Recall that gag from Austin Powers when Dr. Evil, transplanted to 1997 from the Swingin’ Sixties, vows to hold the world at ransom for $1 million—only to have his nonplussed No. 2 observe that amount “isn’t exactly a lot of money these days…”
Well, the other shoe has dropped, One Hundred Thousandaires.
It only seems like yesterday when crossing the threshold to a six-figure salary was the benchmark for a so-called well-paying job.
But, according to the latest calculations from the U.S. Bureau of Labor Statistics, the threshold today for high-earners is more like $133,000. At least, that’s the salary one would need now to have the same purchasing power as $100,000 a decade ago. (Take the Wayback machine to 2003 and you’d need to be raking in $168,000 today.) And who’s the culprit sending yesterday’s Daddies Warbucks to the bread line? Inflation. (And that’s no exaggeration. According to a recent report from LendingClub, more than half of Americans earning more than $100k a year live paycheck to paycheck.)
Inflation rose at a rates of 7% and 6.5% in 2021 and 2022, respectively, according to the Department of Labor—triple its highest rates since 2013, putting a major crimp in purchasing power for salaries across the board. (Inflation is sitting at about 3.2% in 2023.)
Of course, various salaries go a lot further depending on where one resides. In San Rafael, the average monthly rent for a 2-bedroom apartment is $3,433, according to rent.com. In Santa Rosa, it’s $2,608; Napa, $3,170. Nearby, other “big” cities in the Bay Area check in for 2-bedroom rentals in a range from $2,050 (Vallejo) and $2,516 (Hayward) to $4,913 (San Francisco) and $6,289 (Berkeley). And yet jumping out of the rental market into home ownership grows harder, with 30-year mortgage rates continuing to climb higher this summer—cresting 7% in August, their highest level in more than 20 years. (See graphic)
Meanwhile, the Fed recently initiated a 0.25% hike to its federal funds rate—the 11th increase in the current rate-hike cycle—in an effort to rein in inflation.
That Dr. Evil scene gets funnier every day.
5 thoughts on “The new Drs. Evil: Inflation, rising mortgage rates…”
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