Where Does the Money Come From?

Last weekend, Steve and I celebrated our 20th anniversary. We renewed our vows at the local church without telling my loud, large extended family. It was just us and the boys who did the readings. We eloped.

The vow renewal was all thought up and arranged by my sweetie-pie husband. It was a romantic gesture that more than makes up for the way that he proposed. He handed me the ring — “here ya go” — while we were eating some take-out Chinese food on the floor of my apartment. (It was a studio apartment. The living room coffee table was also the kitchen table.)

After lunch with the boys, we went into the city on our own. We stayed at an adorable little hotel near the High Line park and splurged on drinks in trendy bars and a fine meal in a fancy restaurant.

At one point, we looking around at the other people in the bar and restaurant. Our fellow drinkers and diners were 20-somethings. And they had nicer shoes than I did.

When I was their age, I was eating Chinese food on the floor and drinking in dive bars. My first job out of college paid $15,500 per year. So, how can they afford the fancy places? Are they getting paid a lot? Are their folks helping out? Do they have a lot fewer expenses, because they don’t have kids yet? Is it all going on credit cards?

I don’t usually join the “Milennials Are Annoying” conversations, because who wants to be the grouchy old dude? Also, for every high-spending Milennial, there are probably a hundred who are living within their means. But I am genuinely confused about even that small segment that I saw this weekend.

 

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33 thoughts on “Where Does the Money Come From?

  1. I vote for subsidized by parents, working at a law firm or finance.

    I think it’s yet another example o increasing wealth differentials.

    1. +1 to this. There are a lot of biglaw junior associates who are straight out of college, where they lived cheap, suddenly making $160-180k plus bonus per year. Their biggest expenses are generally rent, then student loans, and then they have a lot of discretionary income left over. Some save a lot, or pay down their loans fast of course. But even so, remember they were living like students a year ago. Even being fairly responsible about saving, they suddenly have a lot of discretionary income compared to their responsibilities.

      Some are not responsible of course. You would be surprised how many pay the minimum on their loans, and don’t even contribute to a 401k, and party.

      I am sure the same is true in finance and other highly paid professions.

  2. Oh, and congratulations on the romantic spouse and the fabulous outing. I think the Eliza J dress was a great choice.

  3. Weren’t you an adjunct professor or something? Kids in finance or consulting, even with just a brand new B.A., make $60K to $90K. With no children and no mortgage, that will pay for some shoes and restaurant meals. Kids in their late 20s with a J.D. or M.B.A. make $180K to 200K+.

    When I graduated college, in 1981, I went straight to law school, but those who got jobs in finance were making $15K to $20K. In 1984, with a new J.D. degree, I made $50K. Since I think this was some years before Laura graduated, you can see that those fields have always been relatively high-paying.

  4. I noticed this during the first dot com boom in the late 90s in San Francisco. Suddenly a segment of young people were making a lot of money right out of college. Before that it seemed new tech workers weren’t paid as much right away. My tech friends made more than me but not that much more. I’ve never researched this to see if my perception was true.

  5. For some it’s family money in the form of subsidized/provided for housing. (If that’s looked after then even an entry level job is gravy.) And I’d guess that a reasonable percentage are living on credit cards to keep up with the ones who are privileged enough to have family money.

    While you were eating Chinese takeout in your studio back in the day there were probably restaurants full of your cohort living the high life. In a city of 8 million, it doesn’t take that many to keep the trendy bars & fine restaurants full.

    Maybe we’re just more aware of it now through social media. Advertising is more aggressive/targeted. We see more of what everyone else is doing which can get translated into what we should be able to do.

  6. Also, some 20-somethings with high-paying NYC jobs are living at home. When I was in my 20s, there was a note in the alumni magazine that the most popular zip code for our class was 10028, which in those days was 79th to 96th, Fifth Avenue to the East River. So there were two cohorts, those living in yuppie apartment towers on First and Second Avenue, and those living with Mom and Dad on Fifth or Park. I knew people in both categories. (Although interestingly, none of my daughter’s friends seems to be living at home.)

  7. $15,500 in the late ’80s (?) is about $32-33K in today’s dollars, I think the average salary for a recent college graduate these days is about $45K-50K. So, incomes are a bit higher. And certainly in greater NYC recent college grad incomes are higher than that.

    To extend on what MichaelB said, broadly speaking “stuff” has gotten cheaper, certainly in inflation-adjusted cost, and sometimes in nominal dollars. So once you’ve furnished your apartment, if you don’t have a car payment, you can go out to nice restaurants once in a while and it won’t break the bank. You can even get dressed up in nice clothes or shoes, as long as you aren’t refreshing the wardrobe at Barney’s every single season. You don’t even have to be in technology or finance or big law — just some random first year professional can go out on the town, as long as they don’t go too often.

    Kids — child care and education especially — have gotten more expensive over the last generation, though.

  8. Some of them are living beyond their means, but that’s not unusual in New York. Others are in highly-paid jobs, but don’t have any time to spend their money. It makes a difference if it’s every night, every weekend, or every third weekend.

    Then again, there’s also the international crowd. The children of the international wealthy are just as likely to be found in New York as anywhere else, especially as American colleges have been courting them. Search for “anonymous buyers of New York condominiums shell companies” for more articles on this topic.

  9. 1987 – First job was as an editorial assistant at a super big publisher in New York. I actually did really well and got three promotions in two years, which meant that I made $20,000 when I left to go to grad school at the Univ of Chicago. One of my favoriate alternative personal histories is that I stayed there and got an MBA and moved up the ranks. But that didn’t happen. Instead, I continued bumping between grad school and various low paid jobs — secretary in a museum, special ed teacher, grad school researcher, adjunct — until the kids came.

    So, I’m baffled by young people with money. I didn’t and never socialized with them when I was young.

    1. Yes, publishing pays a lot worse than finance. My daughter has friends in that field. The ones who live in Manhattan are being subsidized by their parents. If you don’t pay the rent and you don’t have student debt, $40,000 buys a lot of shoes and restaurant meals.

  10. “My first job out of college paid $15,500 per year”.
    I am roughly your age and made more than that as a waitress at a truck stop in the Midwest. I had kids already and taking a job like that (low pay but more prestigious) was never going to happen.

    1. I made about that in my first job, working at a city agency in a midwestern city, also in the late 1980s. The job was midway-prestigious – I did some secretarial work and some that was more genuinely administrative (budgeting, grant management, etc.) I was able to pay my own rent (though I lived with my parents for the first few months) and as I remember, support myself fairly comfortably, though I wasn’t extravagant. But I can’t imagine doing it on NYC prices.

  11. “1987 – First job was as an editorial assistant at a super big publisher in New York. ”

    I just read Rona Jaffe “Best of everything”. Fluff (written as a test run for a movie as a dime paperback), but interesting, as an example of that life in the 1950’s.

    In 1987, I was a grad student; my stipend was about 10K, I think, and might have been tax free at the time. I see that the current stipend in my program is 30K. That’s higher than the inflation adjustment of about 20K.

    Y81’s 50K translates to 134K in today’s dollars.

  12. What shoes were they wearing? Are we talking $1000, $500, $200, or $100 shoes? I don’t think any of the grad students would have bought $1K shoes, because they wouldn’t have known where to get them or where to wear them, and, in any case, no one would have known that they were wearing 1K shoes. Now would the students know? I think they would, through media/internet/instagram.

    Would they buy? I think mostly not, being geeky grad students. But, if they were publishing interns or working in a museum? I think people do, sometimes, because they don’t see the 1K saved now as being a trade off for the future. Caroline (is that right, in sex & the city) was planning on marrying a rich man, but others might assume that their circumstances will be significantly different in the future, or, alternatively, that saving money now will not have a significant effect on their future.

  13. I think your sample size is way too small and that the people who were in the restaurant you were in are not representative of regular 20-somethings in NYC.

    I do have a former student living in Queens now. Her apartment is subsidized by her parents, but she is not going out and eating at fancy restaurants and buying expensive shoes. You’re lumping a lot of things together.

  14. Back in my bachelor era I knew several young women whose nicer-than-mine apartments had subventions from their parents. This is not new…
    I have read that the phrase in Wiliamsburg is ‘trustafarians’. This is a big part of the replication of class between the generations – go to every stage and do it right, exactly right, and you can vault into the UMC from poverty. Screw up once, and there is no backstop. For UMC kids, the backstop is there.

    1. I’m not subsidized by my mother in any meaningful way (she’ll occasionally treat me to a meal out if she’s visiting or I’m visiting home), but I’m surprised at the number of my peers who are not totally financially independent, even those from pretty middle class families. Often it’s little things like using a parent’s accountant to do taxes, or being on the family cell phone plan that the parents pay for. My mother would let me move back in if I were homeless, but she views my choice to be a grad student as my own decision as an adult to earn very little money, and I’m expected to live completely within my means and be completely able to manage my own affairs.

      My Italian husband lived at home until he started grad school at age 27 and had never mopped a floor until I made him, but he was required to pay for his own college education. One thing that attracted me to him was that he paid off his undergraduate student loans within two years by working in IT. His family is willing to help out financially with potential grandchildren, in which case I would straight up be dependent on my in-laws, at least in some ways.

      His uncle and aunt have treated me to luxury items well out of my budget, like a 300 euro jacket or a week-long holiday in the Dolomites.* I suppose if you caught me wearing an expensive jacket while vacationing in the Dolomites or even hanging out in the wealthy tourist town where his family’s villa is located, you’d suppose I was quite wealthy.

      Of course even though it’s not my daily life, it is a way that I benefit from being in or at least adjacent to the upper middle classes, as I have access to periodic life experiences that are unattainable for people who are working class.

      *Money is very strange in that part of the family, as they were precipitously downwardly mobile, going from being billionaires in the 19th century to millionaires in the 20th to ??? now. My husband has no idea how much money his uncle has (it could range from in the millions to almost nothing).

      1. Hey, your husband’s family story sounds suspiciously like you could be married to a brother of a friend of mine (I don’t think you are, because I think all the brothers married years ago). He also has an uncle with villas in tourist towns and vacations in the Dolomites (and would probably support grandchildren).

        Yes, appearances can be deceiving, but, I also think the value of backstops is enormous. Without the backstop, one would probably want to convert the jacket into money. With it, one can enjoy the luxury, of $300 shoes, knowing that if one becomes homeless or needs assistance, a larger social network will fill in the need.

      2. bj

        Ha! My husband is an only child, but the similarities are funny. And I absolutely agree on the (even if just psychological) luxury of a backstop or a safety net. I know that if I ever really really needed it, I could borrow $500 or $1,000 from a family member with little difficulty. I can also enjoy luxuries as little things that make my life nicer (although I have to remind myself to actually *wear* my coat, not just hang it in the closet as something too nice to be worn.)

        I also have the luxury of having enough money that I can benefit from middle class frugality in a way poor people often can’t, and I know that one little mistake won’t ruin any precarious stability. In October, I completely spaced and paid one of my credit cards a day late. I had to pay more in fees and interest than I had on the card (it was something like $40), and I was angrily cursing myself for being spacey and costing myself money and potentially dinging my credit, but it the $50 in fees and interest wasn’t a hardship. People who are actually poor find a shortage of $50 (or $500) snowballs into larger and larger debts that become harder and harder to pay off and potentially life ruining. I’m thinking about poor people who get parking tickets they can’t afford, and then not paying fees results in months of jail time, during which they’re fired from their jobs and their girlfriend leaves them, or situations like that.

        I think another difference is that while I don’t get monetary support from my family, they also don’t expect me to provide them with support. For poor people it can also be hard to save because of financial obligations to support needy family members, or to help people who’ve helped them in the past. (My close friend is Sudanese-British, and his brother worked for an aid organization in Khartoum for several years. One employee refused to pick up his paycheck, much to his brother’s chagrin. Eventually, it came out that were the guy to actually receive his paycheck, he’d immediately have to give the money to all of his relatives, and he preferred to be broke with the uncashed check as a form of “savings.”.)

      3. I have made a mistake paying a credit card bill once or twice. If you are a long-time cardholder with a good payment record, call the credit card company and complain bitterly about the fees, and tell them that you will cancel the card if they don’t rescind the fees. They usually will, in my experience.

        Of course, in this case, it is the reserve of goodwill built up by your own middle-class habits on which you are drawing. If you habitually pay late, the company will be less interested in retaining your custom.

      4. Trevor Noah talks about the drag effect of coming out of poverty. He says that his mother (who he not necessarily altogether forthcoming about) told him that if you don’t pull away, you will be dragged back in, with the need of your entire extended family. Trevor Noah has made it into the big time, but escaping from deep poverty into the middle class doesn’t make it possible to support all the needs (and yes needs) of your family. So having your family able to take care of themselves is a privilege, too.

        Sometimes it is harsh, but I think it’s the admonition to put your own oxygen mask on first, because if you start backfilling endless needs of an extended community, you will fall back.

    2. There is certainly some considerable benefit to having a UMC (or even MC) family to supply a backstop, but it’s rather Victorian to suggest that one screwup dooms the poor or working class child to a life of poverty. Both in life and in the newspapers, one frequently learns of working class young people who dropped out of whatever, bummed around, then eventually joined the army, or decided to go back to college, or learned to code, and ended up with a MC/UMC life.

      It’s more like Christopher Jencks once wrote about the homeless: it takes a series of screwups to destroy one’s chance at moving up out of poverty. If you drop out of high school or college, and have a criminal record, and a drug problem, and some out of wedlock children, and a dishonorable discharge, or several elements of the foregoing set, you have made advancement very difficult.

  15. The NYT is doing a series called “The view from behind the velvet rope” that profiles the growing business of providing high end services for a significant premium. Two articles so far profile “personal desk” physicians (for 45K/year/family) and exclusive areas in cruise ships. I see the trends as being similar to expensive shoes. Concentration of wealth (42% in the top 1%, as opposed to 30 two decades ago, according to the NYT article) + commodification of purchases means that the profit to be made is in providing services to the very wealthy.

    (my kiddo told me recently that HS students who were national spelling bee participants are being offered $150/hour for tutoring).

  16. My very first trip to NYC was in 1993 and a friend & I stayed with friends who worked at Bear Stearns & Deloitte (can’t recall what it was called pre-various mergers). The Bear Stearns guy had lived in Manhattan for about 18 months and made a relatively high salary. However, with the long hours, we saw more of NYC in our week than he had in his year & a half.

    Oh to have the energy of our 20’s to work those kind of hours!

    Another quick money anecdote…In undergrad I could make enough in four months of a summer job to pay for tuition + books + accommodation + expenses for an entire school year. And that was waitressing, secretarial work, promotions for a folk festival, etc. Those were the days…

    1. That was before textbooks were $250 a piece. This is really serious exploitation of their students by the professors/oppressors. Wait til Laura starts to pay for those suckers, and we are REALLY going to see some incandescent posts!

      1. FYI, I avoid textbooks whenever possible. I’m actually pressured by the higher-ups to have textbooks, but I’m a full prof now so I tend to do what I want. I start teaching a summer class tomorrow* – no textbook required for that class. I use readings and videos/films that are available online.

        Looking forward to hearing about the prom weekend…. We survived graduation weekend here.

      2. Textbooks…

        Online textbooks can’t be resold.

        Warn your children that some online tools allow the professor to monitor things such as whether the student is reading the book, or what the students are chatting about on class chat logs.

        I just read that 10 Harvard admitted students had their admission rescinded for objectionable memes and chat on a Facebook group.

  17. Belated congrats on your 20th! Your husband-in-the-background, in the blog at least, sure seems like a great guy. And I always appreciate his informed book recommendations! I wish you two every happiness possible. It is a real pleasure to follow your life from afar.

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