10 ms·

Personal income in the US shot up a record 10.5% in April

117 points by prostoalex 6y ago

pentaphobe 6y ago
Seems like you could get this exact statistic by having 20 million or so low earners lose their jobs - as in the shifting average (not talking about unemployment cheques)
planxty 6y ago
A small step up from the pit of despair we're in should not be confused for meaningful progress, though we should fully expect the Trump administration will soon be releasing misleading self-congratulatory statistics for political gain.
verdverm 6y ago
Because the govt super sized their unemployment checks, be ready for the end of unearned bonuses in a few weeks
- gruez 6y ago
  I'm not sure why this is getting downvoted. The second paragraph literally says that: >The rise was mainly due to government payments to help Americans cope with the fallout of the Covid-19 global pandemic
  - verdverm 6y ago
    Thank you! I think most (like myself) don't often click through to read before reacting
- bb2018 6y ago
  I'm agreeing with you - but isn't that the whole point of a stimulus? Boost short term economy and therefore hope, even if the gains are not long-lasting, the money floating around both helps people pay their bills and motivates them to make purchases? There is still a couple more months of increased UI. Surely, it will be a huge fall after that, but in a much better place than if there were minimal or no increased benefits to begin with. I would love to see another half-sized measure - but don't think the fact that it will fall in the future almost proves its usefulness.
  - thephyber 6y ago
    > isn't that the whole point of a stimulus? What was passed wasn't economic stimulus. It was paying people to safely stay at home. Stimulus would be paying people to stimulate more demand (which may happen, but it will be after the economy opens up again).
    - bb2018 6y ago
      I really disagree. The payment amount was not linked to whether or not individual people stayed at home or whether or not they lived in an area that had strict stay-at-home orders. The economy may not seem "stimulated" compared to where it was a year ago - but it is certainly "stimulated" compared to what it would have been if the additional checks didn't go out and a much larger swath of the population missed rent, car payments, or credit card bills.
      - throw0101a 6y ago
        > I really disagree. Both Bernanke (former chair of Fed) and Krugman (Nobel winner) have called the programs to date "disaster relief". Many people cannot work because of the lockdowns, but still need to pay rent and food and such, so the checks are to bridge that gap. > Plus a second wave of infections from premature opening could set recovery back a long, long time. What we need is to stay the course and keep disaster relief in place. Unfortunately, little sign that Trump and allies will do that 5/ * https://twitter.com/paulkrugman/status/1260557224860155906 https://twitter.com/paulkrugman/status/1260557224860155906 > To deal with this properly, however, we need to get past standard rhetoric. The economy is, in effect, in a deliberately induced coma—and necessarily so. So this isn’t about “job creation” or economic growth; we don’t need “stimulus.” What we need is disaster relief on an unprecedented scale, to get people through the shutdown with as little misery as possible. * https://www.92y.org/event/paul-krugman https://www.92y.org/event/paul-krugman * https://www.nytimes.com/2020/04/02/opinion/coronavirus-economy-stimulus.html https://www.nytimes.com/2020/04/02/opinion/coronavirus-econo...
      - thephyber 6y ago
        > but it is certainly "stimulated" compared to what it would have been if the additional checks didn't go out and a much larger swath of the population missed rent, car payments, or credit card bills. By that definition, every single bill that passes appropriations sends money to someone and therefore "stimulates the economy". I still don't think stimulus was the impetus there. Compassion for those who lost their job, a desire to avoid/mitigate social instability, and reinforcement for people to follow the directions of health professionals. As far as I can tell, this is the bill/law[1]. No mention of stimulus in the title or abstracts. [1] https://www.congress.gov/bill/116th-congress/house-bill/6199/all-info https://www.congress.gov/bill/116th-congress/house-bill/6199...
- HarryHirsch 6y ago
  Meanwhile lots of people lost their health insurance. You wonder who came out ahead. It's the old confusion between revenue and profits again.
ravenstine 6y ago
Not sure how this is a useful statistic. I'm being perfectly honest. I think it can only be useful in retrospect, since our ability to predict the near future, given current circumstances, doesn't seem high.
- sesuximo 6y ago
  I think is interesting and surprising even if it doesn’t inform opinions about next steps
rootusrootus 6y ago
I'm thinking the Europeans (at least the ones that did this) got it right by subsidizing payrolls so employers could just keep on paying staff as if they were working. Much simpler to coordinate payments to a smaller number of endpoints, none of the hassle of trying to process orders of magnitude more unemployment claims, etc. But, then I suppose it would be an obstacle to companies using the opportunity to permanently trim staff. Hmm.
- hogFeast 6y ago
  The US way was much smarter...although not smart either in ways. In Europe, you have companies that are functionally insolvent, that will never trade profitably again, and which are being paid not to close. I know of companies where I am that are starting to look at letting hundreds of people go...those people were paid for two months by the govt. And why? A good chunk of these people needed no help at all. The point of an unemployment system is that you focus payments on people who actually need help (btw, you can run an insurance system too...but some European countries that went this way don't have the tax base or economic structure for a true, income-substitution system). It is a typically European solution which is why some countries in the region regard 10% unemployment as a huge triumph. What most European countries have done is fire all the bullets in their gun in the first 10 seconds of a battle that will go on for a long time...this is particularly foolish given how much debt some of these countries need to roll over this year. Also, the US "money for everyone" program was equally stupid for the same reasons.
  - throw7 6y ago
    Well, just want to point out, "money for everyone" is not true. I'm sure there are workers here on HN that did not receive any due to income.
    - thephyber 6y ago
      > I'm sure there are workers here on HN that did not receive any due to income True. The income cutoff for Trump Bucks for a working single person was about what Facebook pays interns in the Bay Area.
TAForObvReasons 6y ago
This is great news for a bunch of reasons. In the immediate term, it's great that people and families saw extra income in a trying time. In the longer term, hopefully this informs a larger discussion on the minimum wage and effectiveness of various social programs.
- justinzollars 6y ago
  No one's pay went up. 40 million people lost their jobs, the majority of who made very little money. The average went up because low wage jobs were vaporized
  - TAForObvReasons 6y ago
    pay != income, which is the key point here. The fact that millions of families are seeing more money now in the current unemployment benefit scheme raises the question about whether the pre-corona minimum wage was too low and whether we need to invest more in social programs. And this honestly couldn't have happened at a more interesting time, since this is a presidential election year. Millions of voters who might have voted on social or cultural issues may be more inclined now to vote for politicians interested in bolstering social programs.
    - thephyber 6y ago
      > in the current unemployment benefit scheme Congress (a nationally centralized organization) was doling out the money and used a simple formula (+$600 for every unemployed person, no matter what their job was). > whether we need to invest more in social programs I think "invest more" is maybe the wrong way to think about it and would just throw more money at the problem the wrong way. I think we need to change how legislatures and federal departments dictate how social programs be administered. Code For America (and 18F and USDS, etc) has great programs where they go in and assist government departments to improve the experience for the end user. They generally try to change the project management to think about MVPs and use Agile methodology and most importantly build small increments quickly and iterate. Traditional US social programs were mega projects defined at legislation/RFP time (both highly corrupt because lobbyists and contractors would steer requirements). We need to empower departments that administer social programs to run them for the people who actually use them and allow them the flexibility to change the requirements of the program.
082349872349872 6y ago
How many months of 110% income would it take for, say, the middle 80% of US households to have accumulated 6 months worth of savings?
- 101404 6y ago
  That probably depends on the number of iPhones and cars they buy in that period.
  - bsder 6y ago
    1) A cell phone is an absolute necessity nowadays. Sorry. Remember the Dot Com bust? People were becoming homeless but absolutely maintained their cell phone because it was the single thing that they had to have to get back out of being homeless. And that was 2001! Cell phones have just gotten more important since then. This is in top of the fact that a cell phone nowadays may be the only computer someone has access to. 2) I know of very few poor people who buy new cars. However, most of them would be better off if they did. Quite often, the amount of money they have to pour into an old car to keep it running exceeds the amount of money to actually purchase a new car. However, no one will give them the loan required to do so.
  - yayadarsh 6y ago
    This is borderline antagonistic. Do you think that the majority of lower-income people who do not have large savings are in this situation due to disproportionately high discretionary spending?
    - burlesona 6y ago
      The post you replied to was a little snarky, but there is some debate here, a lot of which boils down to financial options and “financial literacy.” For example: > Poor people do have surplus money to save, find Massachusetts Institute of Technology (MIT) economists Abhijit Banerjee and Esther Duflo. Even people living on less than $1 per day spend money on many nonessential items such as alcohol, tobacco, and televisions.2 And when poor people increase their earnings, they spend only two-thirds of their windfall on food. These findings suggest that poor people are not just living hand to mouth; they do have funds to save. So the question is, what financial products could help the poor lay away some of those funds for the future? Source: http://www.pensiondevelopment.org/documenten/Helping%20the%20Poor%20Save%20More%20-%20Karlan.pdf http://www.pensiondevelopment.org/documenten/Helping%20the%2...
NicoJuicy 6y ago
This is a total number, it doesn't say to where the money went. I would only trust medians or the 95 percentile with the current administration. Statistics are meant to be misleading. It's even in my profile description :)
- mrep 6y ago
  The federal government is giving unemployed people 600 per week (31,200 a year) on top of state benefits regardless of their income so anyone making less than that is making more on the federal government alone. That is why total income has gone up.
ericmcer 6y ago
Isn’t this the exact opposite of what we want? If a stimulus results in decreased spending we are literally just flooding the market with dollars that are being saved. If that money isn’t being spent it isn’t triggering the desired effect of a stimulus package... creation of goods and services. It’s basically just a big middle finger to people who don’t take on debt and who are still working, especially service workers. If they announce an extension of the bonus unemployment I will definitely ask to be laid off, 3 months of making $4500 a month with infinite free time to pursue side projects?
- triyambakam 6y ago
  So could a couple make $9000 a month, or more with children?
  - ericmcer 6y ago
    If a couple both got laid off in late March and filed for unemployment they would have made 4200 + 4200 + 1200 + 1200 = 10800
    - thephyber 6y ago
      > filed for unemployment I would like to point out that filing for unemployment is risky: - it's not a guaranteed approval, - you don't automatically get health insurance (and COBRA moves all of the cost to you, rather than split between employer+employee), - there's little hope of a bonus extension, and - there's a chance that your state exhausts their unemployment fund in the near future.
- burlesona 6y ago
  It’s very likely that the majority of that cash is being used to pay rent and pay off credit cards, while a percentage is being held as cushion for the very uncertain near future. You can get angry about it, but I don’t know how productive that is when the majority of this money was sent in equal payments to everyone below a fairly generous cutoff level. Lastly, it’s hard to see a stimulus effect in consumer spending when stores are closed and there are supply side constraints. The truth is most households spend almost exactly as much as they make every month, and the fear of the virus combined with the lockdowns basically blew a gaping hole in many people’s income with no easy way to fix it. The cash transfers are basically the government applying pressure to that wound to prevent it bleeding out. It buys some time. Whether or not we’ve used that time well and are prepared to handle what comes next is a very different question.
carlsborg 6y ago
Can someone explain that US personal income $18.5 Trillion figure? That’s approaching the entire GDP.
- arkis22 6y ago
  National income is ~= national GDP GDP is almost just a fun figure for economists to use in back of the napkin math.
- thephyber 6y ago
  > Seasonally adjusted annual rate This means that if the trend were to continue for a year, the amount of personal income would be that figure. GDP is always an annual figure. It's not clear if "personal income" is just cash or includes benefits (like health care). It's also possible that people who are laid off / furloughed are dipping into their retirement funds, because the administration gave guidance that doing so right now would not be penalized for those who are economically impacted (please don't do trust me and verify with your accountant).
- mrep 6y ago
  The federal government is giving unemployed people 600 per week (31,200 a year, 15 an hour on a 40 hour work week) on top of state benefits regardless of their income so anyone making less than that is making more on the federal government alone which is why total income has gone up.
chiefalchemist 6y ago
Interesing. I guess it's a matter of perspective. The headline could have just as easily highlighted the increase in the national debt. This money didn't fall out of the sky. Or perhaps, more accurately, characterize it as a loan that will eventually have to be paid off - directly or indirectly - by the taxpayers currently receiving it as "income." Question: This isn't actually income, is it? That is, it's not taxed. Nor is it capital gain, as that is taxed as well. This would traditionally be labeled an entitlement, correct?
unstatusthequo 6y ago
Quantitative easing?

117 points by prostoalex 6y ago

Seems like you could get this exact statistic by having 20 million or so low earners lose their jobs - as in the shifting average (not talking about unemployment cheques)

planxty 6y ago

A small step up from the pit of despair we're in should not be confused for meaningful progress, though we should fully expect the Trump administration will soon be releasing misleading self-congratulatory statistics for political gain.

verdverm 6y ago

Because the govt super sized their unemployment checks, be ready for the end of unearned bonuses in a few weeks

gruez 6y ago
I'm not sure why this is getting downvoted. The second paragraph literally says that: >The rise was mainly due to government payments to help Americans cope with the fallout of the Covid-19 global pandemic
- verdverm 6y ago
  Thank you! I think most (like myself) don't often click through to read before reacting
bb2018 6y ago
I'm agreeing with you - but isn't that the whole point of a stimulus? Boost short term economy and therefore hope, even if the gains are not long-lasting, the money floating around both helps people pay their bills and motivates them to make purchases? There is still a couple more months of increased UI. Surely, it will be a huge fall after that, but in a much better place than if there were minimal or no increased benefits to begin with. I would love to see another half-sized measure - but don't think the fact that it will fall in the future almost proves its usefulness.
- thephyber 6y ago
  > isn't that the whole point of a stimulus? What was passed wasn't economic stimulus. It was paying people to safely stay at home. Stimulus would be paying people to stimulate more demand (which may happen, but it will be after the economy opens up again).
  - bb2018 6y ago
    I really disagree. The payment amount was not linked to whether or not individual people stayed at home or whether or not they lived in an area that had strict stay-at-home orders. The economy may not seem "stimulated" compared to where it was a year ago - but it is certainly "stimulated" compared to what it would have been if the additional checks didn't go out and a much larger swath of the population missed rent, car payments, or credit card bills.
    - throw0101a 6y ago
      > I really disagree. Both Bernanke (former chair of Fed) and Krugman (Nobel winner) have called the programs to date "disaster relief". Many people cannot work because of the lockdowns, but still need to pay rent and food and such, so the checks are to bridge that gap. > Plus a second wave of infections from premature opening could set recovery back a long, long time. What we need is to stay the course and keep disaster relief in place. Unfortunately, little sign that Trump and allies will do that 5/ * https://twitter.com/paulkrugman/status/1260557224860155906 https://twitter.com/paulkrugman/status/1260557224860155906 > To deal with this properly, however, we need to get past standard rhetoric. The economy is, in effect, in a deliberately induced coma—and necessarily so. So this isn’t about “job creation” or economic growth; we don’t need “stimulus.” What we need is disaster relief on an unprecedented scale, to get people through the shutdown with as little misery as possible. * https://www.92y.org/event/paul-krugman https://www.92y.org/event/paul-krugman * https://www.nytimes.com/2020/04/02/opinion/coronavirus-economy-stimulus.html https://www.nytimes.com/2020/04/02/opinion/coronavirus-econo...
    - thephyber 6y ago
      > but it is certainly "stimulated" compared to what it would have been if the additional checks didn't go out and a much larger swath of the population missed rent, car payments, or credit card bills. By that definition, every single bill that passes appropriations sends money to someone and therefore "stimulates the economy". I still don't think stimulus was the impetus there. Compassion for those who lost their job, a desire to avoid/mitigate social instability, and reinforcement for people to follow the directions of health professionals. As far as I can tell, this is the bill/law[1]. No mention of stimulus in the title or abstracts. [1] https://www.congress.gov/bill/116th-congress/house-bill/6199/all-info https://www.congress.gov/bill/116th-congress/house-bill/6199...
HarryHirsch 6y ago
Meanwhile lots of people lost their health insurance. You wonder who came out ahead. It's the old confusion between revenue and profits again.

ravenstine 6y ago

Not sure how this is a useful statistic. I'm being perfectly honest. I think it can only be useful in retrospect, since our ability to predict the near future, given current circumstances, doesn't seem high.

sesuximo 6y ago
I think is interesting and surprising even if it doesn’t inform opinions about next steps

rootusrootus 6y ago

I'm thinking the Europeans (at least the ones that did this) got it right by subsidizing payrolls so employers could just keep on paying staff as if they were working. Much simpler to coordinate payments to a smaller number of endpoints, none of the hassle of trying to process orders of magnitude more unemployment claims, etc. But, then I suppose it would be an obstacle to companies using the opportunity to permanently trim staff. Hmm.

hogFeast 6y ago
The US way was much smarter...although not smart either in ways. In Europe, you have companies that are functionally insolvent, that will never trade profitably again, and which are being paid not to close. I know of companies where I am that are starting to look at letting hundreds of people go...those people were paid for two months by the govt. And why? A good chunk of these people needed no help at all. The point of an unemployment system is that you focus payments on people who actually need help (btw, you can run an insurance system too...but some European countries that went this way don't have the tax base or economic structure for a true, income-substitution system). It is a typically European solution which is why some countries in the region regard 10% unemployment as a huge triumph. What most European countries have done is fire all the bullets in their gun in the first 10 seconds of a battle that will go on for a long time...this is particularly foolish given how much debt some of these countries need to roll over this year. Also, the US "money for everyone" program was equally stupid for the same reasons.
- throw7 6y ago
  Well, just want to point out, "money for everyone" is not true. I'm sure there are workers here on HN that did not receive any due to income.
  - thephyber 6y ago
    > I'm sure there are workers here on HN that did not receive any due to income True. The income cutoff for Trump Bucks for a working single person was about what Facebook pays interns in the Bay Area.

TAForObvReasons 6y ago

This is great news for a bunch of reasons. In the immediate term, it's great that people and families saw extra income in a trying time. In the longer term, hopefully this informs a larger discussion on the minimum wage and effectiveness of various social programs.

justinzollars 6y ago
No one's pay went up. 40 million people lost their jobs, the majority of who made very little money. The average went up because low wage jobs were vaporized
- TAForObvReasons 6y ago
  pay != income, which is the key point here. The fact that millions of families are seeing more money now in the current unemployment benefit scheme raises the question about whether the pre-corona minimum wage was too low and whether we need to invest more in social programs. And this honestly couldn't have happened at a more interesting time, since this is a presidential election year. Millions of voters who might have voted on social or cultural issues may be more inclined now to vote for politicians interested in bolstering social programs.
  - thephyber 6y ago
    > in the current unemployment benefit scheme Congress (a nationally centralized organization) was doling out the money and used a simple formula (+$600 for every unemployed person, no matter what their job was). > whether we need to invest more in social programs I think "invest more" is maybe the wrong way to think about it and would just throw more money at the problem the wrong way. I think we need to change how legislatures and federal departments dictate how social programs be administered. Code For America (and 18F and USDS, etc) has great programs where they go in and assist government departments to improve the experience for the end user. They generally try to change the project management to think about MVPs and use Agile methodology and most importantly build small increments quickly and iterate. Traditional US social programs were mega projects defined at legislation/RFP time (both highly corrupt because lobbyists and contractors would steer requirements). We need to empower departments that administer social programs to run them for the people who actually use them and allow them the flexibility to change the requirements of the program.

082349872349872 6y ago

How many months of 110% income would it take for, say, the middle 80% of US households to have accumulated 6 months worth of savings?

101404 6y ago
That probably depends on the number of iPhones and cars they buy in that period.
- bsder 6y ago
  1) A cell phone is an absolute necessity nowadays. Sorry. Remember the Dot Com bust? People were becoming homeless but absolutely maintained their cell phone because it was the single thing that they had to have to get back out of being homeless. And that was 2001! Cell phones have just gotten more important since then. This is in top of the fact that a cell phone nowadays may be the only computer someone has access to. 2) I know of very few poor people who buy new cars. However, most of them would be better off if they did. Quite often, the amount of money they have to pour into an old car to keep it running exceeds the amount of money to actually purchase a new car. However, no one will give them the loan required to do so.
- yayadarsh 6y ago
  This is borderline antagonistic. Do you think that the majority of lower-income people who do not have large savings are in this situation due to disproportionately high discretionary spending?
  - burlesona 6y ago
    The post you replied to was a little snarky, but there is some debate here, a lot of which boils down to financial options and “financial literacy.” For example: > Poor people do have surplus money to save, find Massachusetts Institute of Technology (MIT) economists Abhijit Banerjee and Esther Duflo. Even people living on less than $1 per day spend money on many nonessential items such as alcohol, tobacco, and televisions.2 And when poor people increase their earnings, they spend only two-thirds of their windfall on food. These findings suggest that poor people are not just living hand to mouth; they do have funds to save. So the question is, what financial products could help the poor lay away some of those funds for the future? Source: http://www.pensiondevelopment.org/documenten/Helping%20the%20Poor%20Save%20More%20-%20Karlan.pdf http://www.pensiondevelopment.org/documenten/Helping%20the%2...

NicoJuicy 6y ago

This is a total number, it doesn't say to where the money went. I would only trust medians or the 95 percentile with the current administration. Statistics are meant to be misleading. It's even in my profile description :)

mrep 6y ago
The federal government is giving unemployed people 600 per week (31,200 a year) on top of state benefits regardless of their income so anyone making less than that is making more on the federal government alone. That is why total income has gone up.

ericmcer 6y ago

Isn’t this the exact opposite of what we want? If a stimulus results in decreased spending we are literally just flooding the market with dollars that are being saved. If that money isn’t being spent it isn’t triggering the desired effect of a stimulus package... creation of goods and services. It’s basically just a big middle finger to people who don’t take on debt and who are still working, especially service workers. If they announce an extension of the bonus unemployment I will definitely ask to be laid off, 3 months of making $4500 a month with infinite free time to pursue side projects?

triyambakam 6y ago
So could a couple make $9000 a month, or more with children?
- ericmcer 6y ago
  If a couple both got laid off in late March and filed for unemployment they would have made 4200 + 4200 + 1200 + 1200 = 10800
  - thephyber 6y ago
    > filed for unemployment I would like to point out that filing for unemployment is risky: - it's not a guaranteed approval, - you don't automatically get health insurance (and COBRA moves all of the cost to you, rather than split between employer+employee), - there's little hope of a bonus extension, and - there's a chance that your state exhausts their unemployment fund in the near future.
burlesona 6y ago
It’s very likely that the majority of that cash is being used to pay rent and pay off credit cards, while a percentage is being held as cushion for the very uncertain near future. You can get angry about it, but I don’t know how productive that is when the majority of this money was sent in equal payments to everyone below a fairly generous cutoff level. Lastly, it’s hard to see a stimulus effect in consumer spending when stores are closed and there are supply side constraints. The truth is most households spend almost exactly as much as they make every month, and the fear of the virus combined with the lockdowns basically blew a gaping hole in many people’s income with no easy way to fix it. The cash transfers are basically the government applying pressure to that wound to prevent it bleeding out. It buys some time. Whether or not we’ve used that time well and are prepared to handle what comes next is a very different question.

carlsborg 6y ago

Can someone explain that US personal income $18.5 Trillion figure? That’s approaching the entire GDP.

arkis22 6y ago
National income is ~= national GDP GDP is almost just a fun figure for economists to use in back of the napkin math.
thephyber 6y ago
> Seasonally adjusted annual rate This means that if the trend were to continue for a year, the amount of personal income would be that figure. GDP is always an annual figure. It's not clear if "personal income" is just cash or includes benefits (like health care). It's also possible that people who are laid off / furloughed are dipping into their retirement funds, because the administration gave guidance that doing so right now would not be penalized for those who are economically impacted (please don't do trust me and verify with your accountant).
mrep 6y ago
The federal government is giving unemployed people 600 per week (31,200 a year, 15 an hour on a 40 hour work week) on top of state benefits regardless of their income so anyone making less than that is making more on the federal government alone which is why total income has gone up.

chiefalchemist 6y ago

Interesing. I guess it's a matter of perspective. The headline could have just as easily highlighted the increase in the national debt. This money didn't fall out of the sky. Or perhaps, more accurately, characterize it as a loan that will eventually have to be paid off - directly or indirectly - by the taxpayers currently receiving it as "income." Question: This isn't actually income, is it? That is, it's not taxed. Nor is it capital gain, as that is taxed as well. This would traditionally be labeled an entitlement, correct?

unstatusthequo 6y ago

Quantitative easing?