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> How much of this is due to wealth distribution and how much of this is due to human nature? Probably not much. 1. The VAST majority of people who are living

> How much of this is due to wealth distribution and how much of this is due to human nature? Probably not much. 1. The VAST majority of people who are living paycheck-to-paycheck are not making $100K. According to the same report, Seventy-two percent of those who make less than $50,000 live paycheck to paycheck. Do some high earners live paycheck to payccheck? Sure. But the VAST majority of people living paycheck to paycheck are not high earners. 2. The death of pensions matters. In the post-pension world, maxing out your 401K and then some is a bill. Period. $100K - $20K = $80K. That's almost certainly "paycheck to paycheck" territory if you're raising more than one kid without a spouse, even in low CoL areas. When comparing earnings across time, it's almost more important to consider pensions in addition to inflation. 3. The background of people making >100K also matters. Many people making over $100K are well-educated, which often means significant debt and/or catching up on retirement savings. Think doctors, lawyers, PhDs, etc. 4. CoL also matters. Many people making >$100K are living in a high CoL areas. $50K in Dacatur, IL = $114K in SFBA.

handrous 5y ago
> 2. The death of pensions matters. In the post-pension world, maxing out your 401K and then some is a bill. Period. $100K - $20K = $80K. That's almost certainly "paycheck to paycheck" territory if you're raising more than one kid without a spouse, even in low CoL areas. When comparing earnings across time, it's almost more important to consider pensions in addition to inflation. The death of pensions also frees up (lots of) money for zero-sum competition, especially the kid-related variety, which includes housing in desirable (=the schools are safe and have good outcomes) areas, or private school tuition, tutoring, et c. If you want to save but half your peers have already chosen "defect" and are putting an extra $20,000/yr toward their kids, who will be competing with your kids for scarce resources in the not-so-distant future, it gets damn tempting to make a choice that's very bad for your retirement but gives your kids a better chance of, if not rising, at least not dropping in socio-economic class.
gruez 5y ago
>1. The VAST majority of people who are living paycheck-to-paycheck are not making $100K. Right, because the VAST majority of people aren't making $100k. > According to the same report, Seventy-two percent of those who make less than $50,000 live paycheck to paycheck. In other words, increasing your income by more than $50k, only decreases "paycheck to paycheck"-ness by 12 percentage points. That seems to support the thesis that it's due to human nature rather than income distribution. >The death of pensions matters Everything you pointed out is true, but I don't see how it's relevant to the discussion of whether it's human nature or wealth distribution. The point of my original comment is that people live paycheck to paycheck despite having a lot of money, suggesting that it might not be a money issue but a human one (rat race, hedonic treadmill, etc.) >3. The background of people making >100K also matters. Many people making over $100K are well-educated, which often means significant debt and/or catching up on retirement savings. Think doctors, lawyers, PhDs, etc. The debt is higher, but not enough to account for the difference. If your income goes up by 242%, your student debt (and therefore payments) only goes up by 20%[1] [1] https://www.urban.org/urban-wire/which-households-hold-most-student-debt https://www.urban.org/urban-wire/which-households-hold-most-..., comparing the debt/income ratios of households in the second quartile and the 75-90th percentile. >4. CoL also matters Agreed, we need a study that controls for cost of living
- kbenson 5y ago
  > In other words, increasing your income by more than $50k, only decreases "paycheck to paycheck"-ness by 12 percentage points. That seems to support the thesis that it's due to human nature rather than income distribution. You're relating statistics which may be unrelated. It's at least not shown they are related, and I have reasons to believe they are less related than as presented. People that make over 100k but live paycheck to paycheck might primarily be made up of people who live in area with extremely high costs of living. People that make less than $50k might be primarily living in low to medium cost of living areas where thy can survive on that but don't have much chance to save. Without normalizing based on cost of living, you aren't really making a comparison that is useful. By using hard values, such as $50k or $100k, but ignoring that the largest affect on what amount of that is disposable (and thus valid to be applied to savings) is a highly variable cost of living, you ignore variables so large as to make any assumption useless. You might as well normalize and average values for income and savings the United States and China and make assumptions based on that across both populations together. It's essentially the same thing you're doing here, with a more obvious set of differences. The conclusions you make from it will have flaws in similar ways.
- triceratops 5y ago
  > In other words, increasing your income by more than $50k, only decreases "paycheck to paycheck"-ness by 12 percentage points. You're assuming people are earning those higher incomes while staying in the same place. Generally that's not the case - you have to move to a higher CoL area to make a higher wage. Lifestyle inflation definitely exists and very few people are immune. But pointing at "millennials" specifically has a "kids these days" kind of vibe.
  - gruez 5y ago
    >But pointing at "millennials" specifically has a "kids these days" kind of vibe. That wasn't my intention. My only usage of "millennials" was to quote the article title.
- sumtechguy 5y ago
  I would also add you need to look at how you spend money. Many of my peers and people I know have terrible spending habits. usually of the form 'I have X coming in a week I will spend Y' not thinking through that some other thing is going to take up most of X and now they have the debt of Y hanging over them.

handrous 5y ago

> 2. The death of pensions matters. In the post-pension world, maxing out your 401K and then some is a bill. Period. $100K - $20K = $80K. That's almost certainly "paycheck to paycheck" territory if you're raising more than one kid without a spouse, even in low CoL areas. When comparing earnings across time, it's almost more important to consider pensions in addition to inflation. The death of pensions also frees up (lots of) money for zero-sum competition, especially the kid-related variety, which includes housing in desirable (=the schools are safe and have good outcomes) areas, or private school tuition, tutoring, et c. If you want to save but half your peers have already chosen "defect" and are putting an extra $20,000/yr toward their kids, who will be competing with your kids for scarce resources in the not-so-distant future, it gets damn tempting to make a choice that's very bad for your retirement but gives your kids a better chance of, if not rising, at least not dropping in socio-economic class.

gruez 5y ago

>1. The VAST majority of people who are living paycheck-to-paycheck are not making $100K. Right, because the VAST majority of people aren't making $100k. > According to the same report, Seventy-two percent of those who make less than $50,000 live paycheck to paycheck. In other words, increasing your income by more than $50k, only decreases "paycheck to paycheck"-ness by 12 percentage points. That seems to support the thesis that it's due to human nature rather than income distribution. >The death of pensions matters Everything you pointed out is true, but I don't see how it's relevant to the discussion of whether it's human nature or wealth distribution. The point of my original comment is that people live paycheck to paycheck despite having a lot of money, suggesting that it might not be a money issue but a human one (rat race, hedonic treadmill, etc.) >3. The background of people making >100K also matters. Many people making over $100K are well-educated, which often means significant debt and/or catching up on retirement savings. Think doctors, lawyers, PhDs, etc. The debt is higher, but not enough to account for the difference. If your income goes up by 242%, your student debt (and therefore payments) only goes up by 20%[1] [1] https://www.urban.org/urban-wire/which-households-hold-most-student-debt https://www.urban.org/urban-wire/which-households-hold-most-..., comparing the debt/income ratios of households in the second quartile and the 75-90th percentile. >4. CoL also matters Agreed, we need a study that controls for cost of living

kbenson 5y ago
> In other words, increasing your income by more than $50k, only decreases "paycheck to paycheck"-ness by 12 percentage points. That seems to support the thesis that it's due to human nature rather than income distribution. You're relating statistics which may be unrelated. It's at least not shown they are related, and I have reasons to believe they are less related than as presented. People that make over 100k but live paycheck to paycheck might primarily be made up of people who live in area with extremely high costs of living. People that make less than $50k might be primarily living in low to medium cost of living areas where thy can survive on that but don't have much chance to save. Without normalizing based on cost of living, you aren't really making a comparison that is useful. By using hard values, such as $50k or $100k, but ignoring that the largest affect on what amount of that is disposable (and thus valid to be applied to savings) is a highly variable cost of living, you ignore variables so large as to make any assumption useless. You might as well normalize and average values for income and savings the United States and China and make assumptions based on that across both populations together. It's essentially the same thing you're doing here, with a more obvious set of differences. The conclusions you make from it will have flaws in similar ways.
triceratops 5y ago
> In other words, increasing your income by more than $50k, only decreases "paycheck to paycheck"-ness by 12 percentage points. You're assuming people are earning those higher incomes while staying in the same place. Generally that's not the case - you have to move to a higher CoL area to make a higher wage. Lifestyle inflation definitely exists and very few people are immune. But pointing at "millennials" specifically has a "kids these days" kind of vibe.
- gruez 5y ago
  >But pointing at "millennials" specifically has a "kids these days" kind of vibe. That wasn't my intention. My only usage of "millennials" was to quote the article title.
sumtechguy 5y ago
I would also add you need to look at how you spend money. Many of my peers and people I know have terrible spending habits. usually of the form 'I have X coming in a week I will spend Y' not thinking through that some other thing is going to take up most of X and now they have the debt of Y hanging over them.