With one stroke of the pen, Singapore academic and occasional socio-economic commentator, Donald Low* made a substantial number of people feel poor. Donald Low’s comments (as reported in this article) were in response to an article by Singapore’s favourite has-been-tabloid turned free broadsheet about a family of five with a five-figure monthly income whose purse strings feel a little tight.

Basically, using statistics from the Singapore Department of Statistics (SingStat), Donald Low showed that a family of five with a five-figure income could indeed feel middle class. This is given the fact that the average and median household incomes in 2017 were S$12,027 and S$9,023 respectively. Given that this family had a larger than average family size**, it’s no wonder that they are considered middle-income from a statistical point of view.

I get the point about people saying that the lady interviewed needs to get her priorities right – such as not needing the private sailing classed for her kid, but the data also shows that that family is highly likely to be representative of the middle-class. And we all know that it is the middle-class that tends to have the most frivolous spending. I can just imagine how many of them spend so to show that they aren’t in the lower-income bracket and because of the aspirational lure of keeping up with their peers who may be upper middle or in the wealthy group.

By the way, those looking at solving our birthrate problem need to tackle this issue. It’s probably the biggest reason why younger couples aren’t having kids. Imagine a young couple, both working in median paying jobs that pay equally well and therefore, as a household, they are right at the median. Adding a kid to the household presents them with two scenarios: one, do they have someone to outsource the childcare to and live with a 33% fall in their per-capita household income? Or two, does one of them (usually the wife) stop or reduce the amount of work in order to take care of the child. Notice that either scenario reduces their household income on a per-capita basis. The first scenario puts them more or less at the median in terms of per-capita household income while the second puts them below the median.

That’s just having one kid. And you wonder why we have problems replacing ourselves. Having said that, my bigger concern is that many of the middle-class (with one or two kids) in Singapore are spending so much of their income on housing and the occasional affordable luxury that retirement is going to be an issue for them.***

Notes:

*While there has been some controversy over the things Donald Low has said in the part, he is the kind of academic that we need in Singapore. Not many people are able to/aware of the data that’s out there, much less interpret it. Also, some of the other academics that get featured or interviewed regularly either say something that reinforces the government’s view or is trivial.

**The Average household family size for Singapore in 2017 was 3.3 members.

***I suspect the issue will be with housing more than the affordable luxury although that $300/month private co-curricular sailing class adds up to a lot once you consider the opportunity cost of not investing it. $300 a month for five years and then compounded at 5% (CPF can do this easily) for the parent’s entire working lifetime (say it’s 25 years after those 5 years) comes up to be $5613.53. Who knows what other things these people are spending on? Edit: I stand corrected. It’s only $300 per year which makes it even less of an issue.

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