Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 26, 1992 TAG: 9201270183
SECTION: NEW RIVER VALLEY ECONOMY PAGE: 36 EDITION: NEW RIVER VALLEY
SOURCE: JUDY SCHWAB CORRESPONDENT
DATELINE: LENGTH: Long
NO MATTER WHAT THE INCOME, TIMES ARE TIGHT
A Virginia Tech economist, who wishes to remain anonymous, says it's possible to be pinching pennies these days with an income of $100,000 a year."None of us is very sympathetic" about that, he said, but it is possible.
This two-income family, let's say, could have bought a big, new house based on an expected rise in income. It could have a new car and an offspring in college, the economist said.
"He won't starve," he added, but he could be "rather nervous as the months tick by."
Some New River Valley salaries just aren't keeping the recession wolf from the door. The hard truth is, you don't have to be homeless or penniless to be in economic trouble.
With no pay increase in two years for many well-salaried people, the middle class is finding out what it's like to live on a fixed income.
Prices go up, but income remains the same. It's easy to understand the plight of those who have lost their jobs, but there are others in the community who are living - if not on the edge - within clear view of it from their expensive homes.
A couple bringing in $100,000 a year might be paying $2,000 a month in mortgage payments on a $300,000 house.
A child in college at a prestigious school can cost $2,000 a month for tuition of $10,000 to $30,000 a year. If the university is not nearby, there are travel expenses - air fares if the distance is beyond reasonable driving distance.
The kid's living expenses - dorm or apartment rent, food, clothes and a little spending cash, can easily add up to another $500 a month.
And high-income parents can't qualify for special low-interest college loans, nor can their kids qualify for scholarships or grants designed to help low-income students.
People driving high-priced cars often pay cash for them or lease them, according to Steve Garner of Passport Motorcars. Still, lease payments can range from $300 to $500 a month.
Mortgage payments, car leases and college costs can total $5,100 a month. With roughly one-third of the $100,000 income going to taxes, monthly take-home pay would be about $5,800.
That leaves the high-income, high-expense family with $700 to cover food, clothing, medical bills, phone bills, electric bill, utilities, property taxes, pet bills and an occasional movie.
If this family charged big-ticket items like vacations, or furnishings for their expensive house, it could be in deep trouble.
A two-week Mediterranean cruise can cost from $8,000 to $10,000 for two people, according to Bill Ortega at Thomas Cook Executive Travel. A quick trip to New Orleans for Mardi Gras can cost $300 per person for air fare and $500 per person for four nights at a hotel.
Furnishings for a large house can add up at a frightening rate.
According to Etta Henderson, who works in sales and bookkeeping at Classic Interiors in Christiansburg, a dining room furnished in mahogany can range between $5,000 and $11,000. A cherry bedroom suite can run about $6,500. Living rooms can cost $5,000 just for the upholstered pieces, $1,500 for tables - and we won't even mention carpets.
Nurseries and children's bedrooms can cost $1,500; and an eat-in kitchen is easily $1,000. Family rooms can cost $7,000, what with wall units and everything.
For a four-bedroom house, the furniture soon totals $30,000 and that doesn't even include window treatments - poor folks call them curtains - lamps, electronic toys and appliances.
The middle class is defined by Webster's as "the social class between the aristocracy or very wealthy and the lower working class: people in business and the professions, highly skilled workers, well-to-do farmers, etc. are now generally included in the middle class."
The Tech economist described middle class as "just about what everybody thinks they are. George Bush eats pork rinds so he can be middle class. Even Dan Quayle has learned to go out and shake greasy palms. People don't want to be in an elite group," he said.
People at the upper end of the middle class who have not overextended their credit, the economist said, are coping with the recession by being "prudent - our leader's word."
They're making marginal changes, like renting more videos and going to the movies less often. They don't eat out as much, skip the family visit or vacation, and fix up the car instead of buying a new one.
What they can't do is sell a big house and move to a smaller one - big houses are just not moving in this market.
The economist feels a certain sadness for the plight of the children of the yuppies with their $200 sneakers. He wondered aloud if this generation might be the first to feel lucky to maintain the standard of living they'd been raised in instead of doing better than their parents.
"You see kids coming in as freshmen with a Corvette, getting a degree in a subject that can't support that lifestyle," he said.
"We've been a nation that resolved problems by moving away from them. Now we have no place to move. We may need to become more European - generations stay at the same status," the economist said.
An example of a middle-class family feeling the economic pinch is a Virginia Tech staff employee - who also requested anonymity - who works 20 hours a week. Her husband is a construction administrator. He wears a tie and a hard hat to work. They have two children, ages 7 and 10, a dog, a cat and a 2-year-old house.
Her husband's company has not laid anyone off, but that effort has cost all the employees raises and bonuses for the past two years.
The wife said they became conscious of the recession's toll on their lives when they exhausted their excuses for being out of money all the time.
"We blamed it on all kinds of things - we were looking for a scapegoat," she said.
She described their normal economic condition as having a budget plus X amount of buffer.
"All of a sudden that amount wasn't there," she said.
For a while she and her husband were convinced their family vacation to Yellowstone last summer was the culprit. They drove there non-stop, stayed a week, and returned non-stop, trying to cut costs.
Their average motel rate was $50 a night. They kept a cooler in the car instead of eating out for every meal.
"There's a recovery period after something like that," she said. "After a month or two you're back in the groove."
They missed the groove.
"We don't blame it on the vacation anymore," she said.
Their income is the same, but the money doesn't go as far. To adjust to inflation without raises, they've changed their ways.
Past Christmases have been on plastic; this one was cash. They used to drive to Washington, D.C., once a month to visit relatives.
No more.
They're changing their diet, too. They're eating less meat, which she considers a healthy change anyway. And the kids have to wait for things they used to get right away.
A new pair of shoes in a better economy would have been on the child's feet in November. In this economy, they appeared under the Christmas tree as a present.
She clips coupons, as always, and approaches meal planning with the question: "How far can I stretch this?"