4 ms·

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 th

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.
- prolikewh0a 8y ago
  How do you account for the fact that when accounting for inflation, a lot of the country hadn't seen a wage increase since the 70's[1]? The cost of essential goods has gone up. A lot of people are seriously on the edge and aren't spending on useless consumption. I think what you have are people trying to survive, and another subset of people who are surviving perfectly fine and are comfortable but have become rampant consumers due to advertising. I know engineers in the latter circumstance. [1] http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...
- thelasthuman 8y ago
  "2) Severe exogenous financial shocks " Like huge medical bills?
  - prolikewh0a 8y ago
    I'm not sure why you are being downvoted. >Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year—making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. https://www.cnbc.com/id/100840148 https://www.cnbc.com/id/100840148
  - wutbrodo 8y ago
    Yup, that's the exact example I use a sentence or two later, and I'd imagine one of the more common shocks.
- myself248 8y ago
  > at percentile X would substantially improve their financial security if they spent as much as percentile X-10 This is spot-on. It's worked for me -- I didn't have a solid handle on my finances when I moved out of my parents' place, so I lowballed and found a place I knew I could afford even with a pretty pessimistic view of financial discipline. Nine years later I'm living in the same place, and I've gotten a raise every year, so I'm making quite a bit more than I was back then. Driving an even more economical car. Eating better -- buying groceries instead of eating out all the time. I could fritter it away, let my ISP bleed me dry with a $162 cable+internet+whatever+modem plan when the $30 plan works just fine and I bought my own modem. I could shovel $95/mo to Verizon, but I'm on Ting and I use wifi whenever possible, and my bill averages $26 and I own the phone. I could send $8/mo to Hulu and $15/mo to HBO and $11/mo to Netflix and $13/mo to Amazon and $10/mo to Spotify and $10/mo to Pandora and.... how many more are there?! But I don't feel like my life would be improved by having all those. (I do Spotify, but none of the others. In the event that I feel like rubbing my nose in a pile of TV, there's this thing called broadcast.) I feel like there's a never-ending stream of these things, with their pundits on the morning show and Weekend Edition making you feel like you're missing out on life if you don't watch at least one show on every such service. And Disney+ is coming... To me, it's that incremental monthly spending that inexorably, insidiously, increasingly, gobbles up every spare dollar the middle class can scrape together. I've been literally counseling my friends on how to talk their cable providers into a lower rate. Many of them didn't know that was possible. Cancel your shit, people.

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.

prolikewh0a 8y ago
How do you account for the fact that when accounting for inflation, a lot of the country hadn't seen a wage increase since the 70's[1]? The cost of essential goods has gone up. A lot of people are seriously on the edge and aren't spending on useless consumption. I think what you have are people trying to survive, and another subset of people who are surviving perfectly fine and are comfortable but have become rampant consumers due to advertising. I know engineers in the latter circumstance. [1] http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...
thelasthuman 8y ago
"2) Severe exogenous financial shocks " Like huge medical bills?
- prolikewh0a 8y ago
  I'm not sure why you are being downvoted. >Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year—making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. https://www.cnbc.com/id/100840148 https://www.cnbc.com/id/100840148
- wutbrodo 8y ago
  Yup, that's the exact example I use a sentence or two later, and I'd imagine one of the more common shocks.
myself248 8y ago
> at percentile X would substantially improve their financial security if they spent as much as percentile X-10 This is spot-on. It's worked for me -- I didn't have a solid handle on my finances when I moved out of my parents' place, so I lowballed and found a place I knew I could afford even with a pretty pessimistic view of financial discipline. Nine years later I'm living in the same place, and I've gotten a raise every year, so I'm making quite a bit more than I was back then. Driving an even more economical car. Eating better -- buying groceries instead of eating out all the time. I could fritter it away, let my ISP bleed me dry with a $162 cable+internet+whatever+modem plan when the $30 plan works just fine and I bought my own modem. I could shovel $95/mo to Verizon, but I'm on Ting and I use wifi whenever possible, and my bill averages $26 and I own the phone. I could send $8/mo to Hulu and $15/mo to HBO and $11/mo to Netflix and $13/mo to Amazon and $10/mo to Spotify and $10/mo to Pandora and.... how many more are there?! But I don't feel like my life would be improved by having all those. (I do Spotify, but none of the others. In the event that I feel like rubbing my nose in a pile of TV, there's this thing called broadcast.) I feel like there's a never-ending stream of these things, with their pundits on the morning show and Weekend Edition making you feel like you're missing out on life if you don't watch at least one show on every such service. And Disney+ is coming... To me, it's that incremental monthly spending that inexorably, insidiously, increasingly, gobbles up every spare dollar the middle class can scrape together. I've been literally counseling my friends on how to talk their cable providers into a lower rate. Many of them didn't know that was possible. Cancel your shit, people.