Monday, April 4, 2011

Living Above Our Means

My recent rant on facebook about my low-income, high unemployment, and high overweight and obesity community eagerly anticipating the opening of an Olive Garden, a restaurant that serves extremely large, high-calorie, high-fat meals with an average plate cost of $17.  This train of thought led me to consider what it means to be middle class, and if our community has enough middle class families to support many restaurants.
Our community consists mainly of a city and a very large county, with a total population of about 100,000.  The median household income for residents of the city is $26,900; for the county it's quite a bit higher at $46,600.  According to the Pew Research Center, middle class income ranges from $37,675 to $75,350, making a large number of people in our community fall below middle class.  The Brookings Institute gives a broader range of $25,117 to $100,466 and an economist at MIT believes $30,000 to $90,000 covers the middle class.  Even these figures put many in our area below the middle class line.  In addition, the unemployment rate for this area is almost 11% for the county and 14% for the city.  

Yet our community manages to support several chain restaurants, including an Outback Steakhouse that always seems to have a line out the door, even mid-week.   This is a restaurant where a typical meal will set you back at least $15 per person.  One website I visited said that in 2007, the average American family spent almost $2,700 on restaurant food that year, that's over $200 a month.

Contrast this spending with the information that jumped out at me:
In the Spring 2009 survey of the wealthiest 10% of all U.S. households, spending for dining at casual/family restaurants during the next 12 months, in comparison to their spending for such items during the past 12 months, is to be reduced by 29% of the affluent consumers and to be increased by only 7% of the affluent consumers. The remainder (64%) expects to spend the same for dining at casual/family restaurants during the next year as in the past year.
Spending for dining at upscale restaurants is to be reduced by 54% of the affluent consumers and to be increased by only 2% of the affluent consumers. The remainder (44%) expects to spend the same for dining at upscale restaurants during the next year as in the past year.
During this economic down-turn, a large percentage of affluent Americans sees the wisdom reducing their restaurant spending and the majority will not be increasing restaurant spending.  Our community is not affluent nor are our incomes rising, but it appears as if we're prepared to support yet another restaurant.  For a new restaurant to succeed in our area, either dollars will be shifted from the locally-owned or existing chain restaurants, thereby putting some people out of work or out of business, or there will be an increase in restaurant spending.  Neither option is a good one for a low-income area.  If those who can afford it are tightening their belts, why are those who cannot afford it preparing to spend more?

Recently I read an essay by Alexie Torres-Fleming, a woman who was living the good life in Manhattan and had a professional career on Madison Avenue.  She came to the conclusion that she was living a shallow, empty life, quit her job and returned to her childhood community in the Bronx to run a non-profit organization she founded.  In her essay, she listed lessons she had learned, one of which was that "making more people middle class is not the answer" to the problems of the world.  She commented on a report on PBS about the economic boom in Calcutta, where Mother Teresa had served the poorest of the poor.  This is what she said:
There were pictures of all these malls, and people buying machines and microwaves from these malls full of lights, and they were all so excited.  I don't romanticize poverty at all, but I saw that and I thought, 'I wonder if this is what Mother Teresa really wanted.'
Over the last few years, I've found myself extremely critical of both overconsumption and spending beyond our means.  When I lived in Florida, I knew people with six-figure incomes who filed bankruptcy.  When they filed their financials with the court, they included things like private school tuition and exclusive club memberships as "necessities."  I saw so many people running out to purchase the newest luxury car and buying larger, more luxurious houses because they wanted to keep up with the "Jones."  I heard one person comment that they had a window treatment made and it was "only $3,000."  $3,000 to cover a window?  So when we decided to move, I was glad to move away from that mentality, looking forward to living in an area where incomes were lower and people were not caught up in the frenzy of consumption.

Now I see the same disease here.  The only difference I see is that most of my former neighbors could afford to purchase luxury items and had reasonable expectations that they could pay off whatever debt they incurred.  This is evidenced by the following statement from the Affluence Research Center:  
The affluent market has always leaned towards careful spending and aggressive saving, as clearly demonstrated in the 20 plus years of research by Thomas Stanley, author of the best seller The Millionaire Next Door.  The affluent typically live within their means and generally do not overextend themselves financially.
Here in my community, with low incomes and high unemployment, those who incur debt are not likely to be able to pay for it.  Most people here consider themselves to be "middle class" and have bought into what that entails:  regular dining at upscale restaurants, closets full of clothes, never-ending home improvements, tuition for private schools, huge celebrations and all the necessary accoutrements, and, of course, Blackberries and "smart" phones for everyone.  These luxuries are often treated as necessities in my community.  This is why the average person in my community now has in excess of $8,000 owed on credit cards.

Although I have become active in my community, trying to focus my energies on helping those who are less fortunate than myself, I've become somewhat disillusioned.  It's difficult to want to help those who are asking for necessities when I see so many squandering their money on luxuries.  I'm not against having nice things and enjoying life.  However, I object when one doesn't have the means to pay for it or when it's excessive.

Sources:  http://www.dpchamber.orghttp://www.reuters.com http://affluenceresearch.org; Torries-Fleming, A. (2009).  Standing in Uncomfortable Places.  Piladelphia, PA:  Friends Publishing Corporation.


Shona~ LALA dex press said...

I do believe you and I live in the same community.

My work serves extremely low income and homeless individuals and a comment that always comes up is..."but yet you had enough money to buy a pack of cigarettes."

And as a side note about Olive Garden, I recently read a quote by Anthony Bourdaine in which he mentioned the 2 worst meals he ever ate were a fermented shark in Iceland and a meal at Olive Garden.

Cherie said...

Shona, it is sad when I see people at our food bank who use their money in ways I think don't make sense. A friend of mine said we have to keep in mind that sometimes that's all that keeps them from sinking into deep depression. Wish we could teach them that there are better ways.