The plight of Andrew Schiff

By Felix Salmon
March 5, 2012
media tour doing damage control for the quotes he gave to Bloomberg's Max Abelson, Andrew Schiff rocked up at Tech Ticker last week, to talk to a sympathetic Aaron Task.

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On his media tour doing damage control for the quotes he gave to Bloomberg’s Max Abelson, Andrew Schiff rocked up at Tech Ticker last week, to talk to a sympathetic Aaron Task. “The salary you’re making now, you can’t live a middle-class lifestyle in New York City,” said Task. That salary, of course, is $350,000 per year — enough for Schiff to, among other things, pay $32,000 a year to send his 10-year-old daughter to Poly Prep Country Day School.

If you’re a connoisseur of rich people’s whines, you’ll be intimately familiar with the idea that they don’t have much money left after paying for expensive things in general and private school in particular. But sending your kids to private school is the epitome of upper-class snobbishness and elitism, and nobody who does it should ever be allowed to kvetch about their straitened circumstances. After all, they’ve already paid, with their taxes, to send their kids to public school. But their local public school isn’t good enough for little Muffy — in large part because all the rich parents in the neighborhood send their kids to private school instead, and therefore the local public schools aren’t getting the benefits of a significant cohort of affluent, educated, and engaged parents.

What’s more, if you send your kid to public school and augment her education with anything near $32,000 worth per year of books and travel and experiences and even private tutoring, she’ll end up extremely well educated. After all, when you look at studies which adjust for socio-economic status, there’s very little evidence at all that private schools provide a better education than public schools. Indeed, the evidence shows the opposite: that middle-class kids who grow up with two well-educated parents and lots of books around the house will generally do very well in school no matter where they go. Which means that the only real reason to send Muffy to private school is to ensure that she only hangs out with rich kids.

But let’s put aside for one minute Schiff’s complaints that once he’s spent $200,000 per year, not including health insurance, and saved a whole bunch more in his 401(k) plan, he doesn’t have any money left. His main point is that “living in New York is extremely expensive”. And that actually isn’t true. If you’re a financial professional, New York is arguably the cheapest of the world’s financial centers. And most major non-financial cities are more expensive than New York, too.

According to Mercer’s annual cost of living survey, New York lies somewhere between Brisbane and Brasilia, and is significantly cheaper than the likes of Milan, Tel Aviv, Melbourne, Seoul, and, of course, London. And it doesn’t even come close to Sydney, Rio, Hong Kong, Singapore, Geneva, Moscow, or Tokyo. Complaining about the cost of living in New York is the ultimate in parochialism: New York might be expensive by US standards, but it’s definitely cheap by global-city standards. Which is why it’s rather ironic to hear this plaint from Schiff, who’s the marketing director for a company which calls itself Euro Pacific Capital.

Most worryingly for Schiff’s clients, however, is the weakness of his logical reasoning. Worrying about his kids, Schiff tells Task that “I want them to grow up the way I grew up as a kid. I’m certainly of middle-class New York City origins. And that is becoming increasingly expensive. And that’s a function of the diminishing middle class and upper-middle class in the United States.”

Actually, Andrew, if a middle-class lifestyle is becoming increasingly expensive, that’s a function of the growing middle class and upper-middle class in the United States. Or Brooklyn, anyway. Why does the brownstone next door cost $1.5 million? Because there’s demand for housing at those prices from a large number of upper-middle-class families who want to live there. If you’re having difficulty raising a family on $350,000 a year, and you’re surrounded by people living the kind of lifestyle you can’t afford, that’s a sign that New York in general, and Cobble Hill in particular, is full of families making enormous sums of money.

The problem in brownstone Brooklyn isn’t that the middle class is diminishing. In fact, the whole reason why Andrew Schiff can’t move into the house he wants is that Brooklyn’s middle class is growing, to the point at which demand from middle-class families for comfortable housing significantly exceeds supply. The natural result is stratospheric prices. Wall Street bonuses might be down this year. But there’s still an enormous amount of money in New York — so much money, in fact, that Andrew Schiff feels unable to buy exactly the house he wants. I don’t think anybody is going to feel sorry for him — but the very fact that he’s in that position is proof that the rich are doing very well for themselves these days.

And in the mean time, if Andrew’s feeling stuck in his current digs, I have a suggestion for him. Buy a dishwasher. Trust me, you can afford it. And it’ll make your current life significantly easier.

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