ARTICLES OF INTEREST
Six Figures? Not Enough!
MAUREEN SPILLANE, an executive at a shoe and handbag maker in New York, always thought a $100,000 salary equaled serious success. Like many professional people, however, when she finally broke the barrier, she was a bit deflated to learn that it was hardly salvation. It still took her several years of "hoarding away" and avoiding standard Manhattan indulgences - fancy food, fancy clothing - in order to afford a down payment on a one-bedroom fixer-upper on the Upper West Side.
"It's not the big shiny number that you think about when you first get out of college," said Ms. Spillane, who is in her mid-30's. "Don't get me wrong, I'm making a nice living, I enjoy what I do. I'm certainly in a better position than a lot of people."
"But Melania and I don't shop in the same places, let me tell you," she said, referring to the latest Mrs. Trump, Melania Knauss. "I'm not jetting off to the Bahamas."
There was a time not long ago when earning six figures was a significant milestone among upwardly mobile professionals. If you were young and single in one of the nation's big cities, you could live in a building with a doorman, drive a European car, eat at fine restaurants and vacation in Jackson Hole. For married people it meant a suburban home and college savings accounts for the children.
Beyond the lifestyle, $100,000 was a psychic achievement; it meant joining the meritocratic elite. The prospect of "six figures" kept white-collar workers toiling for 20 years, confident that hard work would be rewarded and that the American social contract was securely in place.
Certainly $100,000, which is more than twice the national median household income of $43,527, is still a princely wage in most of the country, placing you in the top 5.2 percent of American wage earners with full-time jobs, according to the 2000 census. Even in New York City, only 7.5 percent of full-time workers make that much. But $100,000 isn't what it used to be. It has been devalued, in the practical sense by inflation and psychologically because it is now a relatively common salary for newcomers in fields like law and banking. For today's executive strivers in the more affluent cities, there is a new grail: $200,000.
"It's the new black," said Bill Coleman, senior vice president in charge of compensation at Salary.com, an online career service based in Needham, Mass., that tracks executive pay. "There's a lot of bunching between $100,000 and $150,000. That's the vast majority of the people who used to aspire to $100,000. Now they are aspiring to $200,000 or $250,000."
"It's the players," he added, echoing a common sentiment, "who make $200,000."
While a salary of $100,000 is still "rarefied," said Jared Bernstein, a senior economist at the Economic Policy Institute in Washington in charge of its living standards program, in many regions "it's not uncommon for households in that range to feel pinched."
Housing in cities like New York, Boston and San Francisco can cost three or four times that of the national median, Mr. Bernstein said, to say nothing of the escalating prices of big-ticket items like education and health care.
"There are certainly cities in this country where it takes an income of a couple of hundred thousand dollars to start to genuinely feel affluent," he said.
Not for nothing did Senator John Kerry propose rolling back tax cuts during the presidential debates on those earning more than $200,000, symbolic of "the rich." Not for nothing did the Nestlé candy company change the name some years back of its $100,000 bar. It is now the 100 Grand bar. It seems $100,000 doesn't summon the old magic.
Passing the $200,000 threshold these days appears to be a ticket to the good life much in the same way that crossing the hallowed $100,000 barrier was during the prime yuppie years of the 1980's. About 1.9 million tax filers (or less than 2 percent) reported gross adjusted incomes between $200,000 and $500,000 in 2002, the last year for which the Internal Revenue Service has compiled statistics. The year a similar percent of tax filers had incomes between $100,000 and $200,000 was in 1987.
In the 1985 film "Lost in America," Albert Brooks's character was able to build up a big enough nest egg as a $100,000-a-year advertising executive that he could abandon the white-collar life before he turned 40 to travel the country in a luxury motor home with his wife.
"Twenty years ago a person would have thought that if they were making $100,000 they were rolling in the dough," said Karen Ramsey, a certified financial planner in Seattle. Now, she said, clients "will be making $100,000, $120,000, and they'll be looking at me and saying: 'We're just getting our kids through school. If we have any left over for a vacation, we're lucky.' "
Adjusted for cost-of-living inflation in the New York metropolitan
region, a $100,000 income in 1987 would be worth about $170,000 today.
And yet it still seems that another $30,000 or more is needed to be
a "player." Part of the explanation may be the almost perverse escalation
in the price of commodities favored by upwardly mobile professionals:
whether $170 Diesel jeans, which have replaced $30 Levis; $3.95 lattes
from Starbucks versus 25-cent coffee from a deli; or the must-have $449
When Patricia Belden, a 39-year-old developer of affordable housing in Boston, was a student at Cornell University in the mid-80's, she dreamed of a six-figure income. "I would be satisfied with the life that would buy," she recalled thinking. Ms. Belden passed that milestone and is not complaining. But when she and her husband, a violin maker, recently shopped for a home in Boston for themselves and their newborn son, they settled for a loft in the city's trendy South End.
Sounds chic, Ms. Belden allowed, except the family has subdivided a space the size of a large studio into a three-bedroom apartment, what she calls "a ranch house in the sky."
The couple's big extravagance was a permanent parking space for $20,000. "My father told me, 'Honey, don't worry, we paid $20,000 for our first parking space,' " Ms. Belden said. "But it came with a house and a garage."
Compensation experts said the expectations of many white-collar workers were turbocharged in the late 1990's, during the long run-up in the stock market and the high-tech boom.
"Only in the latter half of the 90's did starting salaries break $100,000 a year," explained Hussam Hamadeh, a co-founder of Vault.com Inc., a Web-based career services company. "At that point $100,000 stopped being an eye-popping salary and started to become routine. After all, if 'everyone you know' is making at least $100,000 a year, there's nothing very exceptional about it."
By the time professionals in certain high-earning fields are in their mid- or late 30's, they're at least within striking range of the new $200,000 goal. A senior creative executive at a major New York ad agency, for example, earns about $170,000, according to salary statistics compiled by Vault.
A senior vice president at a major public relations firm typically earns up to $160,000, with perhaps another $15,000 in bonuses. In the high-technology field the majority of "e-commerce marketing directors" surveyed by Salary.com earned $120,000 to $150,000 in total cash compensation. The top quarter, however, earned an average of $204,800.
The legal profession is perhaps the most clear-cut example of changing expectations due to changing pay scales. "There was a time when if you were making $100,000, you were a partner, and that wasn't that long ago," explained Jon Lindsey, a managing partner of Major, Hagen & Africa, a national legal recruiting firm. "In New York they now look at $100,000 as a living wage, but not much more."
Last year the median base salary for first-year associates at firms with more than 501 lawyers was $120,000, moving up to $185,000 for eighth-year associates, according to figures from the National Association for Law Placement.
Noble Black, 29, hardly considers himself living it up. He earned his law degree from the University of Virginia a few years ago, moved to New York and took a job in securities law in the Manhattan office of the firm McKee Nelson. His starting salary, he said, was $135,000.
"You think you're going to be making all this money, but it all goes so quickly," said Mr. Black, who left after a few years to work as a consultant to the television show "The Apprentice" (and is now an associate real estate broker for the Corcoran Group in New York).
Mr. Black didn't find much sympathy from his family back in Mississippi, where $100,000 is still a country club income. "You go home and tell them how much you're making, and they think you're doing so well, but then you tell them about the rent," he said, recalling the $4,650 monthly rent for the apartment he shared with a friend in Symphony House, near Columbus Circle.
It was only when his annual compensation began to approach the new affluence threshold that he began to feel he was building real equity. "A couple of years making close to $200,000 puts you into that good place," Mr. Black said.
Robert H. Frank, an economist at Cornell said: "A lot of people think this is about spoiled people who can't keep up with the Joneses, but it's really deeper than that. There's a consumption standard that every group has. If you ask, 'How am I doing?,' it's always, 'Compared to what?' And people hardly ever look down."
If they did, it might seem a bit odd to see a number they had spent much of their lives staring up at longingly. Then again, Mr. Coleman of Salary.com is not sure people will ever quite strive for the $200,000 life in quite the specific way they dreamed of a $100,000 one. The latter "is a natural milestone," he said. "It's a power of 10."
"One hundred thousand is magical because it is 100 - 100 is perfect, remember when you're in school?" he said.
The real point, perhaps, is the dreaming itself, the sense among many professionals that there needs to be some light flickering on the horizon to get you through the long hours and the stress of a career. In that sense, Mr. Coleman said, the dream salary of today is the same as it's always been. "It's beyond reasonable expectation," he said, "but not beyond hope."