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Show HN: The bottom 50% of U.S. households are short after essentials (BLS data)

37 points by pwmglenn 19d ago

Founderarcstone 19d ago
I shape economy is real
thr0w 19d ago
This is vibe coded I guess? Toggling the "Happiness plateau line" does nothing.
- deleted 19d ago
  [deleted]
- gruez 19d ago
  >Made by Patrick Glenn by way of Claude and ChatGPT. Code under the MIT License; text and charts under CC BY 4.0.
  - addaon 19d ago
    > Code under the MIT License If the code is written by an LLM, then it can't be copyrighted, and a license can't be applied.
    - pbasista 19d ago
      Why do you believe that?
      - mminer237 19d ago
        It's a basic principle of copyright that only a natural person can be an author. The US Copyright Office has stated such: https://www.copyright.gov/ai/Copyright-and-Artificial-Intelligence-Part-2-Copyrightability-Report.pdf https://www.copyright.gov/ai/Copyright-and-Artificial-Intell... The Council of the EU has also stated such AFAIK.
      - addaon 19d ago
        The author is a tool, not a person. Tools cannot hold copyright. Copyright requires human authorship. Licenses depend on copyright as their essential mechanism.
        joquarky 19d ago
        A camera is a tool.
        pbasista 18d ago
        Exactly. The person holding the camera is the author. Even if they just point the camera and press the record button. In a similar way, I would not consider AI to be the "author" of the output they produce. Rather, the person prompting it should be considered the author, in my opinion.
- pwmglenn 19d ago
  fixed.
deleted 19d ago
[deleted]
maerF0x0 19d ago
An important element of the conversation is does (or how much does) it matter if any specific percentile group is getting disproportionally richer, given all (or a vast majority of) groups are? A group's lack of upward movement is not unjust if their groups actions do not justify a movement upward. Additionally we also have to recall that the quintile's populations are not necessarily static. to illustrate the idea: members of a quintile may join an adjacent quintile in the next time period. That is, bottom members may move up, top members may move down, mid members may move either way. To the extent their movements are justified by their actions/choices is to the extent we have a fair society. That is, if people are getting rich from sources not related to taking right actions, or people are taking good actions and getting poorer -- then we have an unjust society. This can both apply to Rich people abusing their power to get rich, but also with poor people abusing their democratic powers to unjustly take from others that which they have not earned.
- pwmglenn 19d ago
  See figure 2. The issue is that income/wealth compounds over time. If people in the bottom 40% have very little to invest, they have nothing that compounds. They dont even have an opportunity to risk anything, or make a better decision. The prices of the essentials are largely out of any individual's control. So any lack of ability to save / invest beyond spending on those is also out of their control. It's a vicious cycle, where excess wealth compounds, and income needed to exist dries up. Also the rich often see a larger return to their investments than poor people, so having wealth seems to aide in your ability to make more money. Exactly the sort of thing that you implied was unjust. And your other points about mobility I agree with and are addressed in notes on the site.
  - maerF0x0 19d ago
    What is the issue with wealth compounding? The bottom 40% have a very high value asset -- their agency and actions in the real world. (Working, starting a business (however small), self sufficiency et al.). The prices of true essentials are exceedingly small. Essential is something like sharing a room with someone, eating rice beans frozen veg mix (ie very inexpensively), wearing clothes from thrift stores, exercising outside and using a library card, medicaid. Everything beyond that is, technically, optional. Having wealth aiding the overall return doesn't negate my point. Using wealth to get an unjust return does. An example of a better return would be hiring a financial advisor that (somehow) creates better returns using smarter allocations. An example of an unjust return would be creating a monopoly, buying a politician, or extracting profits from unpriced externalities (pollution and bailouts to name a couple). (These do happen in the USA, and I'm all for ending them!) There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating). I do, however, like Scott Galloway's point that we need to find new ways to get the rich to spend their money, we need the poor to start 10000 businesses that gratify the rich and extract their money. Right now they're mostly accumulating it and bidding up investible assets (eg look athe P/E multiple of the S&P 500) .
the_doctah 19d ago
[flagged]
arjie 19d ago
Okay, this site is becoming unreadable slop.
- dgellow 19d ago
  Flag and move on
orange_joe 19d ago
i’m pretty skeptical of this analysis because it (by default) hides the effect of welfare and advocates for a wealth tax. Hiding the existing social safety net in order to advocate for taxes feels very propagandistic.
- bpodgursky 19d ago
  More than propagandistic, it calls into question whether they are actually trying to solve a problem at all. The US has considerable support for low income families. That's a good thing, if you don't want to even see whether it works, what's your goal?
- pwmglenn 19d ago
  good point. taxes and welfare should probably be on by default. ill change that. I just thought it was a better illustration, easier for the average person to comprehend without those. I didnt mean to do any advocating. Just provided the info because I wanted to see how it'd affect things.
thatfrenchguy 19d ago
I mean, Piketty showed this a decade ago in capital in the 21th century: the higher your income percentile and wealth percentile, the higher saving rate and the higher returns on your investment (which is negative for folks at the bottom of the distribution). Of course the other problem with the projection is that BLS average expenses aren’t super accurate to project what people are spending on at those income percentiles :)
- dgellow 19d ago
  I don’t think that many people have read Piketty given how dense his work is. I’m glad I share my native language with him which makes it a bit easier to understand some of his points, but his writing is really difficult to grasp IMHO
  - danny_codes 18d ago
    IMO he's extremely clear, just verbose. Though I read the English translation so maybe that's clearer than the French.
simianwords 19d ago
This is hiding the real truth. Rich people invest more money and its a good thing that they invest because the investment goes into productive areas which ends up back into consumption. The other way round is much much worse - imagine if rich people don't invest but rather just consume. It _takes_ away money from poor instead of building more wealth for everyone. So the overall point being made here is not that true
- goatlover 19d ago
  This is just trickle down economics, which has led to great wealth inequality while the middle and lower class wages have stagnated as inflation has gone up. What really helps is strong social safety nets and programs that help struggling people. The Nordic model leads to better societal outcomes.
- goatlover 19d ago
  This is just trickle down economics, which has led to great wealth inequality while the middle and lower class wages have stagnated as inflation has gone up and more people have to rent instead of owning their own porpoerty. What really helps is strong social safety nets and programs that help struggling people. The Nordic model leads to better societal outcomes.
- danny_codes 18d ago
  Well no, if rich people just consumed then the money would flow back into the economy via their consumption. This would generate economic growth. Whether that growth is greater or lesser than their capital investments would presumably be hard to measure. But to assume growth resultant from investments will always exceed growth from consumption requires evidence. Now an even better outcome would be that rich people didn't get rich in the first place. This would mean lower inequality, which in the data correlates with higher growth. This is demonstrated convincingly in Piketty's work. Overall, if youw ant to maximize growth for the poor (or really, growth for all of society at an equal pace, say), then you would want to dramatically raise taxes on rich people and eliminate the class entirely (IE, no more rich people). That would massively stimulate growth and of course skyrocket the wealth of currently poor people. It's a bit sad that the solution is so simple and has no downsides.
Arx14 19d ago
[flagged]
RickJWagner 19d ago
A visit to Disney World introduces some questions that bring doubts to this article. The park is overrun with young families, with a great many speaking English as a second language. They don’t seem to be top percenters, but they’ve got cash for tickets and food. ( The food seems to be priced about 5x what I’d imagine it to be at a real store. ) If they truly are poor, they’re surely living YOLO.
- maerF0x0 19d ago
  It's my observation over time that there has been a sharp increase in the what people would call the "bare minimum" life. I think it's a combination of credit, a loss of stoicism, and social media pushing a distortion of reality.
- pbasista 19d ago
  The Disney World visitors are a specific group of people. The vast majority of them do not go there every week, nor every month. So the behavior you observe in there is not representative of the routine behavior of those people. In other words, yes, they may pay 5x the price for a meal in an amusement park that they visit once a year. That does not mean they are willing to pay anything close to that for a meal every week or every day.
  - tstrimple 18d ago
    Most families I personally know who have gone it’s far from an annual trip. This will be their once in a lifetime or maybe once in a decade trip to Disney World. Literally saved up and planned for years for that “dream” family vacation. Like when I was poor living in a trailer park with my parents going out to eat at Olive Garden or Red Lobster was a special occasion. We got to go to the “nice” restaurant and splurge. I doubt anyone who frequents HN from the US considers those to be “nice” or “high quality” restaurants. To some on HN Disney World is or could be an annual trip. For most others it’s a major event. I’m sure a significant amount of debt is accrued in a many cases to make their vacation a reality.
- xboxnolifes 19d ago
  Evaluating the financial situation of a group of people by visiting Disney World is about as canonical example of sampling bias as you can get. The people who are at Disney World are the people who can afford to be at Disney World.
pbasista 19d ago
What does not help, in my opinion, is that the wealthy people often have enough resources to optimize their taxes to a point where they pay much lower rate than their fair share. While the others cannot afford to do that and pay the full rate. That in itself creates inequality. If a base rate that the society agrees on is e.g. n %, then, in my opinion, everyone should pay that n %. But in reality the poor people pay n % because they have no time to even think about optimizing it. As they often work around the clock to make ends meet. While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %. And then there are super rich, some of whom, such as Donald Trump, pay almost no taxes at all. This is, in my opinion, wrong and significantly contributes to wealth inequality. And therefore I believe that it needs fixing.
- gruez 19d ago
  >While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %. Source for this claim? All the claims I've seen involve treating unrealized gains as income, which is questionable methodology. For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?
  - pbasista 19d ago
    > Source for this claim? For example this article: https://www.propublica.org/article/billionaires-net-investment-income-tax https://www.propublica.org/article/billionaires-net-investme... The specific mechanism may vary by country. It often involves personal service companies through which the people are paid rather than being paid directly as employees. This usually means that they pay significantly less social insurance and health insurance than what they would have paid if they were regular employees. To clarify, I am using the term taxes in a very generic way where it covers not only the income taxes but also all kinds of fees collectable by the government. Including social insurance and health insurance.
  - 18d ago
mminer237 19d ago
Very hard to parse, not very helpful, and blatantly wrong. Cutting through the slop, the "bottom 50% of households" average income is said to be $22,907 without any expenses? The middle 20% making $60,298? That's...very obviously incorrect. The median household income is $83,730: https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N The average for the bottom 50% of households is $30,000-something. Would take too much effort to figure out the exact figure for a comment, but still way higher what this site says, and I still feel like this is more effort than went into this misinformation site. Its own linked source says that for 2022 the bottom quintile makes $26.2k before taxes and transfers and $44.8k after, while this site says $17.2k after. No wonder it's coming up with such wacky conclusions like saying a majority of America is going into debt while only buying the bare essentials and nothing else. If you use the correct income numbers, even the bottom quintile averages out to having $16k extra after essentials.
- pwmglenn 19d ago
  There is a per person and per household toggle. That is where the lower numbers are coming from. I'll try and make that more clear.
  - mminer237 19d ago
    Yes, I was initially confused by the title and the content talking about two different things. I've edited my post with the correct numbers now. Even the household numbers are wrong, and the taxes and benefits numbers are very wrong.
    - pwmglenn 19d ago
      [dead]
henrycoler 16d ago
[dead]

37 points by pwmglenn 19d ago

Founderarcstone 19d ago

I shape economy is real

thr0w 19d ago

This is vibe coded I guess? Toggling the "Happiness plateau line" does nothing.

deleted 19d ago
[deleted]
gruez 19d ago
>Made by Patrick Glenn by way of Claude and ChatGPT. Code under the MIT License; text and charts under CC BY 4.0.
- addaon 19d ago
  > Code under the MIT License If the code is written by an LLM, then it can't be copyrighted, and a license can't be applied.
  - pbasista 19d ago
    Why do you believe that?
    - mminer237 19d ago
      It's a basic principle of copyright that only a natural person can be an author. The US Copyright Office has stated such: https://www.copyright.gov/ai/Copyright-and-Artificial-Intelligence-Part-2-Copyrightability-Report.pdf https://www.copyright.gov/ai/Copyright-and-Artificial-Intell... The Council of the EU has also stated such AFAIK.
    - addaon 19d ago
      The author is a tool, not a person. Tools cannot hold copyright. Copyright requires human authorship. Licenses depend on copyright as their essential mechanism.
      - joquarky 19d ago
        A camera is a tool.
        pbasista 18d ago
        Exactly. The person holding the camera is the author. Even if they just point the camera and press the record button. In a similar way, I would not consider AI to be the "author" of the output they produce. Rather, the person prompting it should be considered the author, in my opinion.
pwmglenn 19d ago
fixed.

deleted 19d ago

[deleted]

maerF0x0 19d ago

An important element of the conversation is does (or how much does) it matter if any specific percentile group is getting disproportionally richer, given all (or a vast majority of) groups are? A group's lack of upward movement is not unjust if their groups actions do not justify a movement upward. Additionally we also have to recall that the quintile's populations are not necessarily static. to illustrate the idea: members of a quintile may join an adjacent quintile in the next time period. That is, bottom members may move up, top members may move down, mid members may move either way. To the extent their movements are justified by their actions/choices is to the extent we have a fair society. That is, if people are getting rich from sources not related to taking right actions, or people are taking good actions and getting poorer -- then we have an unjust society. This can both apply to Rich people abusing their power to get rich, but also with poor people abusing their democratic powers to unjustly take from others that which they have not earned.

pwmglenn 19d ago
See figure 2. The issue is that income/wealth compounds over time. If people in the bottom 40% have very little to invest, they have nothing that compounds. They dont even have an opportunity to risk anything, or make a better decision. The prices of the essentials are largely out of any individual's control. So any lack of ability to save / invest beyond spending on those is also out of their control. It's a vicious cycle, where excess wealth compounds, and income needed to exist dries up. Also the rich often see a larger return to their investments than poor people, so having wealth seems to aide in your ability to make more money. Exactly the sort of thing that you implied was unjust. And your other points about mobility I agree with and are addressed in notes on the site.
- maerF0x0 19d ago
  What is the issue with wealth compounding? The bottom 40% have a very high value asset -- their agency and actions in the real world. (Working, starting a business (however small), self sufficiency et al.). The prices of true essentials are exceedingly small. Essential is something like sharing a room with someone, eating rice beans frozen veg mix (ie very inexpensively), wearing clothes from thrift stores, exercising outside and using a library card, medicaid. Everything beyond that is, technically, optional. Having wealth aiding the overall return doesn't negate my point. Using wealth to get an unjust return does. An example of a better return would be hiring a financial advisor that (somehow) creates better returns using smarter allocations. An example of an unjust return would be creating a monopoly, buying a politician, or extracting profits from unpriced externalities (pollution and bailouts to name a couple). (These do happen in the USA, and I'm all for ending them!) There's nothing unjust about someone getting more returns on more invested, this will naturally lead to a widening wealth gap over time. It's an inherent property of existence that more invested yields more return yields yet more invested (accelerating). I do, however, like Scott Galloway's point that we need to find new ways to get the rich to spend their money, we need the poor to start 10000 businesses that gratify the rich and extract their money. Right now they're mostly accumulating it and bidding up investible assets (eg look athe P/E multiple of the S&P 500) .

the_doctah 19d ago

[flagged]

arjie 19d ago

Okay, this site is becoming unreadable slop.

dgellow 19d ago
Flag and move on

orange_joe 19d ago

i’m pretty skeptical of this analysis because it (by default) hides the effect of welfare and advocates for a wealth tax. Hiding the existing social safety net in order to advocate for taxes feels very propagandistic.

bpodgursky 19d ago
More than propagandistic, it calls into question whether they are actually trying to solve a problem at all. The US has considerable support for low income families. That's a good thing, if you don't want to even see whether it works, what's your goal?
pwmglenn 19d ago
good point. taxes and welfare should probably be on by default. ill change that. I just thought it was a better illustration, easier for the average person to comprehend without those. I didnt mean to do any advocating. Just provided the info because I wanted to see how it'd affect things.

thatfrenchguy 19d ago

I mean, Piketty showed this a decade ago in capital in the 21th century: the higher your income percentile and wealth percentile, the higher saving rate and the higher returns on your investment (which is negative for folks at the bottom of the distribution). Of course the other problem with the projection is that BLS average expenses aren’t super accurate to project what people are spending on at those income percentiles :)

dgellow 19d ago
I don’t think that many people have read Piketty given how dense his work is. I’m glad I share my native language with him which makes it a bit easier to understand some of his points, but his writing is really difficult to grasp IMHO
- danny_codes 18d ago
  IMO he's extremely clear, just verbose. Though I read the English translation so maybe that's clearer than the French.

simianwords 19d ago

This is hiding the real truth. Rich people invest more money and its a good thing that they invest because the investment goes into productive areas which ends up back into consumption. The other way round is much much worse - imagine if rich people don't invest but rather just consume. It _takes_ away money from poor instead of building more wealth for everyone. So the overall point being made here is not that true

goatlover 19d ago
This is just trickle down economics, which has led to great wealth inequality while the middle and lower class wages have stagnated as inflation has gone up. What really helps is strong social safety nets and programs that help struggling people. The Nordic model leads to better societal outcomes.
goatlover 19d ago
This is just trickle down economics, which has led to great wealth inequality while the middle and lower class wages have stagnated as inflation has gone up and more people have to rent instead of owning their own porpoerty. What really helps is strong social safety nets and programs that help struggling people. The Nordic model leads to better societal outcomes.
danny_codes 18d ago
Well no, if rich people just consumed then the money would flow back into the economy via their consumption. This would generate economic growth. Whether that growth is greater or lesser than their capital investments would presumably be hard to measure. But to assume growth resultant from investments will always exceed growth from consumption requires evidence. Now an even better outcome would be that rich people didn't get rich in the first place. This would mean lower inequality, which in the data correlates with higher growth. This is demonstrated convincingly in Piketty's work. Overall, if youw ant to maximize growth for the poor (or really, growth for all of society at an equal pace, say), then you would want to dramatically raise taxes on rich people and eliminate the class entirely (IE, no more rich people). That would massively stimulate growth and of course skyrocket the wealth of currently poor people. It's a bit sad that the solution is so simple and has no downsides.

Arx14 19d ago

[flagged]

RickJWagner 19d ago

A visit to Disney World introduces some questions that bring doubts to this article. The park is overrun with young families, with a great many speaking English as a second language. They don’t seem to be top percenters, but they’ve got cash for tickets and food. ( The food seems to be priced about 5x what I’d imagine it to be at a real store. ) If they truly are poor, they’re surely living YOLO.

maerF0x0 19d ago
It's my observation over time that there has been a sharp increase in the what people would call the "bare minimum" life. I think it's a combination of credit, a loss of stoicism, and social media pushing a distortion of reality.
pbasista 19d ago
The Disney World visitors are a specific group of people. The vast majority of them do not go there every week, nor every month. So the behavior you observe in there is not representative of the routine behavior of those people. In other words, yes, they may pay 5x the price for a meal in an amusement park that they visit once a year. That does not mean they are willing to pay anything close to that for a meal every week or every day.
- tstrimple 18d ago
  Most families I personally know who have gone it’s far from an annual trip. This will be their once in a lifetime or maybe once in a decade trip to Disney World. Literally saved up and planned for years for that “dream” family vacation. Like when I was poor living in a trailer park with my parents going out to eat at Olive Garden or Red Lobster was a special occasion. We got to go to the “nice” restaurant and splurge. I doubt anyone who frequents HN from the US considers those to be “nice” or “high quality” restaurants. To some on HN Disney World is or could be an annual trip. For most others it’s a major event. I’m sure a significant amount of debt is accrued in a many cases to make their vacation a reality.
xboxnolifes 19d ago
Evaluating the financial situation of a group of people by visiting Disney World is about as canonical example of sampling bias as you can get. The people who are at Disney World are the people who can afford to be at Disney World.

pbasista 19d ago

What does not help, in my opinion, is that the wealthy people often have enough resources to optimize their taxes to a point where they pay much lower rate than their fair share. While the others cannot afford to do that and pay the full rate. That in itself creates inequality. If a base rate that the society agrees on is e.g. n %, then, in my opinion, everyone should pay that n %. But in reality the poor people pay n % because they have no time to even think about optimizing it. As they often work around the clock to make ends meet. While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %. And then there are super rich, some of whom, such as Donald Trump, pay almost no taxes at all. This is, in my opinion, wrong and significantly contributes to wealth inequality. And therefore I believe that it needs fixing.

gruez 19d ago
>While the richer people hire professionals to take care of their taxes and optimize them to the extent that they pay significantly less than n %. Source for this claim? All the claims I've seen involve treating unrealized gains as income, which is questionable methodology. For instance, if you founded a startup that then raised a few million dollars, at a valuation that values your shares at $1M, should your income be treated as $1M for that year, even if it didn't even hit your bank account and can't even spend it?
- pbasista 19d ago
  > Source for this claim? For example this article: https://www.propublica.org/article/billionaires-net-investment-income-tax https://www.propublica.org/article/billionaires-net-investme... The specific mechanism may vary by country. It often involves personal service companies through which the people are paid rather than being paid directly as employees. This usually means that they pay significantly less social insurance and health insurance than what they would have paid if they were regular employees. To clarify, I am using the term taxes in a very generic way where it covers not only the income taxes but also all kinds of fees collectable by the government. Including social insurance and health insurance.
- 18d ago

mminer237 19d ago

Very hard to parse, not very helpful, and blatantly wrong. Cutting through the slop, the "bottom 50% of households" average income is said to be $22,907 without any expenses? The middle 20% making $60,298? That's...very obviously incorrect. The median household income is $83,730: https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N The average for the bottom 50% of households is $30,000-something. Would take too much effort to figure out the exact figure for a comment, but still way higher what this site says, and I still feel like this is more effort than went into this misinformation site. Its own linked source says that for 2022 the bottom quintile makes $26.2k before taxes and transfers and $44.8k after, while this site says $17.2k after. No wonder it's coming up with such wacky conclusions like saying a majority of America is going into debt while only buying the bare essentials and nothing else. If you use the correct income numbers, even the bottom quintile averages out to having $16k extra after essentials.

pwmglenn 19d ago
There is a per person and per household toggle. That is where the lower numbers are coming from. I'll try and make that more clear.
- mminer237 19d ago
  Yes, I was initially confused by the title and the content talking about two different things. I've edited my post with the correct numbers now. Even the household numbers are wrong, and the taxes and benefits numbers are very wrong.
  - pwmglenn 19d ago
    [dead]

henrycoler 16d ago

[dead]