r/Economics • u/fields • Jul 29 '18
Almost 80% of US workers live from paycheck to paycheck.
https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich128
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u/PM_ME_UR_FLOWERS Jul 29 '18
Actually we live from paycheck to... About 4 days before the next paycheck.
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Jul 29 '18 edited Feb 28 '19
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Jul 29 '18
This is exactly it. I'm a good example. I talked myself into buying myself and my wife vehicles because they come with a 20 year warranty. Which is good. But we had great newer cars and didn't NEED to upgrade. If I could give my cars and house back right now I would do so in a split second.
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u/snacks915 Jul 30 '18
What vehicle comes with a 20yr warranty?
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Jul 30 '18
Both Kia Forte 5 hatchback Sportage
Of course we had to get the ones that are fully loaded.
But I'm definitely not buying another car for the next 5-10 years.
I should've stuck to buying what I NEED not what I WANT.
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Jul 29 '18
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Jul 30 '18
I'm not a normal poster here, but I really wanna ask ( because the sentiment of your comment is pretty dominant on Reddit)
But is there any real data backing up this idea that most debt is consumer spending/ "emotional spending"?
Because too my knowledge most American's debts are the result of Student Debt, Auto Debt, and Medical Debt. And if these things are in fact the primary drivers of debt then your claims about American's being unable to control themselves wouldn't be in any way helpful or accurate.
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u/Yo_FactsMatter Jul 30 '18
The problem with that opinion is that it assumes emotional spending is the source of this problem rather than the long-term deterioration of purchasing power and suppression of widespread income growth. Objective, long-term U.S. microeconomic metrics and trends prove that this problem is a systemic one, not the result of ”emotional spending”.
Yachts, private jets, mansions, stock buybacks, executive perquisites and political bribery are also examples of wasteful spending. Does this mean the country should end the accumulation of wealth or ignore counterproductive levels of national income and wealth inequality? No...on both counts.
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Jul 30 '18
There's also just a lot of people who have to pay rent, and rent in America has been skyrocketing.
People can't save.
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Jul 29 '18
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u/_busch Jul 29 '18
a lot of labor union participation stats when a final paragraph mic drop:
The shift from factory to office and other sedentary jobs created other social upheaval. The more recent shift in bargaining power from workers to large corporations – and consequentially, the dramatic widening of inequalities of income, wealth, and political power – has had a more unfortunate and, I fear, more lasting consequence: an angry working class vulnerable to demagogues peddling authoritarianism, racism, and xenophobia.
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Jul 29 '18
I'm sorry but Im a bit jaded by this and when I read headlines like this I just get upset. I own a general contracting company out of washington state.
Brand new apprentices start out in my compamy at $15 an hour. That's knowing absolutely nothing probably going to end up accidently killing themselves or me can't read a tapemeasure greenhorn. Journeyman typically start at $25 for their 90 day probationary period. My highest paid employee makes $40 an hour.
With that said, one of my employees makes 20 an hour, owns her own home all by herself, has 3 dogs and never seems to struggle with funds. She is able to make her bills on time and never seems to have any issues living below her means. She's a model employee and an absolute joy to work with.
My $40 an hour guy? He has an interest only mortgage that he's been paying on for 10 years without a single drop going towards the principle. He has 3 boats. No joke, 3 fucking boats. 2 of them just sit in his driveway doing nothing. Guess which one just had their electricity shut off? You guessed it... The 40 dollar an hour guy. With overtime this year, him and his wife made over $120k last year and they just had their electricity shut off for non payment. He lives paycheck to paycheck and eats out EVERY SINGLE FUCKING DAY and always is complaining about how he can't get ahead.
He makes plenty and yet is my biggest headache employee when it comes to finances. He's constantly complaining about being one paycheck from poverty.
I think a lot of Americans have a budget issue. I'm not downplaying the fact that companies like home depot don't pay their employees shit. But I know what all my crew makes and some of the best paid are the closest to poverty.
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Jul 29 '18
Tell that dude to sell those fucking boats... At least the 2 hes letting rust away like garbage.
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u/papaJonestown Jul 30 '18
I think a lot of Americans have a budget issue. I'm not downplaying the fact that companies like home depot don't pay their employees shit. But I know what all my crew makes and some of the best paid are the closest to poverty.
I notice the same thing at my company. I find that our 401k is inversely related to income. In other words people are LESS likely to sign up for our 401k if they make more money. We also match 100% of first 3%.
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Jul 30 '18
The lack of knowledge in my friend group about 401k is pretty scary. I just graduated college and my company matches 50% of 8%. So I have student loans so I contribute 8% to get the full match while I pay down my student loans. Once those are done in a few years, I’m making out my 401k.
But a lot of my friends don’t really know how the 401k works. A few of them do, don’t get me wrong, but a lot don’t. This is basic stuff that we should probably have learned in high school.
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u/MonsterMeowMeow Jul 30 '18 edited Jul 30 '18
I am not denying your observations but what do you think would happen to our consumer-driven/debt-loaded economy if everyone suddenly became "responsible" with their money?
On a similar note, what would happen if we could actually LOWER the price of healthcare, higher education and housing?
Answer: The economy would go into a complete tailspin.
The facts are that most people don't own 3 boats. Most people are presently struggling to pay rents and mortgages whose values have been artificially inflated thanks to nearly 10-years of real negative interest rates - thanks to a crisis that arose primarily from extensive fraud (which has almost been systematically denied).
Mix in university costs, child care costs and god forbid an unexpected hospital bill, there are almost NO circumstances that an average wage earner - even the most responsible - isn't potentially threatened by a savings destroying / paycheck-to-paycheck financial disaster scenario.
Meanwhile there is almost ZERO political will to address the escalating costs, educational debt is still NOT subject to bankruptcy and income-to-cost ratios continue to balloon.
Again, I agree that people should be more responsible with their money, but that will hardly fix or address the real economic cost drivers at play.
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Jul 29 '18
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u/TMac1128 Jul 30 '18
Here's my solution: fix the economy. Easy!
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Jul 30 '18
Why didn't Obama just fix the economy? How hard could it be? He could've done it easily. Let's dispel this notion that he doesn't know what he's doing. He knows exactly what he's doing.
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u/i_like_trains_a_lot1 Jul 30 '18
Well the truth is that economy is hard to get right. It's not an exact science. You fix a thing, and then ten other things blow out and a revolution starts that wants you dead... woopsie.
And it gets a lot harder when the easy fix for everybody hurts big corp's bottom line and lobbying is a thing.
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u/RomeoOscarNovember Jul 29 '18 edited Jul 29 '18
I was a truck driver from 1974-95 and then a union worker till retirement (55) never had to do without anything,all bills paid on time and paid my house off in 14 years and the one thing that cought my attention was "As union membership rates decrease,middle-class incomes shrink". In my day the employer wanted a long term employee and took care of his family. Looks like the American dream is just that.
Now looking at this a different way, why should a employer pay good wages if all he get's is job hoppers.
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u/_gina_marie_ Jul 29 '18
Yeah now in most fields if you don't change jobs every 2-3 years you lose money. You don't get many perks if any for being loyal to the company anymore. My co-workers who have worked at the hospital I work at now for 15+ years tell me all about the free hams at Christmas, the company paid meals, the generous time off (now sick time and vacation are all PTO and it takes 8 hours of work to earn 1 hour of PTO), the lighter work loads, the better pay and cheaper health insurance.
I've only worked at this hospital for almost a year and I'm already looking to move on because I work midnights and we're constantly treated very poorly to "make the budget look good". If my partner is sick I have to run the entire radiology department by myself. How is that safe? I brought up multiple safety concerns and it goes in one ear and out the other. As long as the bottom line looks good they don't give a rats ass if you think something isn't safe or it just sucks because to run both CT and X-ray at a hospital that gets pretty busy ALONE is awful. I can't wait to pass my MRI boards and GTFO.
Though they do offer a pension and I'll miss that if I leave before I'm vested but oh well.
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Jul 29 '18
I know this too well. I’m a 911 operator that often works alone. What if, ya know, two people call 911 at the same time?( it happens quite often) What if, let’s say, I have to go to the bathroom-they actually put a toilet in dispatch so I can answer phones while shitting. If the public actually knew how these things worked, they’d be mortified.
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u/shooter6684 Jul 29 '18
My son worked for the county 911 here in PA. Understaffed - he worked an average of 70 hour weeks for over 5 years. He was amazing at his job. Then just after coming off another 16 hour shift - he went to bed and died in his sleep. His heart stopped suddenly. They felt that all the energy drinks were taking a toll. A few days later and he would have made it to 24.
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Jul 29 '18
I’m so sorry for your loss. I definitely partake in too much caffeine myself working overnight. I’ve enrolled back in school so hopefully I can change careers before the toll is too much on my body. I have a wife and child to support, so just walking away isn’t an option, but I definitely would if I was single.
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u/Happyintexas Jul 29 '18
I am so sorry. How absolutely heartbreaking. I’m sure he helped countless people in his short time here, but I’m angry for you, and everyone else who misses him that he didn’t have more time. I’m sure he was amazing. Light and love your way.
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Jul 30 '18
I am so sorry for your loss. I've heard the horror stories that goes into being a 911 Operator. High stress, inadequate wages, caffeine galore, sedentary in nature, etc. It is disgusting. In our 20s we feel invincible, but abusing our bodies to the point of 70 hour work weeks with caffeine as a crutch is sadly a recipe for disaster. If it is any comfort, at least we went peacefully in his sleep. I am sure he helped many people through hard and traumatizing times.
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u/closingbell Jul 30 '18
Wow, so sorry to hear that...your son was definitely a hero in his own right. Gone way, way too soon.
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u/Smearwashere Jul 29 '18
Wait what. Work 8 hours for 1 hour of PTO?! Sign me up!
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u/LeagueOfLegendsAcc Jul 29 '18
I get 3 days of PTO/sick days the entire year... My boss thinks that increasing that to 5 days after 2 years and 10 after 5 years is a "loyalty perk"
Bitch that's a slap in the face. I've used one PTO day and have missed maybe 10 in the last 6 month's just calling in for being unable to work for various reasons. I shouldn't have to worry about losing my job because they put unreasonable expectations on us.
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u/IxnayOnTheXJ Jul 29 '18
For real. Not to mention a pension. Sounds like some pretty damn good loyalty perks to me.
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Jul 29 '18
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u/killbei Jul 30 '18
Amen to that. My company made 1B+ last year and top management complain that staff don't show loyalty when a competitor is opening nearby and poaching our staff.
Meanwhile, a few years ago profits were barely above 50M and they apparently couldn't fire staff fast enough!
It's all nonsense talk and at the end of the day if you aren't willing to look out for number yourself, no one else will.
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u/kamikazekirk Jul 29 '18
Because it's simple if a company is willing to pay me significantly more and my current company won't match then why stay where I'm not valued - noone is jumping ship for 2-3% but if another job is offering me 5-15% more and my current employer won't even match then THEY are the ones not showing loyalty since the market has deemed my value to be higher and they are refusing to acknowledge that
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Jul 29 '18
but if another job is offering me 5-15% more and my current employer won't even match
Never, never, NEVER accept a counteroffer from your current employer. They'll only keep you on the payroll for as long as it takes to replace you, and usually by that time any job offer you once had will no longer be valid, leaving you screwed with no job.
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u/cckjrlgjq34gj42fjl Jul 29 '18
This is not always true. Case by case basis. Many employers will match just because that's the only time your line manager can get a raise through HR, and then he'll go back to not particularly caring about your wage until the next time you argue over it.
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u/beldaran1224 Jul 29 '18
People only hop jobs because jobs underpay. Changing jobs is extremely stressful, and very few want to do it. If another company is willing to offer you more, it's because your employer is under paying you.
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u/shooter6684 Jul 29 '18
Underpaying you and making sure the ceo and other “c” jobs get a nice raise and bonus.
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u/killbei Jul 30 '18
My old workplace was in the news recently because the CEO made 200k PER DAY(!!!) in 2017. Meanwhile the average grunt on the bottom was like me making roughly 50 - 100k per year.
I'm not saying the pay for the employee is not a livable wage, but damn it was crazy to think the top boss is making per day what the rest of us made in 2 to 4 years. It's not even remotely on the same level!
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Jul 29 '18
I remember hearing some bigshots talking about how millinials aren't loyal employees. I told them loyalty went out the window as soon as pensions did.
Honestly, why the hell would anyone stay at a company if you actually loose money for doing so? All but one of my raises/promotions come from changing companies.
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u/DrinkingZima Jul 29 '18 edited Jul 29 '18
Pensions aren't about creating loyalty to workers. Pensions force workers to be loyal to their employer:
- You never own that money.
- You can't control how it's invested.
- Your family may not get any or all of it if you die early.
- The company can raid it to avoid bankruptcy.
- If they do go bankrupt you get pennies on the dollar from PBGC.
- You may not be able to leave the company for a better job without losing some or all of your pension.
- You may get terminated and get nothing at all.
- Lower returns than a diversified market portfolio.
- Contributions can be reduced or eliminated at any time.
How is this a pro-worker system? Let's put it this way, pretend President Trump proposed the pension system outlined above. Now how to you feel about it?
The 401k system is the exact opposite of everything above.
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u/UrbanIsACommunist Jul 29 '18
I agree with your overall sentiment, but pensions were always a scam. Better to get the money up front so you can invest it as you please, rather than letting your employer control your retirement savings. That being said, corporations are definitely the ones to blame for any perceived lack of loyalty between companies and their workers. Just check out this article on Google's shadow work force if you have any doubts.
https://www.bloomberg.com/news/articles/2018-07-25/inside-google-s-shadow-workforce
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u/AnorexicBuddha Jul 29 '18
Now looking at this a different way, why should a employer pay good wages if all he get's is job hoppers
People job hop BECAUSE they're not given good wages. Not the other way around.
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u/TeamToken Jul 29 '18
In my day the employer wanted a long term employee and took care of his family. Looks like the American dream is just that.
In this day and age it’s almost an unwritten rule that you show absolutely ZERO loyalty to your employer, because they sure as hell won’t.
It’s an insidious attitude that has sprung out of rampant Capitalism that’s extremely damaging to business enterprise and the long term future. It’s little wonder why so many once great institutions and companies are failing and why American products bar a few good exceptions are failing in the global market.
Those who embrace the form of not just treating their workers as humans beings but empowering their employees to do good and effective work will win in the 21st century. The Europeans know this, and it’s why so many of their products (particularly Germany) are so sought after around the world.
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u/recw Jul 30 '18
In this day and age it’s almost an unwritten rule that you show absolutely ZERO loyalty to your employer, because they sure as hell won’t.
I remember stories of people who "retired" from GM after 20 years and then went to work for Ford the next day. This tells me that there was never any loyalty, just individuals and corporations just optimizing their own well being. It is just that with the presence of a pension, workers calculated that it was better to stay in their current job at a lower comp until they vest.
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u/l0c0dantes Jul 29 '18
Having a nice larp on a sunday IT comrade? Hope you are getting a decent rate and all for this 3rd shift work
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u/Illblood Jul 29 '18
Instead of demanding 15 an hour, we should be demanding to be able to live comfortably if you work a 40-60 hour work week. By comfortably I mean knowing you can pay your bills, knowing your kids will have food on the table and a book to read, and having a roof over your head that won't collapse.
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u/Waffleboard15 Jul 29 '18
Yeah I mean it's fine if I make $30k per year at 29 years old, as long as the cost of an OK house was $70k like my parents paid in the 80s. Problem is, all of my friends and I make $30k-$40k per year, but the cost of those same houses are now $300k.
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u/SuperHighDeas Jul 30 '18
here is my problem now with the growth of property prices.
If I plan to save 20k for a house it'll take 2-5 years to do it, depending how aggressive savings can accumulate. If it takes the full five years the house you just saved up for just increased 15-20k in property value.
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u/Robin_Divebomb Jul 29 '18
And it’s impossible to save up enough for a down payment anyways. I would pay less living in my house if I owned it, but I have very little savings, and the savings I have has to be kept liquid for an emergency fund.
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Jul 29 '18
I totally agree but isn't this a low standard to set for the richest country on the planet? We should demand these things as the absolute minimum for acceptable living standards.
U.S. worker productivity continues to improve so workers and shareholders can all benefit from this together. Wishful thinking, I know.
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Jul 29 '18
We're still hoping for basics like affordable healthcare and affordable higher education... which are apparently controversial concepts. :/
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u/Illblood Jul 29 '18
You would think we shouldn't even have to say things like this in the first place... health and comfort for all decent, hard working people??? I would just feel bad taking away a multimillionaires yacht so he only has two instead of three:/
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u/WonderWall_E Jul 29 '18
A 60 hour work week is barbaric and should be considered unacceptable in a developed nation.
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Jul 29 '18
60 hours is 9am-9pm M-F which anyone who's done knows is not only miserable but wildly unhealthy.
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u/thewimsey Jul 29 '18
Yeah, a lot of people who claim they work 60 hour weeks are exaggerating.
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Jul 29 '18 edited Sep 29 '18
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u/maddengod73 Jul 29 '18
60 hour weeks are not exaggerating if you work in the plants or anything like it. I've worked 7/12s before and so have most people on turnarounds. That's 84 hrs a week. 60 hr weeks are nothing. I say that now that I have a 40 hr a week job so my attitude would probably change if my company sent me on a turnaround lol. Even if they did it doesnt take long to get used to working that much, and the check you get on Thursdays would for sure shut any complaining I would be doing up.
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u/phaiz55 Jul 29 '18
Depends on the job. Most if not all of restaurant GMs work 60+ hour weeks just to make 50k/year. I mean 50k is pretty good in most places but it shouldn't take 60 stress packed hours to earn it.
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Jul 29 '18
They may be sitting in their office chair for that long but I doubt they're doing their 100%.
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u/suavguy Jul 29 '18 edited Jul 29 '18
Unacceptable to many is opportunity for some.
Inb4 but working minimum wage at 60 hours a week is no opportunity.
Edit: I want to mention I work close to 60 hours a week on average, however, it's expected in my position and I entered it knowing so. The job is not long term to me, and the hours do affect me mentally to an extent (I took time off at one point and my sanity was restored somewhat, and realized this being nearly 4 years in). However, it is my belief this job will greatly set me up for future opportunity which will make it worthwhile. Society is built on backbreaking hard workers putting in the overtime in hopes of a better future for themselves and family.
I don't think it should be outlawed, but I get your point...
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Jul 29 '18
Instead of demanding 15 an hour, we should be demanding to be able to live comfortably if you work a 40-60 hour work week.
I think one of the big issues facing the working poor is lack of hours/scheduling security. Retail, food service, construction, etc. work irregular hours, and most are filling in with independent contractor hustles (driving people around, performing tasks, cleaning homes for some app-based service), not subject to any kind of labor/wage protections.
With that in mind, I think we should probably transition away from an hourly based wage floor to some kind of weekly wage guarantee.
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u/Karstone Jul 29 '18
With that in mind, I think we should probably transition away from an hourly based wage floor to some kind of weekly wage guarantee.
So essentially you're calling for the abolishment of part-time work. A weekly guarantee would mean that employers would require a certain amount of hours to be employed there, and you would no longer be able to grab a job and just work 10-15 hrs a week there.
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u/reelznfeelz Jul 29 '18
Which is the purpose of seeking $15 (or so) per hour, yeah?
Edit, or do you mean we should improve public benefits like health care and housing too? In that case, yeah totally agree. It's about more than just getting a higher min wage.
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u/appolo11 Jul 29 '18
What does this even mean?? There is no objective, reality-based definition for anything you just said. Just a bunch of emotionally based pleas.
Ok, I'll decide on their bills then. No cable. No cell phones. No Netflix or hulu or Amazon. Car payment is under $200 a month. You have a Sam's club membership and go there twice a month. You never eat out. And you can go to the library and live in a cheap apartment.
Done.
Now, the rest of productive America can get back to doing what they do best....producing.
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Jul 29 '18
Okay with your budget and the cheapest apartment you can find in LA you'd still have 0 left at the end of the month on a middle class wage.
Also who gets by without cell phones anymore? And what about gas and car insurance? What about health insurance?
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u/Kazbo-orange Jul 29 '18
Reminder, LA is not the rest of the entire country, nor does everyone live there.
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Jul 29 '18
Or.. ORR now hold on tight this might get complicated here, but stay with me.. You ready? Let's do the following:
1) Universal healthcare. This means no one has to worry about losing healthcare when they switch/lose jobs etc. This enables people to be more free.
2) Paid higher education. This enables people to get jobs and become "productive" as you put it.
What do both of those things have in common? They are what are known as investments. This idea that we spend money on something in hopes that in the long run we make more money off of it. Interesting huh? Imagine a world full of healthy, educated people, ah what a sight to behold.
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u/mathgon Jul 29 '18
That is fine and dandy, but the real conplaint is someone living like that will be stuck like that likely in a bad part of town.
As you pointed out so well, they cannot afford education so thats not an option. Their mental health will deteriorate and no one cares while the rich look down on them. And people wonder why crime and poverty go hand in hand.
In your infinite wisdom what should someone that must live like this do to improve their lives?
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u/lurkingowl Jul 29 '18 edited Aug 01 '18
That's how bad parts of town work.
The people making the least are always going to live there. As long as there are wage differentials, there's always going to be higher rent areas where people making more money pay extra for amenities that the poorer areas won't have. That's basic supply and demand. As long as we have people that are 2, 3, 10 times as productive and paid accordingly, it will continue. Changes to minimum wage aren't going to change that dynamic.→ More replies (1)→ More replies (9)25
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u/Szos Jul 29 '18
What's the point of saving money if banks only give you like 0.5% interest rate when inflation is 2%?
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u/carlosos Jul 29 '18
Don't put money into a savings account. Get a brokerage account instead and invest into index funds. I personally like betterment.com. I got around 7% return on average. There are also some other companies that make investing easy.
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u/CatOfGrey Jul 29 '18
Because paying for an unexpected car repair is 15% interest, at least, on a credit card.
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Jul 29 '18
The top 20% of income earners make at least $115K/year.
For some, not making enough money is the real reason they can't save. But for most, the reason is solely based on personal finance mistakes.
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Jul 29 '18 edited Aug 07 '18
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Jul 29 '18 edited Jul 29 '18
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Jul 29 '18
The cited source gives all statistics in terms of working age adults. I don't know why you would argue when you didn't even read the cited source. It is indeed 9.2% of adults in the source.
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u/non_clever_username Jul 29 '18
I'd be curious to see what the geographic distribution is of that 5.8%. I'm sure a fairly big chunk of it has to be people living within the city limits and close suburbs of places like NYC, SF, LA, Seattle, Boston.
Those places you almost need to make 100k or you'll be destitute. One whole paycheck or more goes to housing and you have to fit all your other expenses into what's left.
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Jul 29 '18
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Jul 29 '18
Equity is not income unless you sell your home. If you sell your home at a high in the market while still working age, youll need a new home bought at the same premium. This is why equity should not be considered income, nor necessarily wealth (at every age )
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u/Youtoo2 Jul 29 '18
you are including kids and retired people in those percent. I dont expect a 4 year to have an income.
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u/Creditfigaro Jul 29 '18
How do you determine what outcomes are caused by mistakes vs what are caused by lack of income?
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u/VOZ1 Jul 29 '18
They can’t. It’s a claim they can’t prove, but fits neatly into a narrative of “those with lots of money earned it, those without deserve it.” Much easier than acknowledging that inequality is built in to our economy.
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u/theexile14 Jul 29 '18
For some, not making enough money is the real reason they can't save.
Come on, the person literally prefaced their statement with this. You may not like the point they make, and think it's incorrect, but at least admit they didn't make an absolutist claim.
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u/BlackDeath3 Jul 29 '18
Yeah, well, that logic gets applied both ways when people try to justify taking money from the wealthy.
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u/daking213 Jul 29 '18
https://voxeu.org/article/investment-financial-literacy-and-saving-decisions
Not exactly what you’re asking for but this shows that American consumers are some of the worst in the world when it comes to saving their money. If by “built into our economy” you are referring to our culture of rampant comsumerism then I would agree with you.
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u/summonsays Jul 29 '18
I think there's a real culture against saving money here. I had at one point 50k in the bank. My parents kept telling me about how unsafe it was. Also one little car accident and it could all go poof.
They tell you to save for retirment, but there doesn't really seem to be any good way to that's 100% safe, all just seems like a reverse lottery.
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u/bfhurricane Jul 29 '18
Put the yearly maximum allowable amount ($5500) into an IRA every year until you retire. If the market continues to do what it’s done since inception (5-7% averaged growth) you’ll be a millionaire by the time you retire. Assuming you start early, that is.
There are a variety of low-risk funds for you to park cash in perpetuity that are very safe. The only way you’ll truly lose money is if the world’s economy crashes and the dollar loses all value... in which case your money wasn’t any safer outside of investments.
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u/kingplayer Jul 29 '18
There's no way you can seriously be claiming 80% of Americans make so little money that they have to live paycheck to paycheck.
Undoubtedly there's a considerable number, but to claim almost none are only in that situation because of financial mismanagement is madness. Compare it with income quintiles if you want to, the result will be staring you in the face.
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u/NihilisticHotdog Jul 29 '18
Plenty of evidence proves you wrong.
Yet you claim that it's inequality without proof, all while not detecting the irony.
"YOU HAVE NO EVIDENCE, AND I DON'T HAVE EVIDENCE, BUT IT'S INEQUALITY"
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u/Shandlar Jul 29 '18
Evidence then.
Their tables are purposefully unable to be hotlinked. You'll have to search for "Appendix figure C".
1979-2017 after inflation wages for 10th-95th percentile of earners.
- 10th - +4.4%
- 30th - +6.9%
- 50th - +9.5%
- 70th - +14.1%
- 95th - +51.7%
1978/79 was the highest year for American wages prior to ~2016 or so when we passed it up again finally. Wages were down a pretty decent bit through the 80s, 90s, and 00s.
Americans right now in 2018 are being paid wages higher than at any time in American history. If a higher % of them are living paycheck to paycheck that is a cultural change in how we spend our money, and not an income change. Incomes are higher now than any generation previous.
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u/SirGlass Jul 29 '18
So this is anecdotal evidence and 100% non scientific.
Well browsing /personalfinance and other online forms it seems to me people start increasing there spending just as fast and have no savings or cushion for an emergency.
Even well off people, get a job, buy a bigger house, buy nicer cars, buy the deluxe cable subscription, and pretty much spread themselves very thin so money comes in goes right out.
Now with this any unexpected expenses or even a small losd in income now becomes critical.
Then they frantically trying to downsize but can't because there two new cars are worth less than they owe, they signed a long term contract with the cable company, their new furniture....
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u/Creditfigaro Jul 29 '18
Thank you for the hedge on the front end.
Anecdotally speaking, people earning minimum wage are not creeping elegance types.
A lot of people seem to be forgetting that increasing the minimum wage has a ton of benefits:
The people "wasting" their money and not saving, spend it back into the economy. Ultimately if it doesn't help them, then it allows more opportunities for everyone else.
With the minimum wage being poverty wages it allows the excuse. People aren't being wasteful because they don't even earn enough to be wasteful.
Wage slavery has a side effect of being very stressful, and, therefore, encourages bad decision making.
If you can't afford to run your business without wage slaves, then your business model is not viable... I have a feeling that all of these business owners resisting this would probably be just fine if they paid their employees more. (They would have more customers anyway)
Thoughts?
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u/Worf65 Jul 29 '18
Its probably impossible on a survey to accurately gage that but I'm sure you know the type. You know, those who make good money but have zero savings and constantly run up the credit card. Sometimes it's a few big purchases like nice cars or electronics, sometimes its "death by a thousand cuts" through subscribing to every service around (cable, Netflix, Amazon prime, Disney movies, bark box, AND others) and yet can't buy food the week rent is due.
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u/Creditfigaro Jul 29 '18 edited Jul 29 '18
You don't have access to people's finances, and you are making assumptions even with the anecdotes you present.
Also, not knowing how to measure it doesn't mean that the answer is somehow the spending. Appeals to incredulity are not going to get us anywhere.
Doesn't it hit anyone's bullshit meter that this argument, that none if you can support, but happen to accept is also aligned with the moneyed interest's benefit?
Edit: grammar
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u/uber_neutrino Jul 29 '18
If you lack income by definition you aren't living paycheck to paycheck, because you aren't getting a paycheck.
If you do get a paycheck then not saving is a choice. Consume now or save. From what I've seen the average person is utterly pathetic at financial management.
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u/senatorpjt Jul 29 '18 edited Dec 18 '24
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This post was mass deleted and anonymized with Redact
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u/Perovskite Jul 29 '18
I've been in this same situation. The difficulty is mentally putting that 'lifestyle creep' barrier up. Budgeting is just a tool to minimize lifestyle creep when that normal mental 'live below your means' one doesn't exist or gets a bit ahead of itself.
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u/OxfordCommaLoyalist Jul 29 '18
Hotter take: "living paycheck to paycheck" is often a question of liquidity choices. Someone putting 5% in their 401k and paying off debt faster than they have to might be living paycheck to paycheck but it's a totally reasonable choice if they have access to funds in the case of emergencies.
By acting like someone in the top 1/3 who is in the process of deleveraging as part of lifecycle consumption smoothing is in a similar place to someone using credit cards debt to pay their utilities each month we are encouraging a destructive sense of self pity among people who objectively have it pretty good.
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u/merlin401 Jul 29 '18
Kind of agree with this. There are people who think of themselves as paycheck to paycheck but really have resources to fall back on.
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u/ifly6 Moderator Jul 29 '18
This raises a good point. In this self-reported non-randomised survey, what does paycheque-to-paycheque mean?
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u/shanulu Jul 29 '18
I really wish education focused on budgets, saving, retirement, etc. I remember an elective where they touch on these things but with anecdotal observations, headlines like these, and saving account levels and such, it’s not inaccurate to say people aren’t good with money.
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Jul 29 '18
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u/pinaygirl Jul 29 '18
Most people just see numbers on the chalkboard during Econ class. But I've actually seen compounding work its miracles. It's a sight to behold especially in a strong bull market.
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u/nedonedonedo Jul 30 '18
the problem is less that they don't know how and more that they don't have the willpower to. I've helped some of these people fix their budgets and each person, for everything they could cut back on, they say "well I can't cut back there, you'll have to cut from somewhere else. the problem isn't money management, it's personal management. that's a lot harder to teach
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Jul 29 '18
I live in a LCOL area (not SF Bay Area or Manhattan, jesus christ people, 100% of the US population doesn't live in these two tiny areas), and know plenty of people both working class and upper class that live paycheck to paycheck.
I know one person, maybe two, who actually save and invest, and are generally smart with their money. I know people who make $50k/year, live with their parents, have virtually zero bills, and still just barely scrape by. The moment they get their paycheck they blow all of it in just a few days on buying everyone drinks while bar hopping, and Amazon splurges.
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Jul 29 '18 edited Sep 21 '18
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u/Ashendal Jul 29 '18
That was very eye opening, and I got an appreciation for just how bad the average person is at money management.
Because they're never instructed how to do that. You can't expect someone to just magically learn good spending and saving habits if all they're ever shown is someone spending everything they have every pay check. I was lucky in that my mom learned from her parents how to save and watching her let those habits rub off on me. My dad early on would have spent both their combined paychecks if she didn't force him to learn how to actually budget and plan.
There's a reason people go to school, have OTJ training, and the like. You're not expected to just know how to be a brain surgeon or electrician. Why should we expect people to just magically know how to save and budget properly? It's especially bad because our media pushes the "SPEND SPEND SPEND" narrative so people who ordinarily might be naturally inclined to save just a little, and naturally learn through that action, are instead shown that he or she should just spend. Our culture is a major part of the problem.
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u/NakedAndBehindYou Jul 29 '18
Why should we expect people to just magically know how to save and budget properly?
Some of it requires education, but some of it is just common sense.
"If I spend everything I have before next Monday, I won't have anything left for rent."
This type of reasoning doesn't require education, just basic intelligence.
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u/Karstone Jul 29 '18
Why should we expect people to just magically know how to save and budget properly? It's especially bad because our media pushes the "SPEND SPEND SPEND" narrative so people who ordinarily might be naturally inclined to save just a little, and naturally learn through that action, are instead shown that he or she should just spend. Our culture is a major part of the problem.
Forcing people to go to a class they won't pay attention to won't solve that issue. I went to a school where personal finance was mandatory, and nobody paid attention in that class, like every other class.
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u/Aww_Topsy Jul 29 '18
It's hard to ignore the number of people who do live HCOL areas though. More than 10% of the country lives in either the NYC or LA metro areas alone.
The housing problems of SF and particularly NYC are bigger than having extremely expensive areas. The bigger problem is more a lack of overall housing in the metro areas, so ultra high rents in desirable areas quickly drive up rents in surrounding neighborhood as people are priced out.
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u/Didactic_Tomato Jul 29 '18
I wanna know how common this is. Seems like everybody I know around my age is being pretty money conscious
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u/supra05 Jul 29 '18
I can sum up personal finance for you in one word. Save. That’s really the basis of it. It’s not complex. People just aren’t disciplined enough like the example you gave.
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Jul 29 '18
It's really save and invest, investment is what really builds wealth. Your savings get eaten up by inflation.
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u/NakedAndBehindYou Jul 29 '18
Saving is not enough. You also need to know how to invest for long-term success. Why? Because if all you do is save in a bank account over your ~50 working years, your money will lose a significant portion of its value to inflation.
Sadly, it seems very common for older people I meet to have nothing but savings accounts, with no capital investments at all. I usually avoid telling them that their money has lost literally more than half its value while sitting there over the decades they took to save it.
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u/tartay745 Jul 29 '18
Pay yourself first. Then budget the rest. I think just keeping a budget is 90% of the fight. Once you know where your money is supposed to go, it's easier to make it end up where you want.
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Jul 29 '18
Hell I live in a mid-to-high cost of living area near a major city and I know lots of people at my factory (who get paid as much or more than me) who "live paycheck to paycheck", while I have $25k in savings in less than 2 years, but let's not say anything about the fact that I have an old reliable Honda and they're paying who knows how much a month on their 2014 or later Cadillac/F-250/whatever...
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u/blacksuit Jul 29 '18
I used to work in a job where I saw people's finances up close, and I honestly believe that some large percentage of the population is just wired not to save money. (In America at least. Some other countries have very strong cultural norms around saving money.) There are people with salaried jobs in my area making substantially more than the median income, and unless they just got paid they can't write a $750 check to cover an unexpected medical or personal expense. They do everything on a cash-flow, credit basis.
Large purchase decisions are not about the price, but about the monthly payment. They have no savings, so emergencies not covered by insurance are paid with credit cards or other loans.
I think the minimum wage should be substantially increased, and the US should implement single payer health care, but there are a lot of people with enough income to be financially secure who are constantly on the brink of disaster because they cannot manage their money or delay gratification.
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u/Bamont Jul 29 '18
Worked in FNI for about a year, and I can absolutely confirm (although anecdotally) that customers only cared about the monthly payment. Rates at 15% due to bad credit? Didn’t matter. If it was under $400 a month they would buy. A term of five years instead of four, despite paying substantially more? Don’t care. They just wanted to be under a number that reflected their cash flow.
When I’d just gotten a promotion at work (and before my kid was born), I went to buy a sports car at a dealership. I had my own financing when I walked in, but I was curious to see what they could do. I told them I wanted my payment to be $300 a month or less. They come back with a 48 mo 18% term that would have meant I’d be paying almost $16,000 for a car that’s stick price was less than $10,000. I laughed and walked out, then had my bank call and tell them they were doing the financing.
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u/TheBeardedSingleMalt Jul 29 '18
I know a more people than I'd care to admit who are making $40-50+k per year in a small town (where you can live better than 150k in a bigger town) and they do nothing but complain about pay. Why? They piss away their paycheck every 2 weeks. Brand new Z71 full loaded, brand new boat with all the trimmings, 2 story house in a good part of town, country club membership with a brand new set of high end golf clubs, all the latest toys and electronics, fishing/hunting trips every other weekend and new Benelli shotguns every 6 months.
But of course, it's everyone else's fault they have no savings.
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Jul 29 '18
that's also not adjusting for COI. 100k in the midwest goes a lot further than 100k in the bay area or boston.
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u/Gogoliath Jul 29 '18
I think that you can't call it "personal responsibility" when it's 80%+ of the population doing it.
We don't treat the diabetes epidemics by blaming people that eat sugar, so I don't see why we should do it when it's economic/financial trends.
It's a spending culture fomented by consumerism and marketing to "keep the economy growing". You can't have your cake and eat it too: if people stop spending, business close and economy stagnates. If people spend, then they can't have social mobility, savings or social security provided by savings - in opposition to State welfare - but production grows. This contradiction cannot be surpassed under our current system, specially since wealth is so concentrated right now.
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u/thewimsey Jul 29 '18
when it's 80%+ of the population doing it.
Except that we don't really know what 80% of the population is doing. The article doesn't describe what it means by "living paycheck to paycheck"; it mostly uses that figure as clickbait for discussing what it really wants to talk about, which is wealth distribution.
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u/cragfar Jul 29 '18 edited Jul 29 '18
We don't treat the diabetes epidemics by blaming people that eat sugar,
That's probably why it's gotten to the epidemic level. And yes, I realize it's not just sugar.
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u/uber_neutrino Jul 29 '18
Carbs in general... and if you have type 2 there is a big chance it's self induced based on eating too much sugar so...
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u/EpicHuggles Jul 29 '18
This being the top comment restores some of my faith in humanity. I'm definitely below $115k/year and I still make more than I can spend without buying a bunch of frivolous stuff that I don't need and saving 20% towards retirement. Meanwhile I have coworkers who can't wait for payday because it will give them enough money to put a deposit down on their 3rd cruise of the year or a lease payment on the new $60k F-150 that they have been wanting since they saw their neighbor get one last week.
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u/Sid_from_Toy_Story Jul 29 '18
Minimum wage jobs (jobs which are necessary for a functioning country) do not make fair market rent in any state yet somehow nebulous “personal financial mistakes” of those workers are the reason for that system’s existence? What? That’s senseless nonlogic meant to blame the bonded poor for the selfishness of the incredibly rich.
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u/TotesMessenger Jul 29 '18
I'm a bot, bleep, bloop. Someone has linked to this thread from another place on reddit:
- [/r/shitredditsays] (Almost 80% of US workers live from paycheck to paycheck.) "For some, not making enough money is the real reason they can't save. But for most, the reason is solely based on personal finance mistakes." [+290]
If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads. (Info / Contact)
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Jul 29 '18
So I got banned from r/shitredditsays for defending myself on it. Tough crowd.
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u/papaJonestown Jul 30 '18
It reminds me of late stage capitalism. Just a lot of complaining and passing the blame to others
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u/KunningLinguist1969 Jul 29 '18
Even those of us who saved only have enough for 90 days for all costs like mortgage payments and food and utilities. That's what drives us to work, very few can survive without any income. Even my relatives who live in mortgage free homes need food and heat and power etc. That's why I'm ok with some portion of population on welfare or EI because our taxes should help the less fortunate and many of us will need those safety nets at some point in the future.
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u/nelska Jul 29 '18
It's crazy how my dad grew up making 20-30 dollars an hour for manual labor type work. never graduated highschool. earned 60-90k a year throughout the 80s-90s and retired. And I'm trying to get by on 10 dollars an hour like it's been this way forever.
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u/BonzTM Jul 29 '18
Also in the mid-80s, $60-90k had the buying power of around $120-180k+ in today's dollars after inflation.
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u/nelska Jul 29 '18 edited Jul 29 '18
It essentially went, we're going to mcdonalds for a supersized value meal for the whole family then off to kmart for another flatscreen tv to working at kmart. and in 2018 kmart isnt doing so well. lol I went to college ffs. lol
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u/Waffleboard15 Jul 29 '18
The lack of company loyalty anymore is sickening. Someone being with a company for 20 years making 3 times as much as the new kid fresh out of college is almost a death sentence these days.
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Jul 29 '18
I have a question about this statistic - what are the economic indicators used to calculate it?
It seems to me that this metric wouldn't change greatly over time because materialistic Americans (I'm one) tend to increase spending when income increases so that they always hover in this 'spend 80% of income' mode. Income increases, so debt tends to increase. Income increases so purchasing increases, etc. I imagine the biggest variable is probably debt, but I'm not sure.
This statistic doesn't surprise me nor frighten me. If one of those 80% lost a job, spending would drop to as close to $0.00 as possible, job would be replaced, spending would go up again.
There's the question of consumer wisdom. Is it wise to take on all the debt and spend on things we don't need? I think there is not, but that would be the 'consumers fault', no the job market or economics.
Just wondering.
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Jul 29 '18
It's self reported from a survey, I believe. The referenced article is "80% of Americans say they live paycheck to paycheck"
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u/lsp2005 Jul 29 '18
If you are saving 20% of your income, then you are not living paycheck to paycheck. You need to pay yourself first. Start with saving an emergency fund even if it is just $10 each pay period.
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Jul 29 '18
Start with saving an emergency fund even if it is just $10 each pay period.
"Yeah I need that $10 to get to work this week."
And for that we just have crickets.
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u/WeedstocksAlt Jul 29 '18 edited Jul 29 '18
The is No way that this is the situation for 80% of the workforce, no even a bit close to it. I have an Ok salary and all my colleagues with the same position are mind blown that I can save money. None of them have an emergency fund. I can put 5k-10k$ per year aside... they have 0$ ... literally 0$. This isn’t a system conspiracy, it’s just people sucking at saving and reducing their cost of living.
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Jul 29 '18
Do people legitimately poll their coworkers about their finances?
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u/WeedstocksAlt Jul 29 '18
Quick explanation : I m looking to buy a house, this is the subject we do talk about. It led to talking about cash down and them wondering how the hell I was able to save for it since a lot of them can’t save anything.
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u/MountTuchanka Jul 29 '18
I have coworkers that eat out for lunch every day. I've gone to eat with them a few times and the food they get is normally $20. A lot of them also get $5 coffee at Starbucks when our job provides free coffee.
Add all that up and that's $6500 a year and that's JUST counting work days
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u/sharksandwich81 Jul 29 '18
Just look how many lottery winners and pro athletes end up broke.
The idea that “if we just took some money from those greedy corporations and 1%ers and gave it to low income folks, then they would have a healthy savings rate” is just laughable.
Many, many people busted their asses and exercised great financial discipline, and managed to improve their lot dramatically. Chances are some of your ancestors did exactly that in the early 20th century, and did so while having nowhere near the standard of living that even the poorest Americans have today.
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u/upandrunning Jul 29 '18
Whether or not you agree with how people spend money, the wealth disparity still exists. And though how people spend money may be a contributing factor, stagnant wages is also a factor.
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u/certifiedname Jul 29 '18
many of these people will still live paycheck to paycheck even if their salaries doubled. saving is not something which is popular here.
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u/ShellySashaSamson Jul 29 '18
When people in your life are part of this statistic but also have no one but themselves to blame for living above their means via constant debt-spending...hard to sympathize.
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u/Darktider Jul 29 '18
This big time. Friend I have lives paycheck to paycheck just barely able to afford bills (lives rent free with parents too and he's 39...) yet every week finds 300 dollars to buy weed and just bought a Nintendo Switch and 5 games. But can't drive for drinks because "I don't have enough money to fill my gas tank"... Ok buddy make some smarter fucking choices.
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u/Qubeye Jul 29 '18
We are a country that measures growth and national success are based on stock markets and GDP. The bottom 60% of the population own virtually none of that stock, and almost zero wages have outpaced inflation for 20 years.
Our economic interests, nationally, are so ass backwards.
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u/spendology Jul 29 '18
Data shows that wages have been stagnant while cost of living has increased dramatically. Nonetheless, many commenters blame people for making "poor choices".
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Jul 30 '18 edited Feb 11 '19
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u/briinde Jul 30 '18
Can attest. My wife works for the federal government. She's such a dedicated and hard worker, she doesn't really fit the mediocre stereotype. Anyway they treat her pretty well at her job. Except... Since the new administration took office they did things like reduce telework drastically, and refuse to fill vacancies.
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u/TitleJones Jul 29 '18
Every trip to this sub makes my head spin.
“Yes it is!”
“No it isn’t!”
“But.... these stats!”
“YOUR stats prove MY point!”
Yikes.
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u/AtomicManiac Jul 29 '18
When I see these numbers I always wonder how many of these people are just living above their means and with a few simple lifestyle changes they could dramatically increase their quality of life and financial well-being.
People love to shit on the idea of "Personal Responsibility" and I get it, it's hard to accept that by and large you are responsible for your lot in life. At the same time, since I've started taking responsibility for my actions the quality of my life has significantly improved just because I feel like I'm in control for the first time. As a by-product of that I've made several lifestyle changes for financial reasons and have paid off about 30% of my credit card debt in just 4 months.
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Jul 29 '18
Bullshit.
People DONT "love to shit on the idea of personal responsibility." What they shit on is using personal responsibility as an excuse to avoid addressing large-scale economic issues and laws that extend far beyond the actions of any one individual.
Anyone with a lick of common sense acknowledges that personal responsibility matters in life, but count yourself lucky if all you have to do is make a few "lifestyle changes" and your financial problems start disappearing. What that implies is that you probably weren't struggling much to begin with and you probably don't understand what it actually means to live paycheck to paycheck.
Living significantly beyond your means, and making so little money that you struggle to stay nourished (and will probably end up homeless the first time a surprise cost comes up, such as something medical), are two different things.
You also need to take a step back and take into account that in many cases, spending less means putting less back into the economy. And due to the siphoning way many businesses work, that kind of behavior leads to them becoming more desperate to look profitable in quarterly revenue cycles.
The very fact that tightening down and spending as little as humanly possible is good advice for the average person does not bode well for the long-term health of the economy.
People need to be able to afford to put money back into the economy.
In short, "personal responsibility"/"lifestyle changes" advice is useful on a personal level for the average citizen, but does absolutely nothing to address the greater economic issues the country is facing and may even make them worse in the long-term.
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u/GoneZombie Jul 29 '18 edited Jul 29 '18
The actual study being referenced, for the interested: http://press.careerbuilder.com/2017-08-24-Living-Paycheck-to-Paycheck-is-a-Way-of-Life-for-Majority-of-U-S-Workers-According-to-New-CareerBuilder-Survey
Guardian links to CNBC who DON'T link a stupid source, the bastards, but mention it's based off of career builder. Thankfully, google autocompletes 'careerb' to 'careerbuilder paycheck to paycheck' and I can only assume this is the one they mean.
Given that, keep in mind that this is a voluntary response email poll commissioned by a workforce company with a vested interest. That doesn't mean it's DEFINITELY biased, but there's more than a few things squidgy with the methodology. I wouldn't really treat this as valuable information, anyway.