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February 11th, 2009

The Perils of a $500,000-a-Year Salary in NYC



I originally found the topic behind this post when I was browsing through The Consumerist this morning. Soon did I find out that the premise was originally and sincerely argued in the New York Times.

You Try to Live on 500K in This Town” is an article by Allen Salkin that lists the life-changing impacts the president’s new salary restrictions would have on the “more than a few” CEOs and their families.

Here’s Salkin’s most legitimate argument:

But in New York, where a new study from the Center for an Urban Future, a nonprofit research group in Manhattan, estimates it takes $123,322 to enjoy the same middle-class life as someone earning $50,000 in Houston, extricating oneself from steep bills can be difficult.

Salkin’s disclaimer — “even if it is not for sympathy but for sport, consider the numbers” — does little to make you feel for the men and women “whose identities are entwined with living a certain way in a certain neighborhood west of Third Avenue: a life of private schools, summer houses and charity galas that only a seven-figure income can stretch to cover.”

Let’s take a look at some of the expenses some CEOs may have to eliminate the day their salaries are capped:

Barbara Corcoran, a real estate executive, said that most well-to-do families take at least two vacations a year, a winter trip to the sun and a spring trip to the ski slopes. Total minimum cost: $16,000.

A summer house in Southampton that cost $4 million, again not the top of the market, carries annual mortgage payments of $240,000.

Many top executives have cars and drivers. A chauffeur’s pay is between $75,000 and $125,000 a year, the higher end for former police officers who can double as bodyguards, said a limousine driver who spoke anonymously because he does not want to alienate his society customers.

Salkin, quasi-sarcastically suggests the solution seems easy: “move to Brooklyn or Hoboken, put the children in public schools and buy a MetroCard.”

By listing the many advantages that accompany a CEO’s lifestyle, by listing the perks they may soon have to go without, does Salkin really expect the majority of Americans to feel bad for these “upper echelon” New Yorkers?

Plenty of Americans have made sacrifices during these strenuous economic times. Some of those sacrifices include spending less time with their families because they had to take on a second job, or having to downsize to an apartment because they lost their job and couldn’t afford their home — NOT suffering the unfortunate fate of having to let their personal driver go.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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