Couple earning €105,000 p.a.

desertcircus wrote: »

We're talking about whether people are wealthy compared to the rest of the country. The rest of the country is generally not understood to exclude people without jobs. And hilariously, you fail to realise that in your example, all ten people with jobs are enormously wealthy have a much higher income compared to the population as a whole.

If in the example the 10 people earning 50k a year also had debt repayments of 50k a year relating to an asset that had already been disposed of whereas the 90 people all owned their own houses then the 90 would be significantly more wealthy not withstanding the income gap.

It's often a big issue when income is equated with wealth. There's a process that has to happen for high income to be translated into wealth and an awful lot of people don't go through that process.

desertcircus wrote: »

We're talking about whether people are wealthy compared to the rest of the country. The rest of the country is generally not understood to exclude people without jobs. And hilariously, you fail to realise that in your example, all ten people with jobs are enormously wealthy compared to the population as a whole.

You're missing the point about wealth, so I'll try and use your example and see can you spot the difference -

Unemployed person -

Income - €188 pw.
Expenditure - €100 pw.
Surplus - €88 pw.

Employed person -

Income - €1,000 pw.
Expenditure - €950 pw.
Surplus - €50 pw.


The unemployed person is actually wealthier than the employed person, because the unemployed person can sustain their lifestyle as it is, whereas the unemployed person is unlikely to be able to maintain their lifestyle if they become unemployed.

See the difference? Wealth, as has been pointed out numerous times in this thread already, has nothing to do with income level, it has to do with the ability to maintain oneself and one's lifestyle.

income does not equal wealth

One eyed Jack wrote: »

You're missing the point about wealth, so I'll try and use your example and see can you spot the difference -

Unemployed person -

Income - €188 pw.
Expenditure - €100 pw.
Surplus - €88 pw.

Employed person -

Income - €1,000 pw.
Expenditure - €950 pw.
Surplus - €50 pw.


The unemployed person is actually wealthier than the employed person, because the unemployed person can sustain their lifestyle as it is, whereas the unemployed person is unlikely to be able to maintain their lifestyle if they become unemployed.

See the difference? Wealth, as has been pointed out numerous times in this thread already, has nothing to do with income level, it has to do with the ability to maintain oneself and one's lifestyle.

The employed person is spending over NINE times as much as the unemployed person on day-to-day expenses! The reason their surplus is smaller is because they're spending all their bloody money...

Clearlier wrote: »

It's not that either, it's to do with the value of your assets/posessions.

Assets aren't a great indicator of wealth either really. Consider for example an unemployed person who inherits a house from their recently deceased relative. The house could be a big dirty white elephant because say for example while the house is worth €700k as an asset on paper, in order to maintain it's value, the unemployed person has to be able to afford the maintenance on the house. They wouldn't be able to maintain the house on their current income, so the house is then considered a liability, and they have to get rid of it quickly in order to get the best price for it. Quick sale means they'll have to sell it for less than the market value, so even if they sell it and they make €650k, they are now wealthy, but if they fail to maintain that €650k, then they aren't wealthy any more.

desertcircus wrote: »

The employed person is spending over NINE times as much as the unemployed person on day-to-day expenses! The reason their surplus is smaller is because they're spending all their bloody money...

Well of course they're spending all their bloody money, but the question is -

Are they wealthier than the unemployed person?

The answer is - they aren't.

desertcircus wrote: »

One: I have repeatedly pointed out that high income tends to lead in a pretty linear fashion to building up wealth. Two: people regularly discuss high earnings as wealth, so I don't see why using it in this fashion is problematic. Three: the central question of the entire thread is whether a given level of income is enough to class a person as wealthy. Four: conceptually separating high earnings from wealth in such a way is problematic in terms of the discussion of who in society is doing well or badly, whether a person on a given income level should be taxed at a higher rate, and myriad other debates, as it clouds the issue. Five: discussion in terms of wealth is wildly skewed, as data is collected at a macro level and tends to be discussed in terms of averages rather than medians, and consequently is skewed by the people at the very top of the pile and has limited value in discussions of how well-off a given household is.

1) Just because you say it doesn't make it accurate. Many, many people have explained on this thread why you're wrong. While I understand that meaning is in many ways subjective it's not possible to communicate if we all insist on our own personal definitions of words. Wealth and income simply are non synonymous. They refer to different things and is probably why we have different words for them.

2) Most people that I know understand the difference. I understand that some people don't. It doesn't mean that they're use of the term is accurate and more importantly that they will be understood by anybody who understands the meaning of the word as it's defined in the various dictionaries that we have. The misuse of the term is problematic because it causes confusions - witness this thread.

3) I did point out that the question posed in the original post is literally nonsensical and has lead to much of the misunderstanding. It's not imperative that a high income will lead to wealth. There are many counter examples some of which have been offered in this thread. It's a logic thing.

4)See, I think that there's something to discuss in that but we can't get away on that discussion because of the confusion of wealth and income. There's a whole great debate to be had the regressive nature of the Irish taxation system with high levels of VAT v. low levels of income tax and CGT and many other taxes. To my mind we should be looking to reduce the cost of living not focus on increasing disposable income but we can't get there if we don't speak the same language.

5)I don't see anything in this point to suggest that wealth should be equated with income but I'm not sure that wealth or income is typically discussed in average terms. Aside from the average industrial wage most of the discussions around income and or wealth that I come across talk about %'s, e.g. the top 1% or the top 10% or the bottom 70%.

One eyed Jack wrote: »

Assets aren't a great indicator of wealth either really. Consider for example an unemployed person who inherits a house from their recently deceased relative. The house could be a big dirty white elephant because say for example while the house is worth €700k as an asset on paper, in order to maintain it's value, the unemployed person has to be able to afford the maintenance on the house. They wouldn't be able to maintain the house on their current income, so the house is then considered a liability, and they have to get rid of it quickly in order to get the best price for it. Quick sale means they'll have to sell it for less than the market value, so even if they sell it and they make €650k, they are now wealthy, but if they fail to maintain that €650k, then they aren't wealthy any more.

It's perfectly feasible to be wealthy once and not wealthy at another stage. There are a few developers about that have gone through that process!

As for being asset rich but income poor. It's a well recognised state of affairs. It's particularly common amongst elderly people who never had that high an income but did buy a house whose value has multiplied beyond comprehension over the past 20 to 30 years.

It is very easy to say a couple on a combined salary of €105K a year is so much wealthier than someone on welfare or on a low paying minumum wage job. But you have to remember the coupld on €105K pay income tax, PRSI and USC on that. And then they have to start paying for the services others get for free. They don't get a medical card so it's €60-€70 a pop to see a GP. They don't get rent allowance and certainly no one is going to just give them a house for free. They won't get grants for their kids to go to college. There is no book allowance or uniform allowance or Communion allowance for their kids in school. The chances are by the time they reach retirement age they probably won't get a state pension so have to plan for their own retirement. And the list goes on and on.

Someone who is working and getting a good salary contributes far more and gets far less from the state than someone who is not working. That's the society we live in. That's not to say it is wrong. It is far better than some countries where the rich have everything and the poor die in slums. Or where the state imposes equality on all no matter how hard you work.

So before anyone points to someone earning €105k and says they are wealthy they need to pay more remember they never see that €105K in their pockets. The gap in actual disposable income is far less than some would like to make out and the reason it is far less is mainly because they are paying tax to support benefits they will never be able to avail of. That is the price of living in this society and to be honest it would be a fair one if the offices of society worked as expected.

Don't lose sight of the fact that BOTH the lower and the middle and indeed the upper middle income people get an extremely poor level of service from the state. Don't get angry with those above you on the pay scale for the fact that they don't pay more into the system or those below you on the pay scale for the fact that they take too much from the system. Get mad at the government for presiding over a system of failure and inefficiency where no one gets what they deserve.

Clearlier wrote: »

It's perfectly feasible to be wealthy once and not wealthy at another stage. There are a few developers about that have gone through that process!

As for being asset rich but income poor. It's a well recognised state of affairs. It's particularly common amongst elderly people who never had that high an income but did buy a house whose value has multiplied beyond comprehension over the past 20 to 30 years.

Yep, that's really why I said that assets aren't really a good indicator of wealth, as they're often only the perception of wealth. It wasn't just developers that got caught up in the madness either, there were many middle income earners that exaggerated their income levels at the time in order to appear as though they could afford an asset that was well beyond their means.

They could afford to keep up the repayments on a mortgage at their current income level, but were their circumstances to change (if they became unemployed for example), then they couldn't afford to keep up the repayments - they had the appearance of being wealthy, but they were never wealthy as they had to borrow money to acquire an asset.