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Ask HN: What is really wrong with the US economy, really?

• Mz 13y ago
  1) Peak Oil 2) Our so called "health care" system is extremely fubarred. There's probably more, but those strike me as the big two. Edit: To elaborate a bit on point 1, Peak Oil is not the end of oil. It is the end of cheap oil. The current U.S. economy and (expected) lifestyle was developed in the era of cheap oil. That era is ending, which is likely part of what is fueling the depression. Our current infrastructure, habits, etc are simply not sustainable with the cost of oil going up and not coming back down. (At this point, if we discovered that Antarctica or the moon were essentially 99% oil with a thin top layer of dust/snow/whatever, that would not solve this because endless expensive oil does not solve the problem here.)
  • deleted 13y ago
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  • maxerickson 13y ago
    Energy spending as percentage of income has gone down. Also, the inflation adjusted price of gasoline hasn't really changed in a brutal manner: http://www.randomuseless.info/gasprice/gasprice.html http://www.randomuseless.info/gasprice/gasprice.html It's twice as high as the 'typical' trend, but vehicles make better enough mileage to eat most of that. Edit: and if you drill into it, the shipping cost of the food at the grocery store is probably less than the gas cost of driving to the store. So shipping hits prices, but it hits them when a $0.05 shipping cost for a package of whatever goes to $0.10.
    • Mz 13y ago
      Please support your first statement. Because the link you give does not fit with your assertion. It shows price compared to 1979, once of the worst years in the U.S. for the price of gas. The chart shows a steady climb in recent years to a point where it now matches or exceeds the inflation adjusted price of 1979 -- again, one of the worst years for gas prices in the U.S. http://en.wikipedia.org/wiki/1979_energy_crisis http://en.wikipedia.org/wiki/1979_energy_crisis Further, the theory of Peak Oil is rooted in actual history. After the Alaska oil pipline came online, oil prices steadily went down for a time. It came online in 1977 and the reduction was in the 1980's: http://www.api.org/oil-and-natural-gas-overview/exploration-and-production/alaska/northern-alaska-petroleum-development http://www.api.org/oil-and-natural-gas-overview/exploration-... So please explain to me how a chart showing that current prices are, in real terms, as bad as or worse than 1979 prices supports your first statement. Thank you.
      • maxerickson 13y ago
        I was sort of sloppily making two points. Gas prices are energy prices that 'we really feel', and they have only gone up some; qualitatively, gas is still cheap enough that (many) people drive around without thinking about it much. This shows residential energy as a percentage going down: http://www.eia.gov/todayinenergy/detail.cfm?id=10891 http://www.eia.gov/todayinenergy/detail.cfm?id=10891 This shows gasoline roughly matching the other link: http://www.eia.gov/todayinenergy/detail.cfm?id=9831 http://www.eia.gov/todayinenergy/detail.cfm?id=9831 But to the point, a 1 or 2% increase in gasoline spending might stink, but it shouldn't be smashing the economy.
• Beached 13y ago
  I wouldn't necessarily say this is related to the economy (The economy has other issues), but more related to our culture. Our entire culture is focused around consuming, buying the next thing, having the nicest stuff, etc. Heck our high schools even teach us how to properly consume, and how to acquire things we cannot afford. However in life you will have to pass up some things you want in order to maintain living within your means, as a result you are going against the constant consuming behavior that our culture has taught us, and feel a failure for not buying all that stuff. I couldn't speak to the social pressures of the past (I didn't live through them). My personal experience is that when I was able to ignore the consuming pressure society gives, the amount of stress and pressure plummet and I have been able to enjoy life much to a higher standard. Those middle managers may be in that sweet spot of enough to be comfortable and feel successful, but not so successful they feel the need to compete with the consuming elite of execs and millionaires. Don't be fooled though, there are plenty of people in other "class brackets" that are able to shed the stress and pressure of the US culture.
  • eqdw 13y ago
    I'm a Canadian expat in San Francisco, and one of my favourite cultural-tourist hobbies is comparing my public school experience with my (American) girlfriend's > Heck our high schools even teach us how to properly consume, and how to acquire things we cannot afford. I'm curious as to what you mean by this. Could you elaborate, for someone who never went through your highschool system? Thanks!
• jakeogh 13y ago
  Fundamentally, it's a rigged system. http://www.youtube.com/embed/mII9NZ8MMVM http://www.youtube.com/embed/mII9NZ8MMVM
• mark_l_watson 13y ago
  I would say that the USA economy does not seem so bad right now because of Quantitative easing: a few trillion $$ in the last several years of new money created out of nothing. This has maneuvered housing and stock prices up, fueling a false sense of optimism and more consumer spending. Long term, we have huge problems in my opinion. Our profligate military spending is going to catch up with us. If we are able to redirect our offshore military spending soon, things might be OK, but I am not hopeful. Edit: I forgot to give my advice: don't get caught up in consumerism (stop watching TV commercials, don't get a new car every time your brother in law does, etc.). Try to save some of your after tax income. Invest time (and money if needed) in continuing education over your entire life.
  • juliangoldsmith 13y ago
    What about spending on healthcare and pensions? We spend more on each of those than on our military.
    • benched 13y ago
      Interesting to think a factor could be my grandparents still living their piece of the American Dream.
    • mark_l_watson 13y ago
      Good point Julian. Spending on healthcare, repairing infrastructure, cost of food stamps, etc. pores money back into our general economy, something that spending money on foreign bases, etc. does not. One thing: it is very important to wind down the size of our military very slowly because we have made a commitment to supply jobs long term in return for being in the military and the sacrifices that entails. My solution is to bring most service people stationed overseas home as soon as we can manage that - better to spend the money inside the USA while maintaining our employment commitments to people in our military services.
• mathattack 13y ago
  I'll start by saying that I feel your pain. I've had lots of discussions with friends where we expressed the belief that we all thought we'd be financially comfortable by now. Almost none of us are. Some thoughts on both sides of this: 1 - My grandparents lost it all in the Great Depression. My parents never had enough money to take overseas vacation once the kids were born. They were never comfortable. This isn't unique to our generation. 2 - We have a lot of material gains that aren't factored into the equation. (Free internet, etc) But this is forcing us to compare against others a lot more. We only see the people succeeding, and don't count the failures. 3 - Once you discount the effects of obesity, we are a much healthier generation than our parents and grandparents. Think of all the major diseases (polio, flu) that used to be fatal. 4 - For better or worse, there is a "Winner takes all" mentality in the current environment. Globalization plus Technology means the best get paid disproportionally more than in prior generations. Upper Middle Class is getting squeezed. The "winners" are now earning a lot more, and are a lot more visible. 5 - In today's environment, losing a job costs A TON and is incredibly destabilizing. I don't know what advice to give, other than don't get sucked in to the consumerism, or feeling forced to keep up with everyone else.
• gavanwoolery 13y ago
  Well, things have changed since our grandparent's generation. A college degree used to be a guaranteed ticket to a decent job, and even many blue collar jobs were much better paying and less abusive. Now being 30 years old and living with your parents is not that odd. Now, debt, unemployment and inflation are soaring (if you want to see how bad it really is, visit cities like Detroit or the non-wealthy areas of Chicago). There is a growing wealth divide. I have nothing against "1 percenters" but I do believe the gap is becoming dangerous. 95 percent of recovered funds from this recent "improvement" in the economy (since the last crash) have gone to the wealthiest 1 percent. Our government's budget is increasing in size, but they are not spending money any more wisely. Certain contractors make a killing (particularly in the military sector), and its kind of a false economy based not on merit but who puts money back into their politician's pocket (in the "real" world, the healthcare.gov site would have been built for a fraction of the cost and its failure would have been a huge blow to the company that created it). Part of this is people failing to adapt to the changing world or feeling too entitled and expecting their corrupt/indifferent government to fix every problem. Part of it is that automation and oversea workers are claiming many jobs (but these are crappy jobs you wouldn't want anyway). Automation is even going into territories you might not think of. 100 years ago the US population was almost half farmers (IIRC), and now it is less than 2 percent. Basically, you are not delusional. Things are getting harder, and worse. Competition is getting fierce as everyone is increasingly competing to justify their worth to employers. The economy is definitely in a bubble because the stock indices does not reflect the reality of debt, unemployment, and our stale economy right now. I have no good idea of how these problems can be solved. I am no Luddite, but I think that perhaps taking a step backwards in time could be an interesting experiment - create more towns that are self-sufficient, grow their own crops, build their own houses, etc. It seems like much of the wealth is getting boiled down into the hands of fewer and fewer big companies.
  • humanrebar 13y ago
    Defense is a decent-sized portion of government spending, but entitlement spending (especially when you consider state budgets) is much larger. If you would like to see the government spend money more wisely, focusing on making entitlement costs tractable should be the top priority. That's not to say that government contracting isn't grossly dysfunctional.
• BlackDeath3 13y ago
  If you don't mind my asking, how far would you say that $110,000 has gotten you in Seattle?
  • benched 13y ago
    I'd say effectively nowhere. My lifestyle is literally identical to what it was 15 years ago when I was just starting out. It honestly feels like the goalposts keep moving. I am doing better than my parents, who were poor. I am doing worse than my grandparents, who had 8th grade educations.
    • BlackDeath3 13y ago
      How is that? Again, I don't really mean to press you too far with the questions, I'm just a young guy who hears $110,000 and thinks "gee, that's a lot of money".
      • giantrobothead 13y ago
        Hey, I'm an old(er) guy and I think 110K is a lot of money.
        • kevingadd 13y ago
          It totally is a lot of money. Unfortunately, everything seems to cost a lot of money these days... Ten years ago I wouldn't have believed you if you told me I'd be spending nearly $10k a year just to get adequate health care, or over $20k a year just to have a reasonable place to live. I was thrilled when my first salaried job paid $35k/year, and couldn't understand why that barely covered my expenses! $35000 is a lot of money! $110000 is a truckload! (Thankfully, I'm in the OP's position this year, and I earned more than I spent on essential expenses... not so much last year, though.)
          • giantrobothead 13y ago
            For the past few years, I've managed to earn more than I've spent, and have put a good portion of that money in savings. If I should lose my job, I've got a significant cushion to survive on. 110K would make for a bigger cushion, though.
• tedsanders 13y ago
  I'm not sure if I agree that your grandparents were under less pressure in their jobs. Overall, I think life is far easier today than it was 50 years ago, at least for most workers. It sounds like you're doing better than 99% of people. Six figure income, no huge expenses. I think the question isn't 'what's the problem with the economy' - really the question should be 'what's the problem with our expectations?' I think for all of human history the Joneses have looked more financially comfortable and happy than they really are. Perhaps the comfortable people you envy are not as comfortable as they appear. Or maybe comfort is more a state of mind than a state of finance. Those are my two cents, at least. I'd be happy to hear more about your situation and where you're coming from.
  • kevingadd 13y ago
    He made it clear he's not complaining about his situation and is asking about others', in general - or more precisely, 'My situation is fairly okay, but why isn't it great on my income? Why do other people have it so much worse when it seems like they should be okay?'
    • tedsanders 13y ago
      Sorry, I didn't mean to accuse him of complaining. It's a perfectly fair question - if $100k income is not enough to cause happiness, then what is? I suspect that even $1 million might not be enough to cause happiness. Or even $10 million. I remember reading that income stops being a predictor of happiness after around $75k per year. Here is the first source I googled: http://www.inc.com/news/articles/2010/09/study-says-$75,000-can-buy-happiness.html http://www.inc.com/news/articles/2010/09/study-says-$75,000-... Even though it seems like money reduces hardship and should increase happiness, I think as long as you aren't broke, relationships matter more than bank accounts. What do you think?
      • kevingadd 13y ago
        I agree completely. To me, the most concerning question is whether eventually, his $110k income won't even be enough for the essentials - housing, health care, taxes, food, etc. Costs keep going up; will they stop? Will his income go up automatically? Where's the money going to come from? Most of the profits and growth in this economy seem to be going to people who are already rich, while jobs keep evaporating. Things sound like they're OK for the OP right now, and he doesn't sound incredibly troubled, just perturbed. And that's probably the right point of view; no use freaking out. But I genuinely worry for a big chunk of the US - people my age and younger - because I don't know if they'll be able to afford anything, or get jobs, 10 years from now. Once you're able to pay your expenses and put enough money away to have piece of mind, I think the intangible things matter most. If all my friends have to move into the wilderness to afford their rent, though, I'm gonna be pretty lonely :)
• rainer89 13y ago
  Watch "Kaiser Report" and u will find it. SPOILER "quantitative easing"
  • deleted 13y ago
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• greggman 13y ago
  Random ramble to follow I know how you feel but at the same time my sister and brother in law make 2/3rd what you make, own a house, a timeshare, raises a kid, home schools, volunteers, her and my nephew are docents at the museum of the pacific, she teaches MS office and other home maker type computer classes (as in how to make a newsletter on your computer), She's in several clubs (the moms club, a bowling club, a bunko club, etc.) she's got a yearly pass to disneyland and goes at least twice a month, used to be at least once a week. What she doesn't have: She lives near the Pomona fairgrounds in LA not in Seattle. She drives a 20-30 year old car. She's got old furniture and old TVs, CRT not LCD, she's enjoying her life way more than pretty much anyone I know. None of this is meant to take away your valid feeling that even making low 6 figures you feel like you're struggling. I'm the same way. Especially when I lived in SF I thought to myself "I'm making good money, why does it seem like I can't afford to live here?" Move to Tokyo, Singapore, HK, or NYC if you really want to feel like a financial failure. In those cities you'll see large portions of them cater to people making 7 figures.
  • kevingadd 13y ago
    'Move somewhere else' is totally missing the point. If everyone moves to those particular low-rent places, that increases the demand there, and rents will go up until housing supply increases to meet demand (or, like SF, it never increases and prices just keep going up). This is ignoring the problem of finding work in low-rent areas (though telecommuting at least makes that less difficult.) To me, 'the problem is where you live' is utterly condescending. Would it be reasonable to tell a minimum wage worker, who works 80+ hours a week, that his problem is where he lives and he should just move? How is that person supposed to afford to move when they can barely pay rent every month? Do you really think THAT is the problem, that some people happen to live/work in a certain location, and it would be better if they just moved to where all the other low-income families live? For a concrete example: I used to work in the Seattle area for a few years. I 'solved' the rent costs problem by living way to the east, in the Issaquah mountains. Unfortunately this meant a 30-60 minute car commute each way, along with a big increase in car maintenance/fuel expenses. And because I was in the mountains, every winter the occasional ice storm would knock out power/heat for 1-2 weeks, or the mountain roads would be so iced over that I couldn't get to work. Days I'm not working are days I'm not getting paid; if I'm lucky I don't get fired. Yeah, solves everything, doesn't it?
• MisterBastahrd 13y ago
  What'd your great grandparents do for entertainment? Probably the radio, some TV, read some books, play cards. Speaking of TV, how'd they get it? Most likely over the air. Phone? Yeah, they had a land line, but they weren't dropping $100+ for a cell phone. Internet? Of course not. House? Probably about 1200 square feet or so, and they likely had more than 3 kids to occupy it. The rest of the world? A recovering war-torn mess that needed to rebuild itself before it could even start to compete with the US economically. What about the car? They probably had one or two, but you could fix them without needing specialized gear. What about the food they ate? It was likely whole foods, which would lead to lower rates of heart disease and obesity. And if they lived in a rural area or subdivision, they likely grew some of their own or bought it from local farmers. My grandparents never borrowed a dime from a bank. They owned a house, two vehicles, and raised 5 children. Their vacation was a week every summer at a rental cabin about 3 hours away. They didn't get cable until the mid 90s and never got the internet or a cell phone. How much money could you save if you never owed anyone interest and spent 20 dollars a month for communication?
  • kevingadd 13y ago
    I think if you list cell phones and the internet before you list housing, your sense of scale is completely off. Even if somebody's spending $200/mo on telephone and internet connectivity, that still pales in comparison to the cost of rent in pretty much any part of the country. A fairly small studio apartment in the area where I live is approaching $2000/mo, minimum - to pay less than that I'd probably have to move 30+ miles away, which then increases my commuting costs dramatically and might force me to drive instead of take public transit. (And no, I'm not living in some posh downtown area with high demand, I'm living next to the low-income workers and big families, in an apartment complex built in the 70s or 80s.) Then let's look at health and dental costs, which combined together probably are double/triple what you pay combined for reasonable cell phone/internet service. (Personally, I pay $30/mo for cell phone voice and data. Internet is expensive because yay, monopolies - very little choice there.) Going without phone/internet connectivity in this modern society is utterly ridiculous as a working professional; you simply can't get away with it unless you decide you're gonna cut yourself off from the world and live in a cabin somewhere. To answer your specific question, let's say he spends $200/mo on internet+cell phone. If he cuts those out entirely, that's $2400/yr, or barely a month's rent in many localities. Don't be ridiculous. Stop focusing on tiny things when the real problems are right in front of you: Housing costs, health costs, transit costs...
• jberryman 13y ago
  > I feel under a lot of pressure all the time, and yet it seems I am not quite 'making it' financially or materially. What is that supposed to mean?
• grecy 13y ago
  As Beached says [1], this is all about your attitude, and how you're choosing to live in the world. Remember, you live in the consumption capital of the world. More than ever, you're being bombarded from all sides at all times with ingenious advertising designed for the sole purpose of separating you from your money. Even your friends, family and colleagues are constantly encouraging you to spend more and more, even when they don't know they're doing it. You've been lied to your entire life - you've been told that spending ever-increasing amounts of money will make you happier and "better off" and it's plainly not true. Why do companies advertise stuff? Solely to further their own agenda. It's not about you. I just finished reading "Your Money or Your Life" [2] - an excellent book that walks through the steps needed to break out of the cycle you're stuck in. It's a little self-helpy, but the message is great, and if you follow the steps they outline, you'll absolutely be completely financially independent and won't need to go to work if you don't want to. Of course, you can if you do want to. The tldr; is very simple - stop consuming so much stuff you don't need that isn't making you any happier, at which point you'll find you earn more money than you need, so you can work less and focus more on the things you want to, then you'll spend even less, etc. etc. etc. The amount of money you spend is directly related to the amount of time you must go to work. Spending is not what you want to be doing. Find the things that make you happy, and focus on those. Spending money does not equal happiness, so stop playing that game. From my personal perspective, I highly, highly, highly recommend taking a couple of years off to figure out what actually makes you tick. I spent two years driving Alaska->Argentina because I wanted to, and another friend that is unemployed right now has never been happier and more in touch with herself in her entire life. The first couple of months feel strange and awkward and lazy, etc. After a while, you become so busy with what makes you happy you can't imagine how you ever found time to go to work. Once you have that perspective, it's doubtful you'll feel happy consuming, because every time you do that, you have to work more. [1] https://news.ycombinator.com/item?id=7315456 https://news.ycombinator.com/item?id=7315456 [2]http://www.amazon.ca/Your-Money-Life-Transforming-Relationship/dp/1591797306 http://www.amazon.ca/Your-Money-Life-Transforming-Relationsh... EDIT: Just for fun, do an audit on how much you spend month-to-month. Include every single cent that you pay out. Cable, Internet, Cell phone, gas, car insurance, food, groceries, snacks, clothes, shoes, transport, entertainment, vacations, personal grooming, lifestyle things, etc. etc. etc. I guarantee you'll be shocked at how much money you're spending on crap you don't need, and didn't consciously know you were spending it on. I make a fraction of what you make, and I'm saving more than I ever have in my life, simply by being extremely conscious of all the crap I don't need to spend money on.
• apeace 13y ago
  I agree that many things are probably wrong with our economy that are affecting you. But what you said doesn't add up to me. Maybe there are many things chipping away at your wealth which you haven't been accounting for? If $110k is your take-home (after taxes), you are single, and your expenses are so low, it seems you could be saving quite a lot. I know many people with similar income and expenses, and they save tens of thousands per year. This allows them to spread savings across IRAs, mutual funds, and regular savings accounts to build wealth. Perhaps like many who make a ~100k range salary, you pay upwards of 30% of it to taxes? This is a huge chunk. You drive; are you sure you haven't spent more on gas than you have on dental? You mentioned dental as your third biggest expense in the last two years. This seems unusual. Gas, food, and other common expenses often make up for a large portion of total expenses. If your medical and dental expenses are that high, that's unfortunate. But you say you have some decent savings, so good for you! That shows you have the financial strength to make it through tough medical situations :) If you have more savings than most people you know, maybe you shouldn't be feeling so pressured. Most people aren't "making it" because they have no savings--but you are! Having debt is a common reason for feeling financially stressed. If you have debt, see a debt counselor or financial advisor and create a plan to get rid of it, fast. They may advise you to use a chunk of savings for eliminating debt. You say you eat out "some of the time". Most people I know say that, and they mean "at least one meal per day". This is not good for your finances! I personally increased my monthly savings by 50% once I limited my takeout to once per week, cooking the rest of my meals myself. Lots of times it helps to have a financial advisor. If you do this, spend plenty of time finding a good one who you're comfortable with, who listens to your concerns, etc. Bottom line: track down where that $110k is disappearing to! You should feel comfortable at that salary. Especially over time, as you save and build wealth! Hope this helps, or at least gives you some ideas.
  • eqdw 13y ago
    > You say you eat out "some of the time". Most people I know say that, and they mean "at least one meal per day". This is not good for your finances! I personally increased my monthly savings by 50% once I limited my takeout to once per week, cooking the rest of my meals myself. I feel like I eat out less often than most other people I know. I budget for restaurants and stay within my budget. I buy lunch from a cafe or restaurant daily during the week, and eat out for dinner maybe once a week. I thought I was doing pretty well until I got my credit card statement summary for 2013. Almost $7000 on restaurants / cafes / etc. My fifth biggest category of spending (after Rent, Aggressive Car Payments ($1000/mo), Savings, and Healthcare, in order).
• jseliger 13y ago
  My question is, what is the problem, really Take a look at Matt Yglesias's The Rent Is Too Damn High (http://www.amazon.com/dp/B0078XGJXO); http://www.amazon.com/dp/B0078XGJXO); many "fun" municipalities like Seattle have restricted development to the point that housing is extremely expensive. If you move from Seattle to, say, Houston or Dallas, you'll probably see your effective rent shrink by 35 – 50%. Secondly: see Tyler Cowen's books The Great Stagnation and Average is Over. Those books are too sophisticated and deep (though they're quite readable) to summarize here, but the shortish version is that Western economies are undergoing a lot of profound shifts driven by a combination of technology and Baumol's cost disease. in the last couple years have been rent, medical, and dental in that order Alex Tabarrok's Launching the Innovation Renaissance is also good: regarding medicine and dentistry, part of the issue is Baumol's Cost Disease and part of it is the powerful lobbies that restrict entry into those fields through licensing regimes and other means. Finally, a general note: be wary of any answers in this thread that don't cite any sources and ideally those sources should be books. The issue is too complex for simple answers, and the simple answers that one tends to hear also tend to be wrong or missing a lot of important information.
  • eldavido 13y ago
    I agree, the issues are quite complex. I cited a fed paper in my reply below -- thanks for taking the discussion up a notch. Something I'd like to understand better is why capital (and not labor) is capturing a higher share of firms' overall income than in past years. As I noted in my reply, the decline of savings means this is a double-whammy for people, as they get hit on the front end with lower upfront cash payments, and on the back as well, when they don't share in any upside of corporate profits, due to no share ownership.
    • ArkyBeagle 13y ago
      I can't footnote this ( although look a lot to both Tyler Cowen and Arnold Kling ) , but labor is relatively less mobile than capital. Capital has become more mobile. Actual capital - machinery - has taken it as hard as has labor. This leads many to think that the increases may be closer to rents than profits. It's also harder to say what the effect of online is; for people under ... what, 25-30?, "likes" on the Internet act as a form of currency that may verge on real currency at the edges.
• eldavido 13y ago
  Three major issues I see (1) People aren't saving enough [1]. For the past 50 years, Americans have come to expect their employers and/or government will finance their retirement, healthcare, unemployment, and other major dislocations, so personal savings became something one did with windfalls, but not on a regular, life-or-death basis. (My grandparents are fond of tellling me that in their childhood, people were "poor as church mice" before Social Security) But these commitments are being tested as people are living longer, massive healthcare inflation is occurring, and the birth rate is falling, causing the ratio of wage-generating members of the US economy to constitute a shrinking portion of the population relative to retirees. This also creates a problem because financial gains drive pensions, and absent capital accumulation, "normal" people (pensioners) can't participate in the upside of higher corporate profits and/or interest rates. (2) Wages are stagnating. I don't know why this is happening, but suspect it's due in large part to globalization, in particular, better communication technologies being used to substitute cheaper labor for what was previously only available locally. The decline of labor unions might be a good thing for owners, but it's unquestionably bad for wage-earners. Also, more and more jobs are getting automated as technology gets better and better, which reduces the demand for unskilled labor. (3) Major across-the-board inflation. Healthcare, fuel prices (which directly affect the cost of driving, flying, shipping, food production, pretty much everything), education costs, higher tax rates (Cook county, IL, where I grew up, has over 10% sales tax, a 5% state income tax, plus federal taxes -- not inflation as such, but it does have a big effect on depleting purchasing power), food -- EVERYTHING is costing more. "Six figure" incomes just aren't what they used to be. I think the combination of no pensions + higher healthcare costs + more taxes (largely to fund government-sponsored retirement funds, not provide broad-based services like education/public works) + inflation is making 120k feel like 80k or less, it's just not that visible because in nominal terms, wages aren't going down. [1] http://research.stlouisfed.org/publications/review/07/11/Guidolin.pdf http://research.stlouisfed.org/publications/review/07/11/Gui...
• mikeash 13y ago
  Where is all your money going? Living in a studio apartment making $110k, you should be able to save thousands of dollars a month. Sounds like a budgeting problem.
  • Mz 13y ago
    He says: "I live in a studio apartment near Seattle. ... My biggest expenses in the last couple years have been rent, medical, and dental in that order." Medical and dental can be really pricy. So can big city rents. Last I checked, an SRO in San Francisco was $1000/mo or more. Most areas, higher average income correlates quite closely to higher local living expenses. So I wouldn't be so quick to judge.
    • bduerst 13y ago
      Location is everything. SRO was $1250 for me in SF when I was slumming it a couple years ago. That's a shared bathroom and shower for the entire floor.
    • mikeash 13y ago
      I don't think I'm judging, but rather asking and proposing/guessing. Let's say his rent is $1,000/month, if that's the biggest expense then rent, medical, and dental together won't be more than $3,000/month. That's a ton of money for basic expenses, but easily doable on $110k/year with plenty left over.
      • tostitos1979 13y ago
        Where did you get 1K for rent? I live in CT and my rent is approx 3K for 1 bedroom + den. Income is a bit higher than OP (10K more annually).
        • illuminate 13y ago
          ~1k is what a studio costs in Seattle. I pay ~1400 for a large 2 bedroom.
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  • kevingadd 13y ago
    He's not asking for pity or for you to explain why he feels pressured; he was asking about whether things are this way for everyone, and why things are this way. Your post completely ignores this and takes the opportunity to condescend to him.
    • whyme 13y ago
      I hadn't thought I was doing that, but thank you for saying it. I'll re-read and I give it some more thought.
      • kevingadd 13y ago
        I don't disagree with your general reasoning and what you wrote in the post, by the way. I think I agree with it. It's just inappropriate for the discussion, at least as it's written :-)
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• jchrisa 13y ago
  The post-war expansion was terribly inefficient. And a lot of what was defined as an increase in quality of life two generations ago (pave everything!) turns out to look like a decrease in quality of life to our generation (suburban sprawl). If you analyze the ongoing costs of maintaining our urban environment, vs paving everything in the first place, you see that it's easy to pave more than you can afford to maintain. That's us, and it's not just pavement, it's a whole lot of things. I like this blog / podcast for talking about how we can avoid making decisions like the ones that got us here: http://www.strongtowns.org/ http://www.strongtowns.org/
• afterburner 13y ago
  The problem is the rich are getting richer, and the middle class is shrinking. Actual inflation-adjusted pay for most people hasn't risen in 30 years, while for the top of the top it's skyrocketed. Meanwhile, everything is more expensive, and unemployment is high thanks to the apparent political impossibility of introducing stimulus spending in a time of lowered demand and zero interest rate (cutting interest rates is the usually the easiest way to stimulate the economy, but you can't do that when you're at zero already). The money moved into finance, distorted everything thanks to deregulation, and screwed up the country, and the world to a certain extent. Europe in the meantime is addicted to debilitating austerity measures; the populations haven't exploded yet only because most of them have excellent social safety nets. Things really were better in the 60's and 70's from the point of view of how everyone was doing, what they could afford and with how much effort spent to afford it. Also, if you're a tech guy living in a tech area, cost of living is probably higher than average. And the US has expensive health care, thanks to, until recently, stubbornly refused all attempts to socialize it.
  • apsec112 13y ago
    "debilitating austerity measures" http://www.leftfootforward.org/images/2011/05/Government-spending-and-revenues-percentage-of-GDP-1978-2010.jpg http://www.leftfootforward.org/images/2011/05/Government-spe... (United Kingdom) http://multiplier-effect.org/files/2012/10/Eurozone-Government-Expenditure_Levy-Institute-Interim-Report.png http://multiplier-effect.org/files/2012/10/Eurozone-Governme... (Continental Europe) Yup, that's some real bone-cutting austerity right there... </sarcasm>
    • afterburner 13y ago
      As % of GDP? Gee that mightn't be because the GDP and revenues plummeted would it? And aside from automatic raises in spending for social security, what do those graphs say about cuts in other areas? These are very misleading. There's no actual debate on whether or not austerity measures were implemented. They were, and the governments of said countries brag about it, or are pressured into it. And suffer for it.
• RealGeek 13y ago
  I recently moved to US (from India) and I was shocked to see how the "free market" economy is structured to bankrupt the middle class and poor. Indians have far less income than Americans but are somehow able to save more. Here are some basic problems I see with economy: 1) Rent: When people are paying half their paycheck to rent a studio apartment, there is something seriously wrong. The monthly rent in most areas is more than 1% of the property value, which is insane. Why pay $2,000 per month to rent, when you can buy it for $1,500 per month mortgage which won't increase every year and will build value towards your equity. In India, most people own houses or spend around 10% to 20% for rent; despite the property being far expensive than US. Example: it costs $500k to $1 million to buy a 2 bedroom apartment in Delhi, but you can rent it for $600 to $1,200. 2) Healthcare: Our healthcare expense in India was less than $500 per year (without insurance). It is more than $20,000 in US, and we are still held hostage by medical practices and insurance companies. Examples: wait 3 weeks to schedule an appointment with your doctor; $this is not covered by your insurance; pre-existing conditions. The drugs I bought in India for $10, costs $200 in US; there are drugs created by Indian pharmaceutical companies and sold to US pharmacies for $1 (they still make good profit on it), but it is sold for $100 in US. The prices are artificially inflated so high that it is not affordable by 99%, so they are forced to buy insurance. This isn't free market economy, this is extortion by monopoly; there should be no place for middle man in healthcare. 3) Banks are designed to screw consumers in every possible way and suck every penny out of your account. It's is not much different in India; just the amounts are lower and banks are regulated by Government. 3) Service & Utility companies: most people pay around $100 per month phone and $100 per month for cable. In India it costs $5 per month for cable, and most people pay between $5 to $15 for phone. Moreover, there are no draconian contracts and service is much better; phones work in remote villages and even in lower basement of concrete buildings. It is silly how a company's 'Terms of Service' can hold consumers hostage and even super seed the law. 4) Consumerism: Americans are obsessed with credit cards and buying everything they can't afford. Why does a minimum wage worker spend $100 a month to buy an iPhone when there are prepaid Android alternatives available for much less? Why do people making $30,000 to $40,000 buy BMWs and $2,000 purses?
  • mikeyouse 13y ago
    1) Those are false choices. If rent is $2,000/month, a mortgage would be far more than $1,500. Just an example, my rent is near $2k in SF, an equivalent sized unit on my block just sold for $700k. If you could put 20% down (just save $140,000!), a 30-year mortgage would be $3,500/month -- 75% more than renting. 2) Get a new healthcare plan through Healthcare.gov. The out-of-pocket maximum is $12,700 for a family plan. 3) Find a credit union, no fees, no shenanigans. 4) Call around and get a deal, my phone plan is $65/month and my cable (25mb internet + digital 'starter' TV) is $65/month 5) Agreed.
• jisaacstone 13y ago
  Too many hippies on this thread. The biggest problem with the us economy currently is the erosion of middle class jobs for unskilled and semi-skilled labor. My grandparents lived comfortably on union jobs. Most of those jobs are gone now, and those that exist are paying less all the time. I know a man who is 60 working in a lumber mill making less then he ever has in his life (40+ years of factory work). Yes sure consumption has increased with affluence but Many people don't realize how hard it is for an unskilled and unconnected person to find any kind of work. I know some Iraqi refugees who could not even get agriculture work because the Hispanic population always filled any open jobs through network effects. The only jobs that exist for unskilled labor are service sector, fast food &tc. These may pay enough to survive in many places but it will not be comfortable or secure. Second biggest problem is the rising cost of healthcare. 15% of GDP and growing, more than half of that is government paid (medicare / medicaid / etc). My father is self-employed so purchases his own healthcare, but there is no out-of-pocket maximum for him so when my mother was diagnosed with cancer there was a massive financial cost despite 80% being paid by the insurance company. There are other problems as well, but those are the biggest cause of financial insecurity and lower lifestyle quality among the bottom quintile of US citizens. Edit: Fewer hippies after I had composed my rant. Re: rents. yeah they are bad but really only outrageous on the coasts. So depending on your location the rent can kill you, but in my hometown it was never a big deal.
  • eqdw 13y ago
    > Yes sure consumption has increased with affluence but Many people don't realize how hard it is for an unskilled and unconnected person to find any kind of work. I wish the focus of the US public discourse was less "how terrible is it that these unskilled people can't find jobs" and more "how can we provide economic stability to these unskilled people and help them become skilled"
• delecti 13y ago
  I live in a quite nice 2br condo in Seattle proper. I make just slightly less than you do. I don't live frugally at all, including eating out far more than I should and plenty of discretionary shopping. I have nearly $80k in student loan debt, and I contribute liberally to retirement accounts. Even with all of that, I've got a healthy buffer in my budget, which is currently going towards a rainy day fund, and will be redirected toward loans after that. Within 3 years I expect to have a big buffer of money that I don't think I could manage to spend. So it sounds like the problem is either: you aren't living frugally by reasonable standards, you're leaving something big out (dental ranks on your biggest expenses?!), or you have such astronomical standards that I can't ever see you being satisfied.
• bubbleRefuge 13y ago
  The problem is macroeconomic illiteracy by policy makers and the press has the economy underperforming. Taxes are to high and spending is to low and policy makers believe the government -which can issue infinite amounts of currency- can actually go bankrupt. We can model the macro economy using 3 sectors: foreign , domestic , and government with money changing hands between each sector. Money flows into the gov sector via taxation and out via spending. Money flows out of the domestic via taxation(to government) or spending on foreign and in via government spending or foreign consumption. Foreign is similar to domestic. In order for any sector in aggregate to increase its income, the other sector(s) needs to spend more than its receives from other sectors by either going into debt or spending from savings. Now, with austerity carrying the day in Washington, the private sector cannot increase its aggregate income with money flowing from the government sector. With the foreign sector structured to mostly export to America ( worlds largest consumer) income is not going to flow from there. The only thing left is for the domestic sector to borrow and spend from savings till it all blows up again. After it blows up, automatic stabilizers go into effect ( unemployment, food stamps, stimulus etc , lower taxes due to less income tax revenue) the government picks up the slack and the economy recovers proportional to net government spending. This is the cycle our economy ( if not the world's) operates on. Income guarantee/Job guarantee, lower taxes, and infrastructure programs would serve to proactively increase income to the domestic sector. The political will -due to deficit myths- to do what is required doesn't exist.
• ck2 13y ago
  The economy got shipped overseas. A trickle at first but then like everything else the practice got optimized. So the upper-end mostly survived. The low-end is being stepped on harder and harder to squeeze more profit out of labor, any way they can.
• cm2012 13y ago
  I make $65000 in NYC and support my wife also. We live in a 2 bedroom with a one hour commute. At this time I feel like I'm making more money than I can easily spend - and easily better off than any generation of my white american family before me. I eat out or order in 5 times a week at least. Its hard for me to imagine scraping by at $110k, truthfully.
  • eqdw 13y ago
    I've had discussions with my friend in NYC. He's married in NYC, I'm single in SF. My salary is $10k/yr more than his, so why do I feel like I'm barely getting by, while he's doing all these crazy Rich New York Person things. So I did some rough calculations. According to paycheckcity.com, despite his making $10k gross less than me, when you factor in tax differences (between states, and his marital status), his take-home is $6000 MORE than me. If you make $65k gross in NYC, and you're married, by half-assed extrapolation that puts you in the same boat as a single person in SF making $80k. Still not 110k, but a substantial difference.
• jandrewrogers 13y ago
  Something does not add up here or, at the very least, I am missing something important. I live in Seattle proper, rent an apartment that is relatively expensive by Seattle standards, have a ten year old car, no dependents, etc and have lived that way on a similar income. I am not frugal but I also don't buy much "stuff" which probably has the same effect as being frugal. It would be hard to argue that my life is not comfortable. Somehow I managed to save tens of thousands of dollars per year after taxes which, invested sensibly and lazily, accumulates pretty quickly into a substantial chunk of change. This is not because I am a great saver or a financial wizard, it was kind of a default outcome. How much do you think you should be saving every year such that saving tens of thousands every year is not enough?
  • esw 13y ago
    >How much do you think you should be saving every year such that saving tens of thousands every year is not enough? OP may not have always had such a high-paying gig. I lost years of potential retirement savings working for under-funded startups (including my own). I'm making good money now and put a decent amount of money into retirement and savings, but I do feel like I'm really far behind compared to similarly-aged friends who stayed in the corporate track.
• rdl 13y ago
  $110k isn't very much for late-30s professional anymore, especially for a single income earner. $150k x 2 for Seattle, or $200-250k x2 for SFBA, is more like a high-end DINK situation, if you count the value of stock and other benefits. $110k is solidly middle class, and fine if you're in your 20s, but by late 30s I'd consider that on the low end of someone in the software engineering field. Muni drivers or police/fire/etc. in SF can easily make in the 100-250k range, without college. (I agree this is all insane, but...inflation. And particularly in the coastal areas. If we were a separate country from the midwest, inflation would be vastly more pronounced. In SF, items e.g. iPhones bought by your employer cost basically 10-20% what they cost in the midwest bought personally for non-business reasons, once you account for taxes, salary differentials, etc. Crazy.)
• debt 13y ago
  I believe surrounding yourself with highly creative people is the problem you're talking about. I just had this conversation with a friend of mine last night. It seems the answer is nothing. You're situation, which is very similar to my own, is a pretty good one. You've worked so hard. You've gotten so far. Yet something is off. You've made it and then immediately readjusted the goal posts. Now you haven't made it. Your situation sucks and you don't know why. Well, it doesn't suck but something is off. I believe this desire is born out of those productive creative people you're exposed to; be it your friends in real life or on Facebook or just people you look up to or read about. The pressure you're feeling is the comparison you make between yourself and others; it's the death knell of ever feeling good about yourself. You'll never feel satisfied because you're not a successful writer or actor or musician or scrabble player or race car driver or etc like your friends are. I think the pressure you're feeling is WhatApps gets acquired for $19 billion and you go "damn it I'm how old and how creative and fuck I can't even write a damn blog post and these guys carve out some time and make something badass." You're economic success is not inline with your actual creative output or potential. Bottom line, sounds like you have some creative juices pent up that need to be let out. Go make something. Because if the economy is bad you're not feeling it(110k, decent savings, no debt?, paid-off car, etc.), so it might be something else.
• NTDF9 13y ago
  I personally think it is just "Expectation vs Reality". The government is in extreme debt. Debts have to be paid back. The problem with debt is that it does not leave freedom to do constructive things (like upgrading infrastructure). Also, what you are feeling is a pinch of inequality. Average and median wages have been stagnant despite record profits of corporations. Tax codes have been changed to favor investments rather than plain old hard work. So, while our "expectations" have been to just work and earn a good life like our grandparents, the "reality" does not facilitate the same. Also, you're living the life most people just dream of. You're richer than most others.
• badsock 13y ago
  The IMF recently released a discussion note which makes the argument that inequality (which we have certainly seen an increasing amount of in the last several decades) can lead to economic stagnation (PDF, also sorry for the link shortener): http://goo.gl/z264OE http://goo.gl/z264OE What I find interesting is that the IMF used to be very committed to the austerity ideal, and this is in quite the opposite direction. It makes sense to me: most businesses lack customers with money (the 99%), not people with investment capital to spare (the 1%). If this is true, then expanding progressive taxation might be the answer for economic growth right now. Not sure that idea would go over well in the current intellectual climate of the anglosphere :)
• dgudkov 13y ago
  Get married. Sharing expenses and having meals at home more often could help you save more and this in turn could change your perception of life, universe and everything.
• wturner 13y ago
  Thanks for sharing. I'm in my late thirties and I currently have no job. I am waiting to hear back from a 'Kelly' temp agency employee (who was high as shit when he spoke with me) for a job assembling plastic parts for $8. This might amount to less than $150 take home as I might have to take a cab home because the buses don't run after the shift ends. I rent a room in a trailer with no door which had a leaky roof until we put a tarp over it. Additionally my mother has emphysema, works 7 days a week and I am powerless to do anything for her. I'm convinced that all the geek analyzing of 'structural' economic problems are partially in vain. I think human beings are inherently social animals, thus until the financial moguls, billionaires, the Mark Zuckerbergs and Larry Pages of the world literally feel that people like me have the power to kill them.... then nothing will change.This is the same carnal belief that lead to our democratic social order. Even if you believe in things like a 'living wage' , without the support from the wealthy it won't happen. Those people like most don't do shit unless their is something in it for them, but people like me have no leverage other than being semi suicidal and wanting to kill something. Voting doesn't work and the government doesn't care. I really don't think it's too complicated. If 5 U.S. billionaires were murdered under the banner of a living wage for all Americans at least a more honest discussion would ensue among circles that have social clout. So that's my synopsis. Enjoy life and.. Have fun!
• Zweihander 13y ago
  You're not supposed to save and houses are supposed to cost multiples of what you could possibly earn. Low interest rates for extended periods of time do that. Without getting overly critical of Fed policies, you can also trace a handful of the other issues in this thread to that.
• ArkyBeagle 13y ago
  Maybe not your grandparents, but maybe their parents. Harry S. Truman could not actually afford a house until he was in national politics ( perhaps even POTUS; a quick Google didn't clear that up ). 100 to 40 years ago, people would only pay a year's pay, two years for a house. A lot of the cost of housing is due to the 30 year fixed mortgage. When you subsidize something, it costs more and you get more of it.
• subrat_rout 13y ago
  1. Housing: Rent is all about location, location and location including supply and demand. The rent is high in some places because a group of customers are able to pay that exorbitant price be it in NY, SF or Seattle. You draw higher salary for that in those big cities. And I agree that rent/mortgage is a major chunk of a white collar job income(typically middle class). 2. Healthcare: With Obamacare, I am pretty optimistic that people will not be scared to stay hostage to their employer and the pre-existing conditions nightmare will end soon yada yada. But the healthcare in US is expensive because: higher prices for services themselves, higher costs to administer the system, or more utilization of these services. Also the health care system is "dysfunctional" because the system of third-party payments from insurers removes the patient as a major participant in the financial and medical choices that affect costs. 3. People are not given enough exposure on how to manage their finance. People have no clue about their personal finances till they are drowned with several debts(study loan, credit card etc) in their twenties and thirties. In this consumerism society, the concept of buying and instant gratification is stronger than the concept of saving. However somebody can start from here: 1. Spend less than you earn and start saving from the day you start making money. 2. Spend some time on net and find deals. There are some really good deals available for everything. Just ex: You can get a phone plan for $10/month (unlimited talk and text no internet though) and $25/month(unlimited talk, text and data) from Republic wireless. Only caveat is, the plan is limited to android and you have to buy the phone for $299.00 upfront. Few fellows have taken disciplined approach and retired in their thirties and forties. http://rootofgood.com/about/ http://rootofgood.com/about/ http://www.forbes.com/sites/laurashin/2013/10/03/how-mr-money-mustache-retired-at-age-30-and-how-you-can-too/ http://www.forbes.com/sites/laurashin/2013/10/03/how-mr-mone... http://www.mrmoneymustache.com/ http://www.mrmoneymustache.com/
• icu 13y ago
  There are several levels to what is wrong. I have dedicated the last 5 years to discovering what is going on so I will try my best to condense it down. In terms of a 'shorter' business cycle view (less than 10 year perspective) to what is wrong is that we are not in a recession but in a deleverage. We haven't had one of those since WW2 so most people don't know what it is and think it is a recession. A deleverage is a once in a 100 year massive transfer of wealth event. I have put resources on what a deleverage is at the end of this reply. The long term problem is that the Fed is a private bank. This means that the US Government and American citizens do not control the Fed. Forget the façade that makes them look like a branch of Government, especially the whole Presidential appointment of the Fed Chairman. It is a private bank that gets to print money and sell it to the US Government that American citizens are forced to use. That means that the US Government and American citizens are slaves with no control over their future. Each dollar printed is a debt burden on the American people and a debasement of the current currency value. Essentially think of printing money as a way that the Fed transfers wealth from your pocket into theirs. Furthermore, I believe that the Fed manipulates the economic cycle to create wealth transfer events that they reap the benefits of. For further information look to the following: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0 http://www.tullettprebon.com/documents/strategyinsights/tpsi_armaggaddonusa_a4_spw_008.pdf http://www.tullettprebon.com/documents/strategyinsights/tpsi... www.youtube.com/watch?v=mII9NZ8MMVM‎ http://www.amazon.co.uk/How-Economy-Grows-Why-Crashes/dp/047052670X http://www.amazon.co.uk/How-Economy-Grows-Why-Crashes/dp/047... http://www.imdb.com/title/tt1645089/ http://www.imdb.com/title/tt1645089/
• gmaney 13y ago
  After World War II the world industrial base was either ruined or tooled up for wartime production. The great U.S. postwar boom lasted from 1945 to 1973, America was factory to the world during these years because it had huge advantages in workforce, industrial base, infrastructure, and money. Today the world has overcapacity in nearly all industries, margins are low, and cost cutting is the obligatory survival strategy. The mass systems industrial revolution created the huge increases in wealth and wellbeing seen in the 20th century. This revolution began around 1900 when the marriage of science and industry was finally consummated, but it was mostly over by the 1990s. That means that there's minimal primary technological innovation now, so returns to investments in industry and infrastructure are nearly zero. The next industrial revolution is the robot revolution, but it's only just getting started now, all human systems will be transformed, and vast amounts of new wealth will be created in decades to come. The world has been accumulating huge levels of debt for 25 years, this is debt that cannot possibly be repaid, but the accumulation is still continuing. Most of the world switched from industrial capitalism to financial capitalism (the capitalism of the Medici) in the 1990s with the end of the mass systems industrial revolution; one result is the rapid rise of oligarchies in many countries including the U.S., Russia, and China.