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I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they

I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough". Income and expenses are intricately linked by psychology. It's almost irrelevant what your paycheck is, if you're prone to this problem then somehow expenses will always rise to meet it. If expenses weren't actually determined by paycheck, the number of people living paycheck to paycheck would be a really small number. Everyone else would either be building a surplus each month or going further into debt.

JoeAltmaier 8y ago
Except when it is. Generalities aren't helpful to the single parent working retail. Expenses aren't always optional.
- sharemywin 8y ago
  Don't forget the guilt when kids are involved.
- imustbeevil 8y ago
  In the vast majority of cases having a child is optional. This perfectly illustrates the problem the GP brings up. People have no concept of what agency is.
  - JoeAltmaier 8y ago
    Oh for God's sake. Have a child, get dumped/divorced, now you're a single parent. Parents are supposed to be omniscient? God already has a job (and parenting didn't work out so good then either)
    - deleted 8y ago
      [deleted]
    - eyko 8y ago
      Or your partner has a fatal disease or accident.
      - astura 8y ago
        Ideally this case would be insured; you'd also be eligible for Social Security survivors benefits.
        greedo 8y ago
        Survivor benefits cap out at 75% of the worker's benefits. That itself caps out to $2675. So a spouse with kids would get at most $2006/month. Not horrible, but a parent with two kids would just be over the poverty level. And realistically, most people at that age would have small accrued benefits.
        refurb 8y ago
        $2000/month is more than a lot of people in the US make working full time. I would argue $2000/month is a very significant benefit to a survivor. It’s also inflation adjusted.
        greedo 8y ago
        For a single person, sure. A single parent with 2 kids? Very scary.
    - WalterSear 8y ago
      > Parents are supposed to be omniscient? The majority of single parents haven't fallen from some perfect baby making situation. They make a risky, selfish choice, usually after the fact. You shouldn't breed if your situation isn't stable. You shouldn't breed if your partner isn't 100% committed to having children. You shouldn't breed if you are living paycheck to paycheck already. Babies aren't magical. Parents aren't inherently beyond reproach. https://www.nytimes.com/2016/08/11/books/review-in-hillbilly-elegy-a-compassionate-analysis-of-the-poor-who-love-trump.html https://www.nytimes.com/2016/08/11/books/review-in-hillbilly...
      - Aeolun 8y ago
        Everyone should breed. That’s evolution.
        WalterSear 8y ago
        That's an asinine statement. We aren't bacteria. We don't have to behave like bacteria, irregardless of one's relationship to authoritarianism or social conformity. And we should not forgive, let alone celebrate, people who do behave like bacteria.
        randallsquared 8y ago
        It's not a nuanced statement, but it certainly isn't asinine. It's just the minimum positive effect you can have on the future -- the lowest bar, if you will. You could, with similar effect, make the same statements about bacteria in response to "People should live" or "People should thrive".
        WalterSear 8y ago
        In the context more than 75% of black children, and more than half of hispanic children being born out of wedlock, and comparable statistics for all poverty stricken population groups, calling it "the minimum positive effect you can have on the future" is a really an asinine statement. It's not a positive effect. https://cis.org/Camarota/Births-Unmarried-Mothers-Nativity-and-Education https://cis.org/Camarota/Births-Unmarried-Mothers-Nativity-a...
  - perfmode 8y ago
    There are powerful and influential institutions in the United States which limit access to birth control, sex education, and access to abortion.
moorhosj 8y ago
Huge difference between living paycheck to paycheck because you struggle to afford basic necessities and living paycheck to paycheck because you took out too large of a mortgage. In one case you have an asset to sell if needed.
- wonderwonder 8y ago
  Agree in theory, but quite often that asset is not sellable as its underwater. End result is a foreclosure and/or bankruptcy. If the underlying behavior is not changed then people can spiral into further debt that they cant get out of as they already spent their once every seven year BK ticket. If people don't know how to budget you get trapped. But yes I do fully agree, I would much rather be broke with a large income than a low one.
- kurthr 8y ago
  Often that debt is spread out on 5 different credit cards and there is no asset to sell other than shoes (a favorite of both genders) or lifestyle "influence".
- astura 8y ago
  The majority of people who are living paycheck to paycheck don't have enough assets to cover debts. Furthermore, paycheck to paycheck living outside of poverty and disability is rarely the result of a one time mistake, it's usually due to an inability to budget and save day-to-day. Which is the reason they end up with more debts than assets. Not to mention people who can't afford their house can often not afford to take care of their house, which reduces its value.
  - milesvp 8y ago
    Upkeep’s a killer. I kept having people tell me to buy in my 20’s, and I couldn’t fathom their logic. I could rent a 4 bedroom house for less than a mortgaged, let alone alone a mortgage plus upkeep. I kept doig the math, and I’d have to tie up a huge chunk of capital, and hope the house appreciated faster than upkeep costs, and that I didn’t piss away all gains again in realtor fees when I next needed to move. But really it’s the upkeep everyone kept ignoring in these conversations. $300/mo in my region is pretty standard, and no one would acknowledge how big this cost really was. Rents finally started to skyrocket where I live, so buying finally made sense for us to try to lock in our housing exoense. But even then, the upkeep occassionally makes me wonder if I did the math right. Like can I put off buying a new roof another year? Or will that eat up my maintanence budget for the next couple years?
IAmGraydon 8y ago
This is exactly the problem. It all comes down to what is more rewarding to you - buying or financial security. Much of the buying in today’s world seems to be driven by the desire to portray status and success to peers. What’s particularly unfortunate about those who fall into this trap is the fact that they’re essentially giving what little real wealth they possess to people who actually have real wealth (business owners) in exchange for an image of wealth. They’re trading the real thing for an illusion.
- GreeniFi 8y ago
  I suspect a lot of people feel that part of their conspicuous consumption is part of the effort to earn more. You have to wear the right clothes, look the right way, have the right tech - or at a higher income bracket, be part of the right clubs, in order to socialise with the people who will pay you. So the two are sort of linked I suspect.
  - lsc 8y ago
    I'm pretty sure that this is actually a thing; Like once you step outside of the technical field; most everyone else really needs to "dress for the job they want" in the form of, for example, having a class-appropriate car. I think this is one of the biggest bonuses you get as a technical person; you can live with roommates and drive a beater car, if you want, and it's not a problem when getting quarter-million dollar a year jobs. A long time ago, I had a roommate who was trying to make it as a realtor. He though his (actually quite nice) not exactly new honda accord was a big handicap for him. I mean, I don't know if it was or not; I know little about the selling side of real-estate, but I can tell you that most people who do sales or management feel that their symbols of wealth are really important to their job and their income.
    - GreeniFi 8y ago
      I can believe this. Realtors, on a %-based fee, have to show their clients how much they’re making (for other clients). If a realtor turns up in a Mercedes, they’re basically saying: “I’m a good salesman/woman”. Devs in SF display status in other ways. HN karma? Exits? Economists call those “hard to fake” status displays.
gamma-male 8y ago
Better: not being paid enough is a sufficient condition, but it is not required. Of course rich people can have such problem, but if you think low wages and the lack of universal health care and free education is not the main issue you are lying to yourself.
- perfmode 8y ago
  Totally. Health care and education can be preventative.
- kurthr 8y ago
  Yes, just as we can subsidize human and societal needs with the tax code, we can do it directly. Food, healthcare, post highschool education...
- wutbrodo 8y ago
  I'm not sure lack of healthcare and low wages _is_ the main issue[1]. As the parent comment points out, it seems like that would lead to a pretty different pattern of this phenomenon. It seems to me that there's a couple broad categories that can lead to paycheck-to-paycheck living: 1) Poverty, at the level where spending on a reasonable floor of basics (food, shelter, education, leisure) leaves little for savings. This is a resource constraint, and even a perfectly optimally-run household would end up living paycheck-to-paycheck. 2) Severe exogenous financial shocks that exceed whatever buffer you were able to build, and an inability to adjust consumption downwards due to sticky commitments or psychological reasons. For lower-middle and middle-class households, this is possible simply due to bad luck; one thing the US economy is pretty bad at is providing a solid way to derisk tail risks, the obvious example being healthcare. This is naturally less common the more severe the shock, and irresponsible financial management can be a contributor in some of these cases (ie not saving an emergency fund, etc). 3) Consumption rising to meet one's income. The resource constraint is irrelevant here, as above the poverty level, this is primarily about hedonism and jockeying for status. The big caveat here is that people tend to short-circuit cost-benefit analyses when it comes to their kids: neighborhood safety and public school quality can lead to people substantially (and understandably) overextending themselves wrt housing costs. I'd caution against leaning too blindly on this mitigating factor though, as there are lots of differences between living modestly in a good school district and living generally beyond your means. There's a degree of freedom around consumption that's likely a lot more significant than your comment assumes; this seems to follow directly from the fact that someone living beyond their means at percentile X would substantially improve their financial security if they spent as much as percentile X-10 (or whatever). For all but the lowest percentiles, this is completely feasible, and yet these low-savings studies consistently find a much larger swathe of people in these categories. The model that makes the most sense to me is that, excluding the lowest quintile, the habit of clamping consumption to income is one of the biggest factors in our low savings. As mentioned above, the US systemically tends to put a lot more risk on the individual than a lot of societies do; you can be better off if you manage this responsibly (and aren't in the lowest income brackets), but financial illiteracy is IME rampant, even among generally well-educated people. [1] Lack of access to quality education likely is, but through the mechanism of low numeracy/personal finance skills/critical thinking skills.
kurthr 8y ago
Which is why without tight controls on lending/debt Universal Basic Income will just lead to similarly desperate outcomes subsidized by the state.
- crankylinuxuser 8y ago
  UBI was only a small-ish step to a moneyless post-scarcity economy. When rent is taken care of (cause there isn't rent), along with food, water, electricity, communication and more, what is there to 'buy'?
  - sokoloff 8y ago
    I wager that a limitless supply of "other things to buy" will spring up, just as it already has today. Clothes, cars, boats, planes, watches, electronics, vacations, fancy meals, you name it...
  - pdimitar 8y ago
    There definitely are a huge number of things that will arise to be on the top 50 desired list. However, if everybody has a respectable existence -- rent/mortgage, food, utilities being covered -- then these other things will be truly and for the first time optional and non-crucial. Which I think will be a big win for the mental health of the population.
  - wtracy 8y ago
    There are people who spend thousands of dollars on Candy Crush. There will always be something more. Also, I have to point out, if you had made that list a hundred years ago, electricity wouldn't have been on it. Luxuries have a way of becoming necessities.
    - max76 8y ago
      If there wasn't a need to buy rent, food, transportation, electrity, and communication I wonder if Candy Crush would have micro transactions.
jondubois 8y ago
That's because all the surplus goes into rents. If your job depends on you living in a big city, then you need to pay a fortune to get a tiny fraction of the quality of life that your parents had and that you had as a child growing up. A lot of corporate jobs these days force people to live like rats in big cities.
- robterrin 8y ago
  +1 Very good comment. You may like to read some Henry George: https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George
  - jondubois 8y ago
    I'm already familiar with Georgism. I think it's more relevant now than it ever was.
- jseliger 8y ago
  A lot of corporate jobs these days force people to live like rats in big cities. This is a problem with zoning: https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B..., not with "corporate jobs." If we fix zoning, costs will go down. Los Angeles is instructive. In 1960, it was zoned for 10 million people: https://la.curbed.com/2015/4/8/9972362/everything-wrong-with-los-angeles-housing-in-one-graph https://la.curbed.com/2015/4/8/9972362/everything-wrong-with.... Today, it is zoned for 4.3 million. Has our technology gotten worse since 1960? Have we forgotten how to build multi-story structures? No: we've just made it illegal to build enough housing. Seattle is also instructive. About two-thirds of the city is zoned for single-family housing only: https://www.theurbanist.org/2017/10/23/the-path-to-eliminate-single-family-zoning-in-seattle/ https://www.theurbanist.org/2017/10/23/the-path-to-eliminate.... Allow missing middle housing, and prices will stabilize: http://missingmiddlehousing.com http://missingmiddlehousing.com.
  - deleted 8y ago
    [deleted]
nunez 8y ago
> I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough". This was a big reason that drove our move out of NYC. No matter how much you made, unless you were a billionaire (good luck with that), you were on a treadmill. Nothing you had would be enough. You could spend yourself broke trying to fit in, even if you make a lot of money. Dallas, where we currently live, has this too, but it's a much bigger city, so you have to want to find those hotspots.
- geff82 8y ago
  Dallas, while the wages are quite high, also has a lot lower cost of living. And the average person is nicer, too.
jchw 8y ago
I think a lot of people misunderstand. Before I had a nice tech job, I literally could not afford to do my dental work or take care of my car. So later on, when I started, it costed a lot more. And I spent it, because it's important. Same can be said about many expenses. When you don't have the money, you make it work even if you can't. When you do, you gotta balance it out again. Saving your money isn't as important as saving your life. Saving your automobile might be cheaper than having to buy another later. Etc, etc. So, just because this problem exists among a wide range of paychecks doesn't mean shit really, because paychecks scale with rent and people are suffering to make the rent as it is. I would argue for most people, the trouble isn't their attitude. It's that wages ultimately grow far, far slower than living expenses and inflation, and cuts have been made to essential expenses at the cost of degraded quality of life. A lot of people harp on others for buying frivolously but frankly an iPhone every year would be a drop in the bucket compared to my medical expenses, maintenance and gas for my car, etc. My monthly rent is more than three iPhone XS Maxes and it's literally within a couple hundred of the cheapest thing I could find in a 20 mile radius. Don't get me wrong, it's great and I'm not complaining, but it still puts things into perspective. Maybe I'm crazy, but I think everything that needs to be said is already covered by graphing minimum wage vs inflation. That's a lot of folks real realities today.
- dingoegret 8y ago
  Rent and cars are a major culprit. Boomers worked all summer selling lemonade when they were teens then bought a home so they can rent it out to this generation for 2100/month. They'll makeup lies about how they have to charge that because they're losing money! Yes, it costs 2100 a month to do basic maintenance on a house. Hmhm.
- pixl97 8y ago
  Asset inflation is busy destroying society.
lsc 8y ago
> I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough". so, certainly, that's not all of it. we all have the wealthy friend who lives paycheque to paycheque. But... let me tell you, saving money is a whole lot easier when you make 10x the minimum to support yourself in the area than it is when you make 1x the minimum to support yourself in the area.
colechristensen 8y ago
I assume it's just rent seeking, services which are allowed by governments to increase regardless of utility because that's what people will pay. People will pay more for the basic needs until they can't any more. Mostly with housing. I don't know how to fix it, but I guess it would be enormous taxes on land owned but used by somebody else and selling land to someone else. Basically making real estate and finance only viable as charitable institutions (or something at least significantly in that direction). More or less impossible, but that's life.
a11595 8y ago
This is exactly spot on. Two personal stories. I was flying out to CT for a couple of years, made a friend there at the dojo who gave me private "fight against a guy with a knife" lessons. Always money problems, always bitched how if he just had 10k to pay off his debt his life would change. After a year, I said eh, wtf, here's 15k as a gift. A year later he calls me up. I haven't been out his for over a year at that point, and we haven't talked in 6 months. "Dude, help, my truck was repoed." The dude paid off his 10k of debt, took the extra 5 as a downpayment on a 30k truck, and increased his monthly bills by a third. Idiot (me). Another story - long time college buddy of mine is trying to start a club promotion business. I dump about 20k into it to help him get started. The guy has a bachelor's in graphic design, and a master's in marketing. Two years later, he's calling me up for cash. He blew through my money, blew through his money, and decided to move to california - no job set up, no money in the bank, no car. I helped him out again w/ another 5k - very good friend. I a year he calls me up, doesn't ask for cash. I'm living in Spain at this point, and he says he couldn't get it going in cali and is working as a bouncer at a club. Wants to move to Barcelona and try it there - again no job lined up, no connections, but hey - he speaks spanish. idiots are idiots, and they'll keep giving losers money until they learn. haven't talked to either of these losers in 15 years.
ken 8y ago
> If expenses weren't actually determined by paycheck, the number of people living paycheck to paycheck would be a really small number. Everyone else would either be building a surplus each month or going further into debt. These people are going further into debt. It's just that this debt is usually not in the form of cash. Need an oil change? Well, I can put that off for a while. Need to go to the doctor? Well, I can put that off for a while. Need to renew my license? Well, I probably won't get pulled over for it this month. It's amazing what necessities you can postpone, if you're willing to take on personal technical debt, in the form of risk. This is how people at the lower end live "paycheck to paycheck". It's not just that they're dumb and spend every penny as soon as they get it. It's that they bend as many of the rules as they can, in order to maximize the cash they have on hand for the rules that can't be bent.

JoeAltmaier 8y ago

Except when it is. Generalities aren't helpful to the single parent working retail. Expenses aren't always optional.

sharemywin 8y ago
Don't forget the guilt when kids are involved.
imustbeevil 8y ago
In the vast majority of cases having a child is optional. This perfectly illustrates the problem the GP brings up. People have no concept of what agency is.
- JoeAltmaier 8y ago
  Oh for God's sake. Have a child, get dumped/divorced, now you're a single parent. Parents are supposed to be omniscient? God already has a job (and parenting didn't work out so good then either)
  - deleted 8y ago
    [deleted]
  - eyko 8y ago
    Or your partner has a fatal disease or accident.
    - astura 8y ago
      Ideally this case would be insured; you'd also be eligible for Social Security survivors benefits.
      - greedo 8y ago
        Survivor benefits cap out at 75% of the worker's benefits. That itself caps out to $2675. So a spouse with kids would get at most $2006/month. Not horrible, but a parent with two kids would just be over the poverty level. And realistically, most people at that age would have small accrued benefits.
        refurb 8y ago
        $2000/month is more than a lot of people in the US make working full time. I would argue $2000/month is a very significant benefit to a survivor. It’s also inflation adjusted.
        greedo 8y ago
        For a single person, sure. A single parent with 2 kids? Very scary.
  - WalterSear 8y ago
    > Parents are supposed to be omniscient? The majority of single parents haven't fallen from some perfect baby making situation. They make a risky, selfish choice, usually after the fact. You shouldn't breed if your situation isn't stable. You shouldn't breed if your partner isn't 100% committed to having children. You shouldn't breed if you are living paycheck to paycheck already. Babies aren't magical. Parents aren't inherently beyond reproach. https://www.nytimes.com/2016/08/11/books/review-in-hillbilly-elegy-a-compassionate-analysis-of-the-poor-who-love-trump.html https://www.nytimes.com/2016/08/11/books/review-in-hillbilly...
    - Aeolun 8y ago
      Everyone should breed. That’s evolution.
      - WalterSear 8y ago
        That's an asinine statement. We aren't bacteria. We don't have to behave like bacteria, irregardless of one's relationship to authoritarianism or social conformity. And we should not forgive, let alone celebrate, people who do behave like bacteria.
        randallsquared 8y ago
        It's not a nuanced statement, but it certainly isn't asinine. It's just the minimum positive effect you can have on the future -- the lowest bar, if you will. You could, with similar effect, make the same statements about bacteria in response to "People should live" or "People should thrive".
        WalterSear 8y ago
        In the context more than 75% of black children, and more than half of hispanic children being born out of wedlock, and comparable statistics for all poverty stricken population groups, calling it "the minimum positive effect you can have on the future" is a really an asinine statement. It's not a positive effect. https://cis.org/Camarota/Births-Unmarried-Mothers-Nativity-and-Education https://cis.org/Camarota/Births-Unmarried-Mothers-Nativity-a...
- perfmode 8y ago
  There are powerful and influential institutions in the United States which limit access to birth control, sex education, and access to abortion.

moorhosj 8y ago

Huge difference between living paycheck to paycheck because you struggle to afford basic necessities and living paycheck to paycheck because you took out too large of a mortgage. In one case you have an asset to sell if needed.

wonderwonder 8y ago
Agree in theory, but quite often that asset is not sellable as its underwater. End result is a foreclosure and/or bankruptcy. If the underlying behavior is not changed then people can spiral into further debt that they cant get out of as they already spent their once every seven year BK ticket. If people don't know how to budget you get trapped. But yes I do fully agree, I would much rather be broke with a large income than a low one.
kurthr 8y ago
Often that debt is spread out on 5 different credit cards and there is no asset to sell other than shoes (a favorite of both genders) or lifestyle "influence".
astura 8y ago
The majority of people who are living paycheck to paycheck don't have enough assets to cover debts. Furthermore, paycheck to paycheck living outside of poverty and disability is rarely the result of a one time mistake, it's usually due to an inability to budget and save day-to-day. Which is the reason they end up with more debts than assets. Not to mention people who can't afford their house can often not afford to take care of their house, which reduces its value.
- milesvp 8y ago
  Upkeep’s a killer. I kept having people tell me to buy in my 20’s, and I couldn’t fathom their logic. I could rent a 4 bedroom house for less than a mortgaged, let alone alone a mortgage plus upkeep. I kept doig the math, and I’d have to tie up a huge chunk of capital, and hope the house appreciated faster than upkeep costs, and that I didn’t piss away all gains again in realtor fees when I next needed to move. But really it’s the upkeep everyone kept ignoring in these conversations. $300/mo in my region is pretty standard, and no one would acknowledge how big this cost really was. Rents finally started to skyrocket where I live, so buying finally made sense for us to try to lock in our housing exoense. But even then, the upkeep occassionally makes me wonder if I did the math right. Like can I put off buying a new roof another year? Or will that eat up my maintanence budget for the next couple years?

IAmGraydon 8y ago

This is exactly the problem. It all comes down to what is more rewarding to you - buying or financial security. Much of the buying in today’s world seems to be driven by the desire to portray status and success to peers. What’s particularly unfortunate about those who fall into this trap is the fact that they’re essentially giving what little real wealth they possess to people who actually have real wealth (business owners) in exchange for an image of wealth. They’re trading the real thing for an illusion.

GreeniFi 8y ago
I suspect a lot of people feel that part of their conspicuous consumption is part of the effort to earn more. You have to wear the right clothes, look the right way, have the right tech - or at a higher income bracket, be part of the right clubs, in order to socialise with the people who will pay you. So the two are sort of linked I suspect.
- lsc 8y ago
  I'm pretty sure that this is actually a thing; Like once you step outside of the technical field; most everyone else really needs to "dress for the job they want" in the form of, for example, having a class-appropriate car. I think this is one of the biggest bonuses you get as a technical person; you can live with roommates and drive a beater car, if you want, and it's not a problem when getting quarter-million dollar a year jobs. A long time ago, I had a roommate who was trying to make it as a realtor. He though his (actually quite nice) not exactly new honda accord was a big handicap for him. I mean, I don't know if it was or not; I know little about the selling side of real-estate, but I can tell you that most people who do sales or management feel that their symbols of wealth are really important to their job and their income.
  - GreeniFi 8y ago
    I can believe this. Realtors, on a %-based fee, have to show their clients how much they’re making (for other clients). If a realtor turns up in a Mercedes, they’re basically saying: “I’m a good salesman/woman”. Devs in SF display status in other ways. HN karma? Exits? Economists call those “hard to fake” status displays.

gamma-male 8y ago

Better: not being paid enough is a sufficient condition, but it is not required. Of course rich people can have such problem, but if you think low wages and the lack of universal health care and free education is not the main issue you are lying to yourself.

perfmode 8y ago
Totally. Health care and education can be preventative.
kurthr 8y ago
Yes, just as we can subsidize human and societal needs with the tax code, we can do it directly. Food, healthcare, post highschool education...
wutbrodo 8y ago
I'm not sure lack of healthcare and low wages _is_ the main issue[1]. As the parent comment points out, it seems like that would lead to a pretty different pattern of this phenomenon. It seems to me that there's a couple broad categories that can lead to paycheck-to-paycheck living: 1) Poverty, at the level where spending on a reasonable floor of basics (food, shelter, education, leisure) leaves little for savings. This is a resource constraint, and even a perfectly optimally-run household would end up living paycheck-to-paycheck. 2) Severe exogenous financial shocks that exceed whatever buffer you were able to build, and an inability to adjust consumption downwards due to sticky commitments or psychological reasons. For lower-middle and middle-class households, this is possible simply due to bad luck; one thing the US economy is pretty bad at is providing a solid way to derisk tail risks, the obvious example being healthcare. This is naturally less common the more severe the shock, and irresponsible financial management can be a contributor in some of these cases (ie not saving an emergency fund, etc). 3) Consumption rising to meet one's income. The resource constraint is irrelevant here, as above the poverty level, this is primarily about hedonism and jockeying for status. The big caveat here is that people tend to short-circuit cost-benefit analyses when it comes to their kids: neighborhood safety and public school quality can lead to people substantially (and understandably) overextending themselves wrt housing costs. I'd caution against leaning too blindly on this mitigating factor though, as there are lots of differences between living modestly in a good school district and living generally beyond your means. There's a degree of freedom around consumption that's likely a lot more significant than your comment assumes; this seems to follow directly from the fact that someone living beyond their means at percentile X would substantially improve their financial security if they spent as much as percentile X-10 (or whatever). For all but the lowest percentiles, this is completely feasible, and yet these low-savings studies consistently find a much larger swathe of people in these categories. The model that makes the most sense to me is that, excluding the lowest quintile, the habit of clamping consumption to income is one of the biggest factors in our low savings. As mentioned above, the US systemically tends to put a lot more risk on the individual than a lot of societies do; you can be better off if you manage this responsibly (and aren't in the lowest income brackets), but financial illiteracy is IME rampant, even among generally well-educated people. [1] Lack of access to quality education likely is, but through the mechanism of low numeracy/personal finance skills/critical thinking skills.

kurthr 8y ago

Which is why without tight controls on lending/debt Universal Basic Income will just lead to similarly desperate outcomes subsidized by the state.

crankylinuxuser 8y ago
UBI was only a small-ish step to a moneyless post-scarcity economy. When rent is taken care of (cause there isn't rent), along with food, water, electricity, communication and more, what is there to 'buy'?
- sokoloff 8y ago
  I wager that a limitless supply of "other things to buy" will spring up, just as it already has today. Clothes, cars, boats, planes, watches, electronics, vacations, fancy meals, you name it...
- pdimitar 8y ago
  There definitely are a huge number of things that will arise to be on the top 50 desired list. However, if everybody has a respectable existence -- rent/mortgage, food, utilities being covered -- then these other things will be truly and for the first time optional and non-crucial. Which I think will be a big win for the mental health of the population.
- wtracy 8y ago
  There are people who spend thousands of dollars on Candy Crush. There will always be something more. Also, I have to point out, if you had made that list a hundred years ago, electricity wouldn't have been on it. Luxuries have a way of becoming necessities.
  - max76 8y ago
    If there wasn't a need to buy rent, food, transportation, electrity, and communication I wonder if Candy Crush would have micro transactions.

jondubois 8y ago

That's because all the surplus goes into rents. If your job depends on you living in a big city, then you need to pay a fortune to get a tiny fraction of the quality of life that your parents had and that you had as a child growing up. A lot of corporate jobs these days force people to live like rats in big cities.

robterrin 8y ago
+1 Very good comment. You may like to read some Henry George: https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George
- jondubois 8y ago
  I'm already familiar with Georgism. I think it's more relevant now than it ever was.
jseliger 8y ago
A lot of corporate jobs these days force people to live like rats in big cities. This is a problem with zoning: https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO https://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B..., not with "corporate jobs." If we fix zoning, costs will go down. Los Angeles is instructive. In 1960, it was zoned for 10 million people: https://la.curbed.com/2015/4/8/9972362/everything-wrong-with-los-angeles-housing-in-one-graph https://la.curbed.com/2015/4/8/9972362/everything-wrong-with.... Today, it is zoned for 4.3 million. Has our technology gotten worse since 1960? Have we forgotten how to build multi-story structures? No: we've just made it illegal to build enough housing. Seattle is also instructive. About two-thirds of the city is zoned for single-family housing only: https://www.theurbanist.org/2017/10/23/the-path-to-eliminate-single-family-zoning-in-seattle/ https://www.theurbanist.org/2017/10/23/the-path-to-eliminate.... Allow missing middle housing, and prices will stabilize: http://missingmiddlehousing.com http://missingmiddlehousing.com.
- deleted 8y ago
  [deleted]

nunez 8y ago

> I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough". This was a big reason that drove our move out of NYC. No matter how much you made, unless you were a billionaire (good luck with that), you were on a treadmill. Nothing you had would be enough. You could spend yourself broke trying to fit in, even if you make a lot of money. Dallas, where we currently live, has this too, but it's a much bigger city, so you have to want to find those hotspots.

geff82 8y ago
Dallas, while the wages are quite high, also has a lot lower cost of living. And the average person is nicer, too.

jchw 8y ago

I think a lot of people misunderstand. Before I had a nice tech job, I literally could not afford to do my dental work or take care of my car. So later on, when I started, it costed a lot more. And I spent it, because it's important. Same can be said about many expenses. When you don't have the money, you make it work even if you can't. When you do, you gotta balance it out again. Saving your money isn't as important as saving your life. Saving your automobile might be cheaper than having to buy another later. Etc, etc. So, just because this problem exists among a wide range of paychecks doesn't mean shit really, because paychecks scale with rent and people are suffering to make the rent as it is. I would argue for most people, the trouble isn't their attitude. It's that wages ultimately grow far, far slower than living expenses and inflation, and cuts have been made to essential expenses at the cost of degraded quality of life. A lot of people harp on others for buying frivolously but frankly an iPhone every year would be a drop in the bucket compared to my medical expenses, maintenance and gas for my car, etc. My monthly rent is more than three iPhone XS Maxes and it's literally within a couple hundred of the cheapest thing I could find in a 20 mile radius. Don't get me wrong, it's great and I'm not complaining, but it still puts things into perspective. Maybe I'm crazy, but I think everything that needs to be said is already covered by graphing minimum wage vs inflation. That's a lot of folks real realities today.

dingoegret 8y ago
Rent and cars are a major culprit. Boomers worked all summer selling lemonade when they were teens then bought a home so they can rent it out to this generation for 2100/month. They'll makeup lies about how they have to charge that because they're losing money! Yes, it costs 2100 a month to do basic maintenance on a house. Hmhm.
pixl97 8y ago
Asset inflation is busy destroying society.

lsc 8y ago

> I think the very fact that people in wildly different circumstances are living paycheck to paycheck is a huge flag that this isn't as simple a problem as "they don't get paid enough". so, certainly, that's not all of it. we all have the wealthy friend who lives paycheque to paycheque. But... let me tell you, saving money is a whole lot easier when you make 10x the minimum to support yourself in the area than it is when you make 1x the minimum to support yourself in the area.

colechristensen 8y ago

I assume it's just rent seeking, services which are allowed by governments to increase regardless of utility because that's what people will pay. People will pay more for the basic needs until they can't any more. Mostly with housing. I don't know how to fix it, but I guess it would be enormous taxes on land owned but used by somebody else and selling land to someone else. Basically making real estate and finance only viable as charitable institutions (or something at least significantly in that direction). More or less impossible, but that's life.

a11595 8y ago

This is exactly spot on. Two personal stories. I was flying out to CT for a couple of years, made a friend there at the dojo who gave me private "fight against a guy with a knife" lessons. Always money problems, always bitched how if he just had 10k to pay off his debt his life would change. After a year, I said eh, wtf, here's 15k as a gift. A year later he calls me up. I haven't been out his for over a year at that point, and we haven't talked in 6 months. "Dude, help, my truck was repoed." The dude paid off his 10k of debt, took the extra 5 as a downpayment on a 30k truck, and increased his monthly bills by a third. Idiot (me). Another story - long time college buddy of mine is trying to start a club promotion business. I dump about 20k into it to help him get started. The guy has a bachelor's in graphic design, and a master's in marketing. Two years later, he's calling me up for cash. He blew through my money, blew through his money, and decided to move to california - no job set up, no money in the bank, no car. I helped him out again w/ another 5k - very good friend. I a year he calls me up, doesn't ask for cash. I'm living in Spain at this point, and he says he couldn't get it going in cali and is working as a bouncer at a club. Wants to move to Barcelona and try it there - again no job lined up, no connections, but hey - he speaks spanish. idiots are idiots, and they'll keep giving losers money until they learn. haven't talked to either of these losers in 15 years.

ken 8y ago

> If expenses weren't actually determined by paycheck, the number of people living paycheck to paycheck would be a really small number. Everyone else would either be building a surplus each month or going further into debt. These people are going further into debt. It's just that this debt is usually not in the form of cash. Need an oil change? Well, I can put that off for a while. Need to go to the doctor? Well, I can put that off for a while. Need to renew my license? Well, I probably won't get pulled over for it this month. It's amazing what necessities you can postpone, if you're willing to take on personal technical debt, in the form of risk. This is how people at the lower end live "paycheck to paycheck". It's not just that they're dumb and spend every penny as soon as they get it. It's that they bend as many of the rules as they can, in order to maximize the cash they have on hand for the rules that can't be bent.