Why are receiving $ 400 000 a year, San Francisco residents do not consider themselves rich

For some, this is a paradox, but residents with a salary of $ 400 000 in the Bay Area belong to the middle class.

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For some, the annual salary in $ 200 000 is something unusual, and for residents of San Francisco and its suburbs, with this income, they can barely afford to survive without dreaming of a house.

The region is filled with high-paying technology companies such as Google, Facebook, Salesforce and Apple. But even working in these companies, renting housing “eats up” a significant part of the salary, and buying a house remains an exorbitant dream. The latest figures indicate that the average price of a house or condo in the bay area is about $ 850 000; San Francisco's average price is $ 1,3 million.

As a result, the term "middle class" is often changed to reflect the region's astronomical cost of living and people with six-figure salaries that will buy the nicest house on the block in, say, Boise, call themselves middle class.

Example: when interviewing Palo Alto residents in February of 2018, some people considered themselves to be middle class with a family income of almost $ 400 000.

“Clearly in the Bay Area the term 'middle class' doesn't mean the same thing as in other places around the country or even in California,” says Williams Riggs, a professor and researcher of finance and economics at the University of San Francisco Management.

What is the middle class?

Belonging to the middle class depends on income, and in the US annual household income of $ 60 000 (often based on two wages) is considered average, according to the US Census Bureau. But in fact, everything is much more complicated. Experts disagree on how much you need to earn to be middle class.

The Pew Research Center, which often conducts economic class research in America, defines the middle class as the one where families earn $ 39 000 to $ 118 000. This range, of course, does not work in the Bay area, where a recent government report found that families earning less than $ 117 400 in San Francisco, San Mateo and Marin counties are low-income and eligible for housing with low income.

Stephen Levy, director and senior economist at the Center for Continuing Study of the California Economy in Palo Alto, agrees that it is difficult to estimate the class by income in the Gulf area due to the high cost of housing.

“You can put all your income toward rent,” Levy says. — At $200, you can afford to rent, but not buy a house. There is a big difference between affording to live here and affording to buy a house.”

Levi adds: "You can be middle class by normal standards, but not middle class in the Bay area in light of housing costs."

Middle class is a label that is also often associated with homeownership, comfort, and optimism, but in the Bay Area this is nearly impossible to achieve if your income falls within the national definition of middle class. Here the numbers are shifting and the salary range is moving up, but by how much?

In the US Census, the average household income is not calculated for a district with nine districts, but the US Census data for 2017 a year show the average income of about $ 101 000 in the San Francisco Oakland-Hayward area. And this is not enough to make ends meet for many large families.

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