6 ms·

Eh. Part of the reason is that living in the US is just plain expensive. According to statistics on average American household budget, 16% goes to housing. 14%

by kiba 5y ago

Eh. Part of the reason is that living in the US is just plain expensive. According to statistics on average American household budget, 16% goes to housing. 14% goes to transportation.[1] So you can say that 30% of your consumption goes directly to land use, because cars need infrastructure and because we refuse high density housing and increased barrier for new housing supply. Taxes, which is 12%, actually comes a distant second. Also, with 75K, sounds like you would have ample amount to invest. 1. https://www.valuepenguin.com/average-household-budget https://www.valuepenguin.com/average-household-budget

lotsofpulp 5y ago
$75k household income with kids is a pittance in pretty much all areas of the US that have seen economic growth in the past few decades. Most people are simply skipping saving/investing sufficient funds for their old age/emergencies (a few million by 65, but I would say you need decent portion by 50 since likelihood of being unable to work starts going up a lot).
- Miner49er 5y ago
  This is part of the reason birth rates are down.
  - lumost 5y ago
    per the article's central thesis. If Income inequality changes direction births will rise.
    - toomuchtodo 5y ago
      Unlikely. Educated, empowered women with access to family planning facilities have less children if they have any children at all. Birth rates in developed countries with more robust social safety nets and less inequality have total fertility rates below that of the US. https://ourworldindata.org/fertility-rate#what-explains-the-change-in-the-number-of-children-women-have https://ourworldindata.org/fertility-rate#what-explains-the-...
      - Supermancho 5y ago
        More likely than unlikely. > Educated, empowered women with access to family planning facilities have less children if they have any children at all This has nothing to do with wealth inequality. This does have to do with optimizing for wealth accumulation. Possibly something to do with Quality of Life, wherein children used to improve it comparatively, while now they are more of a risk proposition. For people in poverty, they are a (subsidized) source of income, which is unfortunate.
    - nemo44x 5y ago
      What's interesting though as that households with over $200,000 in income have the lowest birthrate of all. The highest birthrates are in households with very low income. In essence, for every dollar of household income you have, your birthrate decreases.
      - deleted 5y ago
        [deleted]
      - lotsofpulp 5y ago
        I suspect birthrate’s biggest factor is women’s financial independence and access to cheap and convenient birth control such as IUDs and birth control pills. Birthrates are plummeting even for low income households, and I would bet it has something to do with Affordable Care Act of 2010 greatly increasing access to birth control by making it free. From the women I have spoken to, it is almost a no brainer to get an IUD. https://www.statista.com/statistics/562541/birth-rate-by-poverty-status-in-the-us/ https://www.statista.com/statistics/562541/birth-rate-by-pov... I think societies are about the find out the real price of having babies now that they are not simply a byproduct of sex or women not having power.
        nemo44x 5y ago
        > I think societies are about the find out the real price of having babies now that they are not simply a byproduct of sex or women not having power. Can you expand on that, I'm not sure I follow?
        deleted 5y ago
        [deleted]
        lotsofpulp 5y ago
        Up until a few decades ago, women did not have a nearly foolproof way of preventing pregnancy while still being able to have dec. As well as having the power (financial independence) to say no to anyone pressuring them into getting pregnant. So now, the fertility rate will more accurately reflect a woman’s desire to get pregnant (at a certain age, at a certain income/wealth, given a certain set of possible partners, given a certain number of other children they already have, in a certain culture/time). The caveats in the parenthesis are almost unnecessary though, since we are seeing declines in birthrate across all incomes/wealth levels around the world. I think we will see very, very few women choosing to have more than 3 kids, or even 3 kids. I actually only know of 1 couple with 3 kids, everyone else has 0, 1, or 2, and I am in mid 30s.
  - Workaccount2 5y ago
    And why the pyramid scheme is going to collapse, unless we can continue to undercut our own workers with cheap/static cost immigrant labor.
    - refurb 5y ago
      Singapore has entered the chat with the lowest birth rate in developed nations despite massive leverage of cheap foreign labor.
      - Workaccount2 5y ago
        I mean, that makes sense. The immigrants are there to replace all the missing kids (as well as unskilled workers).
        refurb 5y ago
        The workers were there before the lack of kids.
  - nemo44x 5y ago
    What's interesting is birth rates say otherwise. The wealthier you are the lower your birthrate. People that can certainly afford to have many children are not where as very low income people are having many. I think it's something more than people feeling like they can't afford it. https://www.statista.com/statistics/241530/birth-rate-by-family-income-in-the-us/ https://www.statista.com/statistics/241530/birth-rate-by-fam...
    - lotsofpulp 5y ago
      Birth rates for lower incomes are plummeting too, so I think it is mostly lack of access to birth control like IUDs and pills, but also lack of women’s financial independence. https://www.statista.com/statistics/562541/birth-rate-by-poverty-status-in-the-us/ https://www.statista.com/statistics/562541/birth-rate-by-pov...
    - larksimian 5y ago
      Possible causality inversion? People have more money because they chose to not have kids, all else being equal.
giantg2 5y ago
"Also, with 75K, sounds like you would have ample amount to invest." Depends on location and if you have a family. $75k for a single person in an average area will provide a fair amount to invest. $75k for a family of four in most suburbs is going to be tight. In either case, the value available to invest is substantially less that high net worth individuals and will limit many investment opportunities (private equity, accredited investor status, and likely not making enough to take advantage of mega backdoor Roth).
burlesona 5y ago
With housing, cause and effect probably runs the other way. It’s seen as a good investment and soaks up monstrous amounts of capital, and for that machine to work and Calpers to pay pensions, housing prices must always go up.
rgrieselhuber 5y ago
Where in the US are middle class families getting away with 12% in taxes?
- nemo44x 5y ago
  Yeah at $75,000 your effective tax rate is around 17% in most states with state income tax and probably around 15% in states that do not. Of course this doesn't cover property tax, sales tax, etc. This is a handy calculator to calculate effective tax rates: https://smartasset.com/taxes/income-taxes https://smartasset.com/taxes/income-taxes
  - davidgay 5y ago
    That page is not exactly neutral though: it includes FICA (not completely unreasonable, though maybe uncommon) and includes FICA in Household Income (who knows their income with FICA included?).
- throwaway0a5e 5y ago
  Blue collar worker in non-income tax state that doesn't own property and has 2-3 kids is probably going to be around 12-15% overall. That's a pretty small subset of the country, 2-3 states or so. If you use the same book of tricks (i.e. ignore a myriad of local taxes and taxes collected on goods sold) that people around here typically use when trying to make certain high tax states look not too out of line with the national average then huge swaths of the south and midwest would be included.
  - jdhn 5y ago
    >If you use the same book of tricks (i.e. ignore a myriad of local taxes and taxes collected on goods sold) that people around here typically use when trying to make certain high tax states look not too out of line with the national average It really irks me when people do that. They also conveniently leave out items such as the average cost of electricity or gas prices.
  - jandrewrogers 5y ago
long_time_gone 5y ago
== So you can say that 30% of your consumption goes directly to land use, because cars need infrastructure and because we refuse high density housing and increased barrier for new housing supply.== Aren’t the most dense and transit friendly places also the most expensive (SF, NYC, etc.)?
- kiba 5y ago
  Density is part of the equation, but you need to keep increasing housing supply. Ditto for transportation investment. Trains are very cost effective method of transportation, but it doesn't mean squat if fare is high and demand is overwhelming.
lordnacho 5y ago
> Eh. Part of the reason is that living in the US is just plain expensive. This is backwards. The point of the article and the GP is to explain why it's expensive. Reason seems to be low rates -> assets inflate. Naturally those assets tend to be in the hands of older/wealthier people.
- kiba 5y ago
  Part of it. The inability to increase housing supply meant that the inflation of home value cannot be blunted.

by kiba 5y ago

lotsofpulp 5y ago

$75k household income with kids is a pittance in pretty much all areas of the US that have seen economic growth in the past few decades. Most people are simply skipping saving/investing sufficient funds for their old age/emergencies (a few million by 65, but I would say you need decent portion by 50 since likelihood of being unable to work starts going up a lot).

Miner49er 5y ago
This is part of the reason birth rates are down.
- lumost 5y ago
  per the article's central thesis. If Income inequality changes direction births will rise.
  - toomuchtodo 5y ago
    Unlikely. Educated, empowered women with access to family planning facilities have less children if they have any children at all. Birth rates in developed countries with more robust social safety nets and less inequality have total fertility rates below that of the US. https://ourworldindata.org/fertility-rate#what-explains-the-change-in-the-number-of-children-women-have https://ourworldindata.org/fertility-rate#what-explains-the-...
    - Supermancho 5y ago
      More likely than unlikely. > Educated, empowered women with access to family planning facilities have less children if they have any children at all This has nothing to do with wealth inequality. This does have to do with optimizing for wealth accumulation. Possibly something to do with Quality of Life, wherein children used to improve it comparatively, while now they are more of a risk proposition. For people in poverty, they are a (subsidized) source of income, which is unfortunate.
  - nemo44x 5y ago
    What's interesting though as that households with over $200,000 in income have the lowest birthrate of all. The highest birthrates are in households with very low income. In essence, for every dollar of household income you have, your birthrate decreases.
    - deleted 5y ago
      [deleted]
    - lotsofpulp 5y ago
      I suspect birthrate’s biggest factor is women’s financial independence and access to cheap and convenient birth control such as IUDs and birth control pills. Birthrates are plummeting even for low income households, and I would bet it has something to do with Affordable Care Act of 2010 greatly increasing access to birth control by making it free. From the women I have spoken to, it is almost a no brainer to get an IUD. https://www.statista.com/statistics/562541/birth-rate-by-poverty-status-in-the-us/ https://www.statista.com/statistics/562541/birth-rate-by-pov... I think societies are about the find out the real price of having babies now that they are not simply a byproduct of sex or women not having power.
      - nemo44x 5y ago
        > I think societies are about the find out the real price of having babies now that they are not simply a byproduct of sex or women not having power. Can you expand on that, I'm not sure I follow?
        deleted 5y ago
        [deleted]
        lotsofpulp 5y ago
        Up until a few decades ago, women did not have a nearly foolproof way of preventing pregnancy while still being able to have dec. As well as having the power (financial independence) to say no to anyone pressuring them into getting pregnant. So now, the fertility rate will more accurately reflect a woman’s desire to get pregnant (at a certain age, at a certain income/wealth, given a certain set of possible partners, given a certain number of other children they already have, in a certain culture/time). The caveats in the parenthesis are almost unnecessary though, since we are seeing declines in birthrate across all incomes/wealth levels around the world. I think we will see very, very few women choosing to have more than 3 kids, or even 3 kids. I actually only know of 1 couple with 3 kids, everyone else has 0, 1, or 2, and I am in mid 30s.
- Workaccount2 5y ago
  And why the pyramid scheme is going to collapse, unless we can continue to undercut our own workers with cheap/static cost immigrant labor.
  - refurb 5y ago
    Singapore has entered the chat with the lowest birth rate in developed nations despite massive leverage of cheap foreign labor.
    - Workaccount2 5y ago
      I mean, that makes sense. The immigrants are there to replace all the missing kids (as well as unskilled workers).
      - refurb 5y ago
        The workers were there before the lack of kids.
- nemo44x 5y ago
  What's interesting is birth rates say otherwise. The wealthier you are the lower your birthrate. People that can certainly afford to have many children are not where as very low income people are having many. I think it's something more than people feeling like they can't afford it. https://www.statista.com/statistics/241530/birth-rate-by-family-income-in-the-us/ https://www.statista.com/statistics/241530/birth-rate-by-fam...
  - lotsofpulp 5y ago
    Birth rates for lower incomes are plummeting too, so I think it is mostly lack of access to birth control like IUDs and pills, but also lack of women’s financial independence. https://www.statista.com/statistics/562541/birth-rate-by-poverty-status-in-the-us/ https://www.statista.com/statistics/562541/birth-rate-by-pov...
  - larksimian 5y ago
    Possible causality inversion? People have more money because they chose to not have kids, all else being equal.

giantg2 5y ago

"Also, with 75K, sounds like you would have ample amount to invest." Depends on location and if you have a family. $75k for a single person in an average area will provide a fair amount to invest. $75k for a family of four in most suburbs is going to be tight. In either case, the value available to invest is substantially less that high net worth individuals and will limit many investment opportunities (private equity, accredited investor status, and likely not making enough to take advantage of mega backdoor Roth).

burlesona 5y ago

With housing, cause and effect probably runs the other way. It’s seen as a good investment and soaks up monstrous amounts of capital, and for that machine to work and Calpers to pay pensions, housing prices must always go up.

rgrieselhuber 5y ago

Where in the US are middle class families getting away with 12% in taxes?

nemo44x 5y ago
Yeah at $75,000 your effective tax rate is around 17% in most states with state income tax and probably around 15% in states that do not. Of course this doesn't cover property tax, sales tax, etc. This is a handy calculator to calculate effective tax rates: https://smartasset.com/taxes/income-taxes https://smartasset.com/taxes/income-taxes
- davidgay 5y ago
  That page is not exactly neutral though: it includes FICA (not completely unreasonable, though maybe uncommon) and includes FICA in Household Income (who knows their income with FICA included?).
throwaway0a5e 5y ago
Blue collar worker in non-income tax state that doesn't own property and has 2-3 kids is probably going to be around 12-15% overall. That's a pretty small subset of the country, 2-3 states or so. If you use the same book of tricks (i.e. ignore a myriad of local taxes and taxes collected on goods sold) that people around here typically use when trying to make certain high tax states look not too out of line with the national average then huge swaths of the south and midwest would be included.
- jdhn 5y ago
  >If you use the same book of tricks (i.e. ignore a myriad of local taxes and taxes collected on goods sold) that people around here typically use when trying to make certain high tax states look not too out of line with the national average It really irks me when people do that. They also conveniently leave out items such as the average cost of electricity or gas prices.
- jandrewrogers 5y ago

long_time_gone 5y ago

== So you can say that 30% of your consumption goes directly to land use, because cars need infrastructure and because we refuse high density housing and increased barrier for new housing supply.== Aren’t the most dense and transit friendly places also the most expensive (SF, NYC, etc.)?

kiba 5y ago
Density is part of the equation, but you need to keep increasing housing supply. Ditto for transportation investment. Trains are very cost effective method of transportation, but it doesn't mean squat if fare is high and demand is overwhelming.

lordnacho 5y ago

> Eh. Part of the reason is that living in the US is just plain expensive. This is backwards. The point of the article and the GP is to explain why it's expensive. Reason seems to be low rates -> assets inflate. Naturally those assets tend to be in the hands of older/wealthier people.

kiba 5y ago
Part of it. The inability to increase housing supply meant that the inflation of home value cannot be blunted.