Almost 80% of US workers live from paycheck to paycheck
theguardian.com
theguardian.com
1) re housing: if you don't have much savings at all, you live with your parents (or you go on the streets, which is a very sad and tough reality for millions of Americans). if you have some savings but not much, usually you search for roommates or tenants if you have a house but still live paycheck to paycheck.
2) if you lose your job, in most states you can qualify for unemployment, which usually means 1-2k per month in post tax income for 6 months. unemployment has saved my ass twice already and im not even 30. it's very common to lose a job here, but it's also sort of easy to interview and get a job here compared to France.
3) regarding health insurance, if you don't have a job, you get it from your parents or spouse. if those don't work for you, you have to wait a long time until you eventually qualify for medicaid and food stamps (1-2 years if your income was too high this year). my gf didnt have any insurance for the first 20 years of her life, i havent had it in the last 6 years.
so, it's definitely not optimal, but also not a death sentence. with roommates, i'm living on less than $1,000 a month right now and I feel extremely comfortable. I have gone as low as $500 a month but right now I live in NYC where the cheapest room possible is about $600
This assumes your parents are alive, can afford their own place, have space for you, and you have a good enough relationship with them for them to let you stay without paying (much) for rent.
"if you don't have a job, you get it from your parents or spouse"
These assume that your parents or spouse have health insurance and that insurance will cover dependents.
"if those don't work for you, you have to wait a long time until you eventually qualify for medicaid and food stamps (1-2 years if your income was too high this year)"
In California, I was told that I'd qualify for Medi-Cal (California's Medicaid program) as soon as I had no job (ie. no income, or very low income -- you can get information on exact income limits from them).
yes, it does assume all those things. I was kicked out at 18. I saved enough money such that I'll always have enough for a deposit on an apartment. I am very good at hawking rooms to roommates. Beyond 18, I wasn't afforded the privilege of living at home for cheap.
>health insurance
Yes, once again it assumes those things. I literally said that in the next sentence. I don't have health care. If I make below $20,000 next year, I get medicaid in 2020.
>Medi-Cal
each state is different. some go by tax return and not current income.
- TANF (temporary assistance for needy families)
- Medicaid
- SNAP (food stamps)
- CHIP (child health insurance program)
- unemployment
- disability
- housing assistance
- social security
- ...
States and cities also have many welfare programs along with private charities.
It is absolutely possible to save money on an average salary. In general, Americans are indebted and live beyond their means by choice, not by necessity. And once they get into the debt cycle it can be extremely difficult to get out.
Check out Dave Ramsey for practical tips: https://www.daveramsey.com/store/product/the-total-money-mak...
There are all these little gotchas - when there are no margins in your life - where a crack opens a little here, or there, and you fall through, and without help just becomes all the more harder to pull yourself up.
It's less than Denmark/Norway/Sweden, but more than the UK for example (per capita).
Mostly because US spends a ridiculous amount of money just moving records and doing busy work with layers and layers of middlemen. The healthcare complex is a good example.
Not to pick on your use of average in general concertation, but it appears the average income is around 45 000/year and the median is around 30 000 - for all demographics.
I'm not sure what 30k is after taxes most places in the US... 25k if you're not a home owner?
It may be feasible to save some money in areas with low cost of living - I don't know.
I also only get these weekly/yearly numbers to line up if I multiply with 52 weeks - but is paid vacation and sick days the norm in the US?
Unsurprisingly, this number rises with household income. It's ~0.4 for the lowest quintile and ~2.0 for the highest.
Even the original post I replied to said Salaried employees typically get paid vacation and sick leave. Employees paid hourly wages do not. Some don’t even get unpaid leave.
The distinction of who gets paid vacation and sick leave is not based on “salaried” vs “hourly” but based on “full time” vs. “part time”. The distinction isn’t nevessarily based on that either.
While I don’t know of any salaried jobs without benefits, I know of plenty of part time hourly jobs with benefits and know of very few hourly jobs that are classified as “full time” that you don’t have paid holidays and vacations.
In fact my wife could go part time and still get full health benefits. I know plenty of people who do what she does part time specifically for the benefits where their checks are basically a token amount while thier spouses make most of the money doing something without benefits like owning a small business or in my case depending on which way the wind is blowing, doing contract/consulting software development instead of working in a salaried position.
But the original post by e12e I was replying to above doesn’t say anything about full time - it was just talking about calculations to extrapolate wages from income: https://news.ycombinator.com/item?id=17637626
https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_an...
There are many medical conditions which are not covered and require insurance or out of pocket payment.
Hospitals—well, emergency departments of hospitals that take Medicare—are required to screen for and stabilize any “emergency medical conditions”, as defined in law, regardless of ability to pay. As your source noted, that is not a mandate for general treatment, or even stabilization of medical conditions generally.
Let's see. In the US, as soon as you can qualify for unemployment, you usually get USD 1,000-2,000/month in post tax income for 6 months.
In Switzerland, you get 70-80% of your last salary.
Are you guys still sure you are not getting ripped off buy your government (respectively the billionaires who own it)?
After living abroad as American, I can't imagine returning. I've seen too many friends older, in my same cohort, and younger suffer in unimaginable ways — many through no fault of their own.
Another thing I've noticed is that most Europeans see American as a "high tax" country, and they wonder what we get for those taxes. I can say that I pay less taxes to Switzerland than I pay to the US. I would bet the impression from America is that the Swiss pay more in taxes, but that does not seem to be the case.
That doesn't make it a good system, but you've got the wrong idea about the number of people that can't afford healthcare at all.
And before anyone gets too moralistic about how evil I am, I've contributed $0 so far this year towards my deductible that is thousands of dollars.
https://www.nytimes.com/2016/01/06/upshot/lost-jobs-houses-s...
> In the new poll, conducted by The New York Times and the Kaiser Family Foundation, roughly 20 percent of people under age 65 with health insurance nonetheless reported having problems paying their medical bills over the last year. By comparison, 53 percent of people without insurance said the same.
> [...]
> One reason, many experts said, is a gradual shift in the norms about the generosity of health insurance. In recent years, health plans have come with growing deductibles and narrowing networks of providers, provisions devised to lower the cost of premiums. Those features have made health insurance accessible to a larger share of the population, but may also be leaving more insured Americans vulnerable.
> Ten years ago, David Dranove, a professor of health management at Northwestern’s Kellogg School of Management, conducted research on people experiencing medical bankruptcies. The study he co-authored found that bankruptcy was largely a problem of the uninsured. “But with more people buying less generous health insurance, I think the old evidence might no longer be relevant,” he said.
> Insured people with financial problems often have plans with higher deductibles. But many said that the smaller co-payments piled up to make their care unaffordable. Many also received big bills that were not covered by their insurance. Among the 32 percent of insured patients stuck with an out-of-network bill, more than than two-thirds of patients said they didn’t know the provider wasn’t covered. More than 25 percent of the insured respondents said a medical claim had been denied.
Pinning down "medical bankruptcies" turns out to be difficult because people can't agree on how to define it.
But I was making a point about the statistics, not launching a spirited defense of the US system.
This assumption is stated and accepted around here uncritically but with zero supporting evidence. Four out of five Americans are not desperately hand-to-mouth poor as this figure suggests. Accepting the extraordinary 80% claim for the sake of argument, some of them must be in stable, full-time job situations — and some those have to be in two-income households — by law of large numbers.
Having identified a segment of the 80% with at least decent incomes, that shatters a premise of the Reich piece. They can afford to save money but do not because consumption is too high relative to income. The balance goes on credit cards, home equity lines of credit, or other debt instruments.
Of those who are living paycheck-to-paycheck with no emergency fund for contingencies, how many have written goals? How many are executing an intentional plan where they make and follow a budget each month? Those are important questions that go unasked.
First of all, I think it's worth noting that basic money management skills are no longer part of any curriculum with broad acceptance in America. They used to be taught in home economics classes, but those have been pared down to the bone in some places, outright eliminated in others. So expecting Americans to have basic money management skills at this point is, while not exactly unrealistic, at least not something that should be considered the obvious default.
Secondly, there are plenty of places where a two-income household, with both earners making significantly above minimum wage, will still be just squeaking by, particularly in places with very high housing costs. That's not even taking into account other all-too-common situations, like large medical debts, or burdensome student loans.
"But they should just move!" you cry. "They should have known better than to go to college!" you cry. (...I'm going to give you the benefit of the doubt that you wouldn't say they should know better than to get cancer or some similar costly illness, but Poe's Law applies here.)
Moving, when you cannot easily save up money, is, at best, highly impractical. It costs mental energy that you probably lack if you are stressed from worrying about your poor financial situation, in addition to the time costs of finding someplace to move to that fits your needs better than where you are now, and the obvious financial costs of hiring movers and potentially putting a down payment on a house, depending on whether you're trying to buy or rent.
College has been sold to every generation in America for some time now as not merely the way to better your situation, but to many as the only way to get a stable job—or even to be a worthwhile person, depending on your (parents') social circles. Just within the past decade or two has the country started to turn around and say, "But we're going to make you pay through the nose for it. For the rest of your life. So if you aren't already wealthy, you better not go for a degree that can't get you six figures within 5 years of graduation!"
So...yeah, assumptions. They're a bitch, and they lead to an awful lot of the kind of moralistic labor-theory-of-value crap that keeps us in this terrible situation, instead of working together to find a way to make it better.
Basic money management is not at all complicated. By the time someone completes fourth grade in a typical U.S. elementary school, she has mastered the necessary math for the subject. No, that person may not be able to explain exactly how municipal bonds work or how to compute an amortization table, but she will be able to lay out and follow a budget, with pencil and paper if necessary. “This month I expect to bring home this amount; food, housing, utilities, and transportation will cost so much; and that will leave this many dollars in expendable income.” Addition and subtraction is as complex as any of that gets.
For people who want to learn more, Suze Orman, Clark Howard, Dave Ramsey, The Motley Fool, and Personal Finance Stack Exchange are just a few of many who produce affordable, accessible resources. We all have our respective circles of friends and acquaintances to learn from or at least to ask for pointers.
This is not a high bar. Now, an entirely different question is whether people have learned to moderate their behavior around these basics. “I have so much money and want to buy this; can I afford it?” Prioritizing needs versus wants, setting goals, making a plan are also not heavyweight intellectual endeavors but do require a bit of discipline.
Of course people do fall on hard times through no fault of their own. The disabled and mentally ill are examples or people who fall into bad health, either themselves or their children. (The American system of healthcare and particularly health insurance are terribly broken, but outside the scope of this thread.) Yes, these terrible situations do happen, but they are exceptions. Bad times, not necessarily this severe, will hit us all, so the smart course of action is to save up now for when the rainy day comes later.
Living in a home that costs so much relative to one’s income that it leaves little in the way of disposable income or even to cover all necessities is known as house-poor. As with any other good, when it comes to housing, we all have to ask ourselves whether we can afford it. Yes, moving is stressful, uses mental energy, and costs money. I’m an instrument-rated pilot. An important part of the training is learning to guard against hazardous attitudes, one of which is resignation. Giving up and thinking ‘I guess I can’t do anything about it’ is dangerous in that it can kill you quickly in an airplane or in slow motion from the stress and anguish of living house-poor. They can do something about it, and their lives will be far better on the other side. Rent an apartment at first to allow cushion for saving money. I live in north Alabama, an area whose TV portrayals bigoted people sneer at. The median house price here is under $150k, and believe it or not we do have indoor plumbing!
We’re on the same page about the bum deal many have been sold on college too. Just like everyone in college is not pre-med or pre-law material, not everyone in high school is college material. They are still human beings and therefore worthy of life, liberty, and the pursuit of happiness. The education establishment has done them a grave disservice by making vocational training out to be a last resort for the scum of the earth. People working the skilled trades make good money — in part because they are not competing with people who can walk in off the street and do the same job. Elsewhere you mentioned Home Ec being ground down to nothing, and it seems to be part of the same trend as with vocational training. No one should ever be forced into these programs because of someone’s backward ideas about certain people’s alleged place in society — that would be evil and wrong — but denying someone who’s mechanically inclined or who wants to be a homemaker the opportunity to be their very best at these worthy, honorable, necessary positions – again for the sake of mere political axe grinding — is likewise evil and wrong.
Financial literacy, like civics, needs to be a required course for every child growing up. Not fourth-graders; they're mostly too young to really understand the importance. Best to teach it in high school, when you're getting close to the time when they can vote, and when they might already have a part-time job (or, in lower-income areas and for less fortunate families, a full-time night shift job supporting the family).
Put another way, if healthcare costs and the amount of insurance paperwork doubled yet again overnight, would that be "fuel to the economy" or "dead weight"?
Once again - this is from a non-emotional point of view. I am not saying this is good. The way the US works and the way they push towards more "dead weight employee" rather than "social beneficient" works for now well enough to keep it as it is apparently. Otherwise, there will be a much stronger push for change.
Proof by counter example, then. The Scandinavian countries have the exact opposite mindset to the US yet they are some of the richest and happiest countries. But that could be the oil money talking.
While we're at it, neither Denmark nor Norway are "Democratic Socialist" states. Heck, not even Sweden, though they are marred with a Left-Wing government. They are instead Market-liberal Capitalist Welfare States. While the policies of these countries are "social" they're not Social-ist. Please make a clear distinction between the two, because Socialism – the thing Robert Reich stands for – is anything but what we have here in Norway. But like in most countries, you'll find commies also here. That doesn't mean either Communism or Socialism are viable political ideologies. Quite the contrary!
But it does have abundant geothermal and hydropower. Aluminum smelting is a big part of Iceland's economy, and it wouldn't be possible without the cheap electricity those natural resources supply.
Stating that something is not good for the economy does not mean I support it, I vouch for it and I think it has future. Obviously, there are better models, but the current one works good enough currently. Once it will become too much to handle, it will be surely changed (after a series of market crashes). Market and economy will adjust itself when there is no other way.
Not saying it is good, but this is one of the tools governments have to reduce the cost of social state and increase the production.
If everyone doesn’t have access to higher education, you run into underuse if the talent pool through aristocracy in place of meritocracy.
If families don’t have long paid parental leaves and subsidized daycare, you both get low birth rates and lower workforce participation.
The overheads in the healthcare system are well known.
The US has a good system of transacting with one another (sufficient security, trust, and credit check systems), but that doesn’t mean people are happier or that it will continue into the future. It very well may be a short lived local maxima.
And that a tiny minority are basically ruling over the overwhelming majority, making the laws, and telling the rest of us what to do as we fight with each other over the crumbs that the rich let fall from their table.
Many of us will never be able to afford to retire, while the ultra-rich will never have to work a day in their life, and neither will their children, or their children's children. We will be polishing these people's shoes for generations to come.
Any self respecting scientist would blow their brains out with a shotgun if they were forced to use these results to draw enough conclusions to write a 200 page book with....
This scumbag presents ratios the entire book instead of actual numbers,then at the very end tells you his sample size.
That book is the biggest money grab crock of shit on earth and is as conclusive as a two year olds explanation on why the sky is blue.
If you ever reference that book as a talking point you should be absolutely ashamed of your self because you're a garbage person who is using fake science to fit their bullshit narrative of the poverty being an individuals fault instead of a systemic issue.
Americans have (or at least had) cultural mores against discussing the topics of personal finance, income, and net worth at all. Where would you suggest starting?
Statistics requires training and does have some intuitively nonobvious results, such as determining sample size[0]. If you prefer more interactive, Survey Monkey has a form[1] that lets you select population size, confidence, and margin of error. For the U.S. population of 325 million at 95% confidence level and 5% margin of error, the necessary sample size is 385 — not far from your figure Stanley’s.
The topic warrants future study, but Stanley’s book does destroy the notion that all millionaires are a bunch of Paris Hiltons and Thurston Howells — for those readers who are willing to challenge their own prejudices.
[0]: https://en.wikipedia.org/wiki/Sample_size_determination
[1]: https://www.surveymonkey.com/mp/sample-size-calculator/
How did he determine the sampling was random?
How can you confirm the self reported data was correct?
Also this was ONE SINGLE unreproduced study...no scientist in the world would write a 2 page paper based on one study much less 200 pages.
That worthless book destroys NO notions. That book is propaganda selling a false narrative based on extremely shoddy science and it would do you well to throw it directly into the garbage.
If it’s only money that ought to be “evened out,” what makes it special vis-à-vis these other valuable areas? What is the underlying system of ethics that justifies this intervention?
The Millionaire Next Door devotes an entire chapter to Economic Outpatient Care, that is, continually paying their adult kids’ bills and otherwise bailing them out. For all their skill at building and growing businesses, American millionaires do not seem to be any good at passing these skills on to their children. What that means is through the natural course of things, millionaires’ kids tend to squander their gifted status without outside help from egalitarians.
You can be this way even if self made, but I think if you were self made the things that worked for you on the way up help you be connected to the real world.
The focus should be on making poor people rich, not making rich people poor.
So I would suggest if you want to be ruled by people who are less learned and less empathetic then doing away with high estate taxes might be a way to achieve that.
I’ve always thought quality of life is more of a macro term, dealing with things like quality of education you can expect your kids to receive, physical safety, access to healthcare, vacations, ability to move “up” in the world, ability to practice your hobbies, etc.
Generally, these are the things you can’t specifically go out and buy, but rather the desired end result of all the work and time that people sell.
Now, not all those things are true for everyone but it's true for a lot of us. Quit using the internet as your only source of education.
Healthcare is not always provided by the employer, and the cost may be more than your paycheck if you want a family plan. Literally - I've worked such a job. The weekly cost was more than I brought home working 40 hours a week for a family plan: The individual cost was a very good chunk of the paycheck. This was not a high-paying job. Not only that, but it may be the bare minimum of insurance, rendering it basically major medical only. Lots of places won't do a surgery or screening without your copayment upfront, and this is a real issue.
Jobs don't fire you becasue you are sick: They fire you for not having good enough attendance. This includes nearly everything, including you or your children being sick. These aren't abnormal in any sense.
Then they give birth on the job?
>Healthcare is not always provided by the employer
I never said it was.
- While not as robust as some Western European countries, the social safety net in the US is pretty strong.
- The majority of US workers get paid sick days and even for those that don't you will almost never get fired for taking off when sick.
- Maybe about half of US workers get paid maternity leave.
- Only around 10% of Americans do not have health insurance and many of those people are young people unlikely to get sick.
To be clear, I'm not trying to say that everything is perfect and that there is no room for improvement, but the US isn't the dystopia that you make it out to be. It also helps that incomes in the US are among the highest in the world due to the very robust economy.
I think there is some confusion of terminology here: a European probably means paid leave for the first 12-18 months of the baby’s life, until it’s old enough to go to daycare so the parents can return to work. One or a few months leave doesn’t really help much if you still either have to quit or take a long unpaid leave until the kid can be in daycare during the day
I know my wife was quite eager to go back to work after 3 months. Staying at home all day with a newborn gets boring fast.
>>Boggles the mind.
Why would it be Mind boggling?
State funded social security schemes do not exist to make up for bad personal finance decisions. They are for circumstance when someone fails despite their best efforts.
If they are used for the former, no amount of social cover will be enough, ever.
I imagine quality of life is good in the US. But they continue to build up an enormous debt to maintain it.
If we could teach sound financial discipline to younger people (say, by 'gamifying' it like we do everything else these days) while easing off on the consumerism, and somehow make it cool to be smart with money & limited resources, I think it would put a dent in the problem. We made computer geeks cool, maybe we can do this, too.
In order to make this work, we need a different metric reflecting the performance of our economy.
Irrespective whether you agree or not with the article's arguments, in general correlation doesn't imply causality.
The drop in the percentage of middle class income could be caused by a bunch of factors, including (but not limited to) increased automation capabilities and increased reliance in off-shore low-wage workers.
Yes, we know. But it's often a sign that something interesting is going on.
And yet not a word about tens of millions of people immigrating to the US. As if supply didn't matter. It's unions and oligopolies. Sure.
It's also not the case that borders can protect workers from competition. Especially in the long run.
Meanwhile many other goods are manufactured outside of the US, benefiting primarily the mega corporations who can do international arbitrage on physical products.
There's also the third side of the squeeze where the native workers desperately need to contrast themselves from the millions of migrants. They do it by going deep into debt to get a college degree from an American university, which then goes completely unused except for its signalling value
the official rate hides more troubling realities: legions of college grads overqualified for their jobs
Labor a shrinking market demand and a growing supply, and we're not going to fix that.
I agree that manufacturing capital will serve itself.
I also agree that credentialism is a problem but I don't think it is particularly impacted by immigration.
https://en.wikipedia.org/wiki/Immigration_to_the_United_Stat...
To be able to get to the point you describe, you have to make extra money at some point. those things you describe are responsible for folks with leftover money.
It also greatly assumes folks are lucky enough not to have things like an accident that disables them, a spouse that dies young and leaves you supporting children by yourself, a parent that needs taken care of instead of working, and so on.
I mean, I used to be unable to pay bills until my paycheck arrived, I get it. But today, despite having a modest emergency fund and being able to pay all of this month’s bills with last month’s paychecks, I still would consider myself living paycheck to paycheck. I mean, I cannot quit my job for a month or two without substantial financial harm. So I might answer such a survey in the affirmative. Meanwhile, younger me from several years ago would look at my current bank balance with envy.
Is this like a survey of who feels rich? Everyone says no, but everyone below you on the scale thinks you are rich while everyone above you thinks you are poor.
Edit: Average number of people per household in us is 2.54 (https://www.statista.com/statistics/183648/average-size-of-h...).
The Guardian attributes
https://www.cnbc.com/2017/08/24/most-americans-live-paycheck...
Who attribute a "CareerBuilder Study"
>The job-hunting site polled over 2,000 hiring and human resource managers and more than 3,000 full-time employees between May and June.
Which you can find a synopsis of here
http://press.careerbuilder.com/2017-08-24-Living-Paycheck-to...
Which states
>Having a higher salary doesn't necessarily mean money woes are behind you, with nearly one in 10 workers making $100,000 or more (9 percent) saying they usually or always live paycheck-to-paycheck and 59 percent in that income bracket in debt. Twenty-eight percent of workers making $50,000-$99,999 usually or always live paycheck to paycheck, 70 percent are in debt; and 51 percent of those making less than $50,000 usually or always live paycheck to paycheck to make ends meet, 73 percent are in debt.
At least the Guardian attributing it now.
Also factor in the credit card culture and you get this mess.
edit: It could get to 59,000 if these people actually worked 53 hours a week.
>>>According to the Bureau of Labor Statistics (BLS), the median wage for workers in the United States in the fourth quarter of 2017 was $857 per week or $44,564 per year for a 40-hour workweek.
[1] https://www.thebalancecareers.com/average-salary-information...
Then I responded by setting some parameters. "As long as you are frugal and responsible, $59,000 a year is enough to make sure you are fed and sheltered and that's about it".
If someone chooses to spend their $59,000 on a new BMW and 5 vacations to Paris and granite countertops, then $59,000 will not even be enough to feed them and pay their rent/mortgage bill! :)
I'm thinking of Moscow in particular (where rent prices are also quite high). 2017 median income was, reportedly, about 63k RUB/month (~$1k/mo) after the taxes: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou... That makes (very roughly) 2.5x cheaper cost of living difference to the US, while income difference is, very roughly, about 4x less ($12k vs $50k after taxes)
That's median household (or family) income.
If your household consists of 2 people, that $59k is slashed to $29k per person.
So the real per-capita median income is significantly lower than $59k.
I found it interesting that the recent Trump tax cuts offered the rare opportunity to get some empirical data on that question, because they had the effect that people were getting more of their paycheck.
If 80% of people were desperately trying to save, but couldn't, you'd expect that consumption would stay the same, and the savings rate would go up.
But if they were just didn't care to save and would by and large fit their consumption to their income you'd expect consumption to go up, while the savings rate stayed level.
There's a recent episode of Planet Money discussing the Q2 US GDP growth that goes into this a bit, consumption went up as a result of the tax cuts: https://www.npr.org/sections/money/2018/07/27/633230414/gdp-...
However, they don't break that down at all. It's conceivable that consumption just went up with 20% of the population, but this is presumably an easy question to answer.
There's a bunch of items like clothing which people will make last if they have to, but if they feel like they have more discretionary income will spend more on.
Did consumption in those categories go up in a way that indicates that people living paycheck-to-paycheck were now spending more?
Maybe they bought needed underwear they couldn't afford before or something that's a necessity.
Maybe they bought a laptop which provides them massive value as far as information goes.
We have to be careful of interpreting these results based on what we 'expect'.
After all, just "living paycheck to paycheck" says nothing about your income per-se. You could make several millions/year and struggle to pay your NYC penthouse mortgage and the loan on your Ferrari.
But the image that's invoked when you read that phrase is not someone who's absurdly rich and living beyond his means, but someone who's poor and struggling to make rent on their apartment or paying for their car.
In aggregate, if all those people would make $500 less a month you'd expect a significant spike in foreclosures, evictions, bankruptcies etc. It would look much like the 2007-2009 recession.
Or, if they truly weren't living beyond their means and were all given a $500 lottery ticket how that money gets spent says a lot about their situation.
Does such an injection of cash into the economy e.g. reduce the foreclosure ratio? That would indicate that people weren't truly living beyond their means.
Or does it only show an increase in consumer spending without any meaningful change in such numbers? Then it's more likely that those people were just bad financial planners, or just haven't thought to save any of their income.
This would be really interesting data to mine cross correlate if you can find good sources.
The problem with modern American society is that it's developed a superbly optimized form of hyper-capitalism that is able to suck in every single marginal dollar while not delivering meaningful improvements in quality of life.
Areas of the economy that don't operate on that arena (food, electronics, clothing etc.) follow standard deflation curves and get drowned out by the areas of the economy that do.
Take children's safety for example. As a parent, you are expected to buy exactly up to your level of social status in marginal safety improvements for your kids, despite almost no tangible return on investment. If you are a working class family, your kids go to school on their own in a school bus and are latchkey kids in the afternoon while you finish your shift but if you are middle class, you're expected to ferry your kids to every single engagement because "what if something happens to them" and you have to participate in every hare brained exercise in child-rearing on the off chance that it adds some iota of chance to their success. Not doing so not only immediately makes you an outcast in every single social circle, in many cases, busybodies can also bring to bear the power of the state to compel you to behave or childhood services will be brought in to rip your child away from you.
With colleges, families stretch to send their child to the "best" college the child gets into, even if there are plenty of perfectly acceptable colleges for a quarter of the price. If you send your child to the best college, then at least you can reassure yourself that you've done everything you can whereas if you go for the "budget" option, you're forever going to be plagued with the thought of "what if?"
The American cultural pathological fear of every talking about or confronting death leads to the same thing with healthcare. If you have $100K in savings and a parent/loved one is suffering from some medical issue not covered by insurance, you will spend all $100K of that accumulated savings on experimental, last ditch efforts to save them. If you have $500K in savings, you will spend that $500K on a different set of treatments to save them. If you have $500K in savings, it would be morbidly unthinkable to only spend $100K of it and then look your loved one in the eye and tell them you think you're ready to watch them die now. Note that this would be the case even if the $500K treatment was no better or ever worse in outcome than the $100K treatment.
In Economics, there is a theoretical concept of price discrimination where the absolute maximum profit you could ever get from a product is to have some kind of mind reader device that could ascertain the exact maximum amount every single person is willing to pay and charge them exactly that amount for the product. Childcare, education, healthcare & real estate have ballooned in cost because the marketing of American society has become exquisitely tuned to do exactly this.
It doesn't matter how immune you are to this marketing message or how much you would like to reject it, this is marketing that works on a societal level to socially punish any individual who does not willingly give every single marginal dollar to some nebulous notion of the "better life".
Even if we could wave some magic wand and double everybody's wages (in real terms), you would not see any substantial increase in quality of life because those extra dollars would just be absorbed into even more pointless medical tests, fancy college campuses, increased land prices and bullshit helicopter parenting.
This also occurs in the free time/life difficulty space and has the same societal pressures. Got life figured out and going well? You need to level up. You need a home to work on so you can go to Home Depot every weekend. You need a pet or child(ren) to take care of. Happy with your job? Climb higher on the ladder. It's morally questionable in this society for your life to be easy, regardless of your status.
Try telling people in a social setting, as a working age person, that you accept half the salary in exchange for working half the amount and are happy with it and don't need more. Watch their facial expressions.
What I got for buying a house is a fixed housing expense. When I got married, my wife - who was already living in one of the best school districts in the state with her (now our) two sons. We moved into a 3 bedroom apartment,1630 square feet for $1200 a month. Within three years, rent had gone up to $1700 a month.
We moved into a house - slightly further north but still in the most affluent county in the state and one of the top 30 in the nation - and now pay $2050 a month. We have 3000+ square feet 5 bedrooms, 3-1/2 baths, a separate large office, a garage, not attached to other apartments, and privacy.
The apartment we left two years ago is now renting for $2150. Our mortgage will never go up, our insurance and property taxes will go up slightly.
My parents bought the home they live in now in 1978 and their mortgage was $650 a month. In 2008 when they paid off their mortgage, they were still paying less than $1000 (insurance and property taxes go up). 30 years later. In 1978 it was a stretch, by 2008 it was nothing. They live in a small town, we live in a major metro area. Now, they don't have to worry about rent - just insurance and a reduced property tax amount since they are over 65. A house is a great inflation hedge.
I would mention that in the two years since we bought the house, the value has gone up $30K+. But, since we have no plans on moving to a cheaper area, equity is meaningless.