42 ms·

Household income surged in April despite record unemployment

38 points by joeyespo 6y ago

tathougies 6y ago
Makes the 'rent strikes' and such seem even more unethical than they seemed at first. Article also mentions a small GOP opposition to one provision of the bill (despite strong GOP support overall) while neglecting to mention the fact that the house delayed the bill for several more days than was needed. This is vox though, so...
- kerkeslager 6y ago
  Just because people have money now doesn't mean they're unethical for wanting some security. When the stimulus goes away the unemployment will still be there. Owning things isn't a contribution to society. When the thing owned a limited resource like housing, owning more than you need creates artificial scarcity--this is a blight, not a contribution. As a society we're going to have to address this issue.
  - Red_Leaves_Flyy 6y ago
    >As a society we're going to have to address this issue. This cans been getting kicked down the road since before my ancestors naturalized. I'm not holding my breath that'll be addressed in my life time.
    - thephyber 6y ago
      The worse life gets for the average American, the more the Overton Window changes and reforms that seemed unpalatable yesterday may be more reasonable today. In this way, the COVID economy is more likely than any other event in our lifetime to help spur change. That said, what you say is correct and I have similarly low expectations that legislators are capable of reasonable policy reforms. Their incentives are far too removed from the average employee.
  - tathougies 6y ago
    > Owning things isn't a contribution to society. When the thing owned a limited resource like housing, owning more than you need creates artificial scarcity--this is a blight, not a contribution. Owning and nothing else is of course a blight. Owning and maintaining is really not. Even a homeowner who simply owns and does no maintenance is a blight, even if they live there. It would be preferable to have the property managed by a landlord who can actually maintain it.
    - kerkeslager 6y ago
      Linking ownership and maintenance to justify rent is a fallacy for two reasons: 1. You said it yourself: a homeowner who simply owns and does no maintenance is a blight. This includes people who charge rent, and then use a portion of that rent to pay someone else to do the maintenance. In this case, the landlord is contributing nothing: they're just using the artificial scarcity of the property they own to insert themselves as parasitic middle men between the resident and the maintainer. 2. Maintenance is valued far less than ownership. Even in cases where landlords do maintain the property themselves, they are paid far more than we would pay a super or a handyman. Think about it: if you owned your own home and didn't want to handle the maintenance yourself, would you pay someone $1343/month[1] for the few hours they have to work on maintenance? Obviously not. And landlords agree: supers are paid only a small fraction of what the landlord makes in an apartment building. Let's not pretend what you're paying for when you pay rent is maintenance. [1] https://www.abodo.com/blog/2019-annual-rent-report/ https://www.abodo.com/blog/2019-annual-rent-report/
      - perl4ever 6y ago
        How much profit do you think it is typical to make on rent of $1343 per month? Here's my attempt at estimating for the whole industry: $1343 rent x 12 = 16116 [1] x 7.11 p/s = 114,584 [2] x 3.5% = 4010 [3] / 12 months = $334 Which is to say, from the renter's perspective, they're paying about 25% of their rent towards the landlord's profits, but from the landlord's perspective, they're making about 3.5% on their capital. So I'm curious if you find this believable, whether it's an outrageous level of profit, or what? Do you see any logical problem with my calculation? Does it seem like a good explanation of why, even if you think you're being ripped off as a renter, owning property isn't an automatic way to get rich? While your landlord may not be a big fund that is professionally managed, and might be making more or less, it seems reasonable to me to assume that the people who are the best at extracting profits work in such places and their performance represents the competitive climate for everyone. You can invest in real estate and reap the profits with literally any amount of money, if you live in the US or have access the financial system there[4] But I think 3.5% isn't exciting to most people. [1] Yearly total of rent payments [2] 7.11 is the average price to sales ratio for Residential real estate investment funds. I'm equating sales to total rents and price to property value or amount invested. As a cross check, $114K seems like a reasonable value for an apartment; in fact I happen to know that my former apartment's building was assessed at about $90K per apartment, and the rent was noticeably higher than $1343. https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Ratio-Average-per-US-Real-Estate-Investment-Trust-sector-on-2019-09-23/ID/3660 https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Rat... [3] 3.5% is about what a residential real estate fund, called REZ paid to investors in the past year. (0.46+0.50+0.63+0.51)/60 = 3.5%. As a cross check, this is in the ballpark of what corporate bond funds pay, and you'd expect them to be similar when investors who want steady income can choose either (but the real estate funds don't get taxed at the corporate level). https://www.ishares.com/us/products/239545/ishares-residential-real-estate-capped-etf https://www.ishares.com/us/products/239545/ishares-residenti... [4]I'm not a customer and this is not an endorsement, but see: https://robinhood.com/us/en/support/articles/fractional-shares/ https://robinhood.com/us/en/support/articles/fractional-shar...
- dashundchen 6y ago
  AFAIK House Democrats were delaying the bill not because of the stimulus payments, they were opposed to the lack of teeth to Congressional oversight in the CARES Act bailouts, along with the tax code change that cost $90 billion and benefits almost entirely millionaires+.
  - tathougies 6y ago
    And that justifies not mentioning the delay at all? The republicans cited in the article also have a reasonable concern (that it harms the economy to pay people more to not work than to work), and yet the GOP members were the only cited critics.
    - ethanbond 6y ago
      But... the virus is still here. So people shouldn’t be going back to work. A few weeks/months after the vaccine (or some other magical eradication), your point will make sense.
    - dashundchen 6y ago
      > The republicans cited in the article also have a reasonable concern (that it harms the economy to pay people more to not work than to work) I won't disagree with those Republicans and some others the incentives were weird with the whole package. The conflict between requiring a percentage of PPP money to be spent on payroll vs the increased unemployment benefits is pretty clear. Add in some businesses essentially being forced to shutdown yet still meet the requirements for the PPP loans and you have a big mess. However I think the better solution to the additional UI would have been a temporary UBI regardless of employment status. It removes any incentives to lay people off or force them back to work and would have eliminated a lot of the administration overhead where states were overwhelmed by UI claims. Unfortunately I think many politicians are afraid of what happens when the workers realize what it's like not to be scraping by at the mercy of their employer.
bearjaws 6y ago
It's pretty sad that $600-$900 a week is a massive improvement for most people. With state benefits and $1200 its nearly $45k a year, which is quite a bit more than $15 an hour. Its no wonder people have more money given around 30 million Americans make <$10 an hour. https://www.pewresearch.org/fact-tank/2014/11/05/making-more-than-minimum-wage-but-less-than-10-10-an-hour/ https://www.pewresearch.org/fact-tank/2014/11/05/making-more... (older source, but I am sure its in the ball park) I am curious how long until US congress starts blaming anyone who is unemployed for "being lazy", and stop providing financial assistance, or only provides the bare minimum $7.25 an hour.
- BubRoss 6y ago
  And to think that all it took was printing off more than $35,000 per tax payer which will then be multiplied by 8x through fractional reserve banking. The inflation will eventually haunt anyone with an income based off of a static dollar amount, yet those are the people who got a sliver of the avalanche of money.
- ac29 6y ago
  For those of us who live in high cost of living areas, its easy to forget just how cheap most of the US is: the median mortgage payment in the US is $1100.month (2017 data) [0]. That's 151 minimum wage hours, or about a month of ~40 hour weeks (before taxes, which are very low at that income level). So, a household with two minimum wage earners probably would struggle to afford the median mortgage, but remember half of mortgages are less than that. This is not me attempting to justify the current minimum wage - I think it should come up. I just think many on this site live in areas where renting a small 1 bedroom apartment is more expensive than $1100/month, or even significantly more than that, much less owning a home. [0] https://www.census.gov/programs-surveys/ahs/data/interactive/ahstablecreator.html?s_areas=00000&s_year=2017&s_tablename=TABLE14B&s_bygroup1=19&s_bygroup2=1&s_filtergroup1=2&s_filtergroup2=1&s_show=S https://www.census.gov/programs-surveys/ahs/data/interactive...
  - ethanbond 6y ago
    The price of real estate in an area is set pretty exactly to the level of productivity (i.e. what kinds of jobs you can hold) in that area. So yeah, it all “works out” in that it doesn’t matter if the median person is producing $10 or $15 or $2000 worth of value per hour. The median person will always be “barely making it” given what they must spend to have access to jobs in which they can produce that much value. Look at Palo Alto’s consideration of housing welfare for people earning $150k - $250k/yr. Inequality grows as more people max out their individual productive potential, but real estate prices keep rising because the few hyper-productive peoples’ ceilings have not been hit yet.
strict9 6y ago
>That’s because of government stimulus benefits, both the $1,200 checks that went out to most people and, even more importantly, the $600-a-week increase in unemployment insurance benefits ... But the message of this data is that, on the whole, it worked. It sort of worked, but unfortunately the dialog has centered on the talking point that "people are making more not working than they could by working." It's temporarily true for a lot of people suddenly out of work that weren't making a whole lot to begin with. Now that it's ending soon things are about to get much worse for everyone.
puranjay 6y ago
Anecdotally, I run a website for a specific hobby that's monetized by Amazon affiliate program. I saw holiday season-like traffic and revenues in April (before Amazon cut the commission rate). Was thr strangest thing because I had already assumed that my revenue from Amazon this year would be drastically lower. But so far, I'm up nearly 100% YoY
- munificent 6y ago
  My father runs a Woodcraft franchise, and the past few months have been significantly better than average for him. Since people aren't spending much time and money on activities and dining out, they are investing some of that in hobbies they can do at home instead.
  - Tiksi 6y ago
    To add another data point, I got into hydroponics and indoor gardening since I was sitting at home all day, and I guess a lot of other people did too. Everything is sold out everywhere. Seeds, nutrients, even just potting soil is harder to come by. I tried to order some seed potatoes last week to try a hydroponic grow of them and almost every supplier is completely sold out. I found one seller that had 2/100 of their products in stock, but won't ship until mid-August.
    - munificent 6y ago
      Yeah. Another point: my wife fosters kittens for the local animal shelter and almost all of the shelters are just straight up out of adoptable animals. Everyone is getting pets now.
  - krallja 6y ago
    I’m getting into electronics and microcontrollers for exactly that reason. Can’t go out, might as well do something painstaking, expensive, and pointless!
thephyber 6y ago
Note this was reported on May 29, 2020 for data in the April calendar month. It's likely that a good proportion of households got their one-time $1200 federal check in the April timeframe. I'm more interested to see how much of a cliff happened after April.

38 points by joeyespo 6y ago

Makes the 'rent strikes' and such seem even more unethical than they seemed at first. Article also mentions a small GOP opposition to one provision of the bill (despite strong GOP support overall) while neglecting to mention the fact that the house delayed the bill for several more days than was needed. This is vox though, so...

kerkeslager 6y ago
Just because people have money now doesn't mean they're unethical for wanting some security. When the stimulus goes away the unemployment will still be there. Owning things isn't a contribution to society. When the thing owned a limited resource like housing, owning more than you need creates artificial scarcity--this is a blight, not a contribution. As a society we're going to have to address this issue.
- Red_Leaves_Flyy 6y ago
  >As a society we're going to have to address this issue. This cans been getting kicked down the road since before my ancestors naturalized. I'm not holding my breath that'll be addressed in my life time.
  - thephyber 6y ago
    The worse life gets for the average American, the more the Overton Window changes and reforms that seemed unpalatable yesterday may be more reasonable today. In this way, the COVID economy is more likely than any other event in our lifetime to help spur change. That said, what you say is correct and I have similarly low expectations that legislators are capable of reasonable policy reforms. Their incentives are far too removed from the average employee.
- tathougies 6y ago
  > Owning things isn't a contribution to society. When the thing owned a limited resource like housing, owning more than you need creates artificial scarcity--this is a blight, not a contribution. Owning and nothing else is of course a blight. Owning and maintaining is really not. Even a homeowner who simply owns and does no maintenance is a blight, even if they live there. It would be preferable to have the property managed by a landlord who can actually maintain it.
  - kerkeslager 6y ago
    Linking ownership and maintenance to justify rent is a fallacy for two reasons: 1. You said it yourself: a homeowner who simply owns and does no maintenance is a blight. This includes people who charge rent, and then use a portion of that rent to pay someone else to do the maintenance. In this case, the landlord is contributing nothing: they're just using the artificial scarcity of the property they own to insert themselves as parasitic middle men between the resident and the maintainer. 2. Maintenance is valued far less than ownership. Even in cases where landlords do maintain the property themselves, they are paid far more than we would pay a super or a handyman. Think about it: if you owned your own home and didn't want to handle the maintenance yourself, would you pay someone $1343/month[1] for the few hours they have to work on maintenance? Obviously not. And landlords agree: supers are paid only a small fraction of what the landlord makes in an apartment building. Let's not pretend what you're paying for when you pay rent is maintenance. [1] https://www.abodo.com/blog/2019-annual-rent-report/ https://www.abodo.com/blog/2019-annual-rent-report/
    - perl4ever 6y ago
      How much profit do you think it is typical to make on rent of $1343 per month? Here's my attempt at estimating for the whole industry: $1343 rent x 12 = 16116 [1] x 7.11 p/s = 114,584 [2] x 3.5% = 4010 [3] / 12 months = $334 Which is to say, from the renter's perspective, they're paying about 25% of their rent towards the landlord's profits, but from the landlord's perspective, they're making about 3.5% on their capital. So I'm curious if you find this believable, whether it's an outrageous level of profit, or what? Do you see any logical problem with my calculation? Does it seem like a good explanation of why, even if you think you're being ripped off as a renter, owning property isn't an automatic way to get rich? While your landlord may not be a big fund that is professionally managed, and might be making more or less, it seems reasonable to me to assume that the people who are the best at extracting profits work in such places and their performance represents the competitive climate for everyone. You can invest in real estate and reap the profits with literally any amount of money, if you live in the US or have access the financial system there[4] But I think 3.5% isn't exciting to most people. [1] Yearly total of rent payments [2] 7.11 is the average price to sales ratio for Residential real estate investment funds. I'm equating sales to total rents and price to property value or amount invested. As a cross check, $114K seems like a reasonable value for an apartment; in fact I happen to know that my former apartment's building was assessed at about $90K per apartment, and the rent was noticeably higher than $1343. https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Ratio-Average-per-US-Real-Estate-Investment-Trust-sector-on-2019-09-23/ID/3660 https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Rat... [3] 3.5% is about what a residential real estate fund, called REZ paid to investors in the past year. (0.46+0.50+0.63+0.51)/60 = 3.5%. As a cross check, this is in the ballpark of what corporate bond funds pay, and you'd expect them to be similar when investors who want steady income can choose either (but the real estate funds don't get taxed at the corporate level). https://www.ishares.com/us/products/239545/ishares-residential-real-estate-capped-etf https://www.ishares.com/us/products/239545/ishares-residenti... [4]I'm not a customer and this is not an endorsement, but see: https://robinhood.com/us/en/support/articles/fractional-shares/ https://robinhood.com/us/en/support/articles/fractional-shar...
dashundchen 6y ago
AFAIK House Democrats were delaying the bill not because of the stimulus payments, they were opposed to the lack of teeth to Congressional oversight in the CARES Act bailouts, along with the tax code change that cost $90 billion and benefits almost entirely millionaires+.
- tathougies 6y ago
  And that justifies not mentioning the delay at all? The republicans cited in the article also have a reasonable concern (that it harms the economy to pay people more to not work than to work), and yet the GOP members were the only cited critics.
  - ethanbond 6y ago
    But... the virus is still here. So people shouldn’t be going back to work. A few weeks/months after the vaccine (or some other magical eradication), your point will make sense.
  - dashundchen 6y ago
    > The republicans cited in the article also have a reasonable concern (that it harms the economy to pay people more to not work than to work) I won't disagree with those Republicans and some others the incentives were weird with the whole package. The conflict between requiring a percentage of PPP money to be spent on payroll vs the increased unemployment benefits is pretty clear. Add in some businesses essentially being forced to shutdown yet still meet the requirements for the PPP loans and you have a big mess. However I think the better solution to the additional UI would have been a temporary UBI regardless of employment status. It removes any incentives to lay people off or force them back to work and would have eliminated a lot of the administration overhead where states were overwhelmed by UI claims. Unfortunately I think many politicians are afraid of what happens when the workers realize what it's like not to be scraping by at the mercy of their employer.

bearjaws 6y ago

It's pretty sad that $600-$900 a week is a massive improvement for most people. With state benefits and $1200 its nearly $45k a year, which is quite a bit more than $15 an hour. Its no wonder people have more money given around 30 million Americans make <$10 an hour. https://www.pewresearch.org/fact-tank/2014/11/05/making-more-than-minimum-wage-but-less-than-10-10-an-hour/ https://www.pewresearch.org/fact-tank/2014/11/05/making-more... (older source, but I am sure its in the ball park) I am curious how long until US congress starts blaming anyone who is unemployed for "being lazy", and stop providing financial assistance, or only provides the bare minimum $7.25 an hour.

BubRoss 6y ago
And to think that all it took was printing off more than $35,000 per tax payer which will then be multiplied by 8x through fractional reserve banking. The inflation will eventually haunt anyone with an income based off of a static dollar amount, yet those are the people who got a sliver of the avalanche of money.
ac29 6y ago
For those of us who live in high cost of living areas, its easy to forget just how cheap most of the US is: the median mortgage payment in the US is $1100.month (2017 data) [0]. That's 151 minimum wage hours, or about a month of ~40 hour weeks (before taxes, which are very low at that income level). So, a household with two minimum wage earners probably would struggle to afford the median mortgage, but remember half of mortgages are less than that. This is not me attempting to justify the current minimum wage - I think it should come up. I just think many on this site live in areas where renting a small 1 bedroom apartment is more expensive than $1100/month, or even significantly more than that, much less owning a home. [0] https://www.census.gov/programs-surveys/ahs/data/interactive/ahstablecreator.html?s_areas=00000&s_year=2017&s_tablename=TABLE14B&s_bygroup1=19&s_bygroup2=1&s_filtergroup1=2&s_filtergroup2=1&s_show=S https://www.census.gov/programs-surveys/ahs/data/interactive...
- ethanbond 6y ago
  The price of real estate in an area is set pretty exactly to the level of productivity (i.e. what kinds of jobs you can hold) in that area. So yeah, it all “works out” in that it doesn’t matter if the median person is producing $10 or $15 or $2000 worth of value per hour. The median person will always be “barely making it” given what they must spend to have access to jobs in which they can produce that much value. Look at Palo Alto’s consideration of housing welfare for people earning $150k - $250k/yr. Inequality grows as more people max out their individual productive potential, but real estate prices keep rising because the few hyper-productive peoples’ ceilings have not been hit yet.

strict9 6y ago

>That’s because of government stimulus benefits, both the $1,200 checks that went out to most people and, even more importantly, the $600-a-week increase in unemployment insurance benefits ... But the message of this data is that, on the whole, it worked. It sort of worked, but unfortunately the dialog has centered on the talking point that "people are making more not working than they could by working." It's temporarily true for a lot of people suddenly out of work that weren't making a whole lot to begin with. Now that it's ending soon things are about to get much worse for everyone.

puranjay 6y ago

Anecdotally, I run a website for a specific hobby that's monetized by Amazon affiliate program. I saw holiday season-like traffic and revenues in April (before Amazon cut the commission rate). Was thr strangest thing because I had already assumed that my revenue from Amazon this year would be drastically lower. But so far, I'm up nearly 100% YoY

munificent 6y ago
My father runs a Woodcraft franchise, and the past few months have been significantly better than average for him. Since people aren't spending much time and money on activities and dining out, they are investing some of that in hobbies they can do at home instead.
- Tiksi 6y ago
  To add another data point, I got into hydroponics and indoor gardening since I was sitting at home all day, and I guess a lot of other people did too. Everything is sold out everywhere. Seeds, nutrients, even just potting soil is harder to come by. I tried to order some seed potatoes last week to try a hydroponic grow of them and almost every supplier is completely sold out. I found one seller that had 2/100 of their products in stock, but won't ship until mid-August.
  - munificent 6y ago
    Yeah. Another point: my wife fosters kittens for the local animal shelter and almost all of the shelters are just straight up out of adoptable animals. Everyone is getting pets now.
- krallja 6y ago
  I’m getting into electronics and microcontrollers for exactly that reason. Can’t go out, might as well do something painstaking, expensive, and pointless!

thephyber 6y ago

Note this was reported on May 29, 2020 for data in the April calendar month. It's likely that a good proportion of households got their one-time $1200 federal check in the April timeframe. I'm more interested to see how much of a cliff happened after April.