lew was usually paid between $700,000 and $800,000 a year as the school’s vice president, while also receiving a $440,000 mortgage subsidy. Lew also earned $300,000 a year from Citigroup, with a “guaranteed incentive and retention award of not less than $1 million,” according to an employment agreement obtained by Businessweek.
So he made $1.5 million, and thinks that wasn’t stratospheric.
Sometimes I really hate this country.
While Lew’s comments leave him open to charges that he is out of touch with economic reality, he is not alone, as surveys show many Americans also have misconceptions about income distribution.
A recent study by Harvard University and Bangkok’s Chulalongkorn University found Americans grossly underestimate the divide between CEO and average worker pay.
Because people like the Treasury Secretary make sure they do.
Gah. 50% make less than 35,000? I have seen this a lot with the really wealthy, them complaining about how much they have to pay in taxes while their quarterly estimate payment is more than 50% of what Americans make in an entire year.
–
I don’t even know what to think.
Yup. We have ridiculous levels of income inequality here. It evened out a good deal in the 50s-70s, but then went into reverse, and now it’s just grotesque.
It’s tips.
I can understand his position. If you’re making $35,000 a year, you have NO IDEA what super-rich is. There is no distinction for you between “financially OK” (in a secure job), “financially independent” (don’t need a job), “rich” (don’t need a job and have more money than you need) and “super-rich” (have more money than you can realistically spend in your lifetime even if you try). It’s like the difference between the top of the Empire State building and the top of Mount Everest… as seen from a wheelchair.
The distinctions only really start to become apparent to the rich… when they start realising that, rich as they are, certain things we peasants don’t even realise exist are closed to them because their “illionaire” word doesn’t start with a “b”. Sure, they can join Netropolitan – Facebook for rich people, $9,000 membership fee so you don’t rub selfies with the hoi polloi – but they can’t get their kids into the exclusive school because it’s full of Chinese and Russian oligarchs with REAL money.
Guardian link: http://www.theguardian.com/commentisfree/2014/oct/13/foreigners-best-housing-super-rich-poor-nation
Look at Ann Romney. Back in 2012 she said “I don’t even consider myself wealthy” …. “‘How I measure riches,’ Romney ‘continued, is by the friends I have and the loved ones I have and the people that I care about in my life, and that’s where my values are and that’s where my riches are.'”
That’s nice.
… never mind that her family has multiple homes and is worth about 200 million dollars. http://abcnews.go.com/blogs/politics/2012/03/ann-romney-i-dont-even-consider-myself-wealthy/
I remember during Obama’s first term some University of Chicago professor blogged about how terrible the proposed tax increases on the wealthiest 1% was. Why, that would include him, and he’s not rich! By the time he gets done paying the mortgage on his multi-million dollar home in a nice neighborhood, payments on his and his wife’s luxury automobiles, his kids’ private school tuitions, his housekeeper, his gardener, and nanny, why, there was barely a few thousand left for fooling around money!
Ah yes, it’s discussed here. (In which it’s not even clear that his taxes would have gone up under Obama’s proposal.) Oh, and his name was Todd Henderson, though for some reason some bloggers decided to give the lying jackass a break after the fact and redact his name.
I grew up in a household in the top 5% (very near the cutoff throughout the 90s) of income in the country (until my parents divorced), and I had no idea how radically advantaged I was for a long time. I knew we were entirely comfortable – we had a house (a smaller one – 2 stories, 2 bed, 1.5 bath, maybe 2,000 sq ft, with a mortgage), two cars (Toyota Camrys both, which we kept until they completely wore out), and a yearly family vacation. But of course so did most people in my near-urban suburb (what I would later learn was that we didn’t carry any debt besides the mortgage, while most people had an amount of debt that was between a considerable portion of their assets and greater than their assets), and our “rich” friends had things like mansions, boats, cars they didn’t use regularly for transit, horses, airplanes, cottages/vacation homes, and large properties and could do things like send their kids to private schools, take weekend trips, eat at expensive restaurants (versus places like Denny’s or Pizza Hut where we’d go), rent venues for parties, and hire domestic workers. I also knew that there were people FAR worse off than we were, though I had no idea just what a large percentage of the country that was.
People are accustomed to what’s around them, and since neighborhoods tend to be segregated pretty heavily by wealth by virtue of property prices, that becomes one’s baseline. Too, as sonofrojblake mentions, it’s often not until one has actually lived with some amount of income and realizes just how much skew there is in the top 10%, 5%, 1%, .1% such that even people relatively near the top are still hundreds or thousands or even millions of times less-wealthy than people very near to them distribution-wise (for example, our household income was closer to the poverty line than to people in the top 4%) that one can have a clear conception of just how extreme wealth can be. It was very odd to me the first time I encountered someone who thought that owning a house at all made someone “rich”, since nearly 2/3rds of people in the USA own houses (though in some sense banks actually own many of them). I still have a hard time seeing my childhood household as “rich”, becasue to my mind that means independently wealthy, such that one doesn’t need to work to live comfortably, but I can see much better why other people might. Another part of it is that my parents didn’t spend a lot of the money they earned: they saved or invested it instead of buying material markers of wealth, which contributed to me never feeling particularly “rich”.
And, of course, *I* don’t understand how Lew could consider himself not-rich, since he could live quite comfortably for 20 years or more on what he makes in 1 – he doesn’t actually need to work (or, he doesn’t actually need to work for more than a handful of years). But maybe he only considers someone “rich” who owns a private jet or something like that. Now I make about $30K a year, yet I don’t feel particularly impoverished in terms of quality-of-life relative to when I was in a household in the top 5%, which is also odd to me – I’m not totally sure what my parents were doing with the excess $40K-$60K a year that wasn’t going to support our lifestyle directly. But, yeah, our perceptions are shaped by our expectations and relative positions, and income segregation tends to bias all of us in terms of evaluating our absolute positions. Hence many people below the poverty line considering the median household income in the country “rich” while even people in the top 1% don’t necessarily consider themselves “rich”.
No matter if it is number of sexual partners, income, or perceived difficulties the default assumption is that everyone considers themselves average.