Comment by edw519 | Hacker News Reader

Comment by edw519 | Hacker News Reader

Only now he's off to collect their unemployment benefits, electronically delivered to their bank accounts by the state of Indiana: $268 for Kelly...

"It's 28 hours, eight bucks an hour," she says. No benefits, she adds. "You say, 'Thank you, but -- '?" "Yup," she says. "I make more on unemployment."

So she turns down a job that pays $224 per week so she can continue to collect $268 per week unemployment compensation after 9 months.

Am I the only one who sees something wrong with this picture? Has she even considered:

- that 28 hours could turn into more

- that $8 could turn into more

- that no benefits could turn into benefits

- that she may meet someone at work who could refer her to a better job (lots of people pass through a chiropractor's office each day, a lot more than she meets at home)

- that she may meet someone at work who could refer Scott to a job

At what point should we expect people dealing with difficulties to try a little harder to help themselves?

A friend who is an armchair economist (in a good way), noted that America's poor apply a much too high discount factor to future cash flow streams. In other words, they place too much value int today's pleasure and not enough in the avoidance of future pain. It's this short-sightedness that let them end up in this situation.

> It's this short-sightedness that let them end up in this situation.

When you're close to the poverty line you've been taught by experience that saved money will be just eaten up by future crises anyway, so why not enjoy a little treat while you can? If future pain seems unavoidable, why not take some pleasure today?

That is a common precept of the human experience above the poverty line, too.

>When you're close to the poverty line

A year ago, the man alone was making $53K! Let's presume the woman contributed at least another $25K. That's a well above-average household income in America.

This attitude seems hard to understand for people who didn't grow up poor. You need a certain amount of money to get over the threshold of not living paycheck-to-paycheck. There are several ways you can get it: grow up while already over this threshold (if you could call your parents and ask them for 10K if you had a real need, you're over it), borrow the money (for example, for college), get lucky, or live far below your means while saving it up.

The time when you can borrow the money is a limited window, usually, around 17-23. If you don't understand that this is important and possible, the window vanishes.

Living far below your means while saving up money is not only very difficult to do, culturally, for Americans, but takes a long time at minimum wage or some small multiple of it, and you have to resist the urge to do things like buying business casual clothes in the hopes of getting a better job, or buying a newer car in the hopes that the maintenance will be lower enough that it pays for itself, etc. Those things can work, but they fall under "get lucky". :)

I sort-of agree with you, but these people were hardly poor a year ago! Their household income easily exceeded $75K! And, it was obvious that they had considerable disposable income.

That's true. It may be that they grew up poor, or it may be that they're just "poor" psychologically. I dunno. I have a lot of these tendencies, but I got lucky (I now feel).

The time when you can borrow the money is a limited window, usually, around 17-23. If you don't understand that this is important and possible, the window vanishes.

You are right that there is a limited window, but it is not so tied to age. My wife was a "nontraditional student" and they were more than happy to give her student loans.

A better threshold is kids and mortgage. If you have real dependents that need money now for things like food/diapers/clothes then it becomes much more challenging, perhaps insurmountable.

This isn't unique to the poor:

However, while past studies cover a wide range of choice situations, there is a remarkable consensus in the literature that future outcomes are discounted (or undervalued) relative to immediate outcomes. Put differently, an identical (positive) outcome will become increasingly attractive the closer it is located in time to the time of decision-making.

See: http://www.mit.edu/people/shanefre/Marketing%20Letters.pdf

Also: http://www.nytimes.com/2009/04/19/magazine/19Science-t.html

This I don't doubt. I'd rather have a dollar today than a dollar tomorrow. It's that this family applied such a steep discount factor that is problematic.

One also shouldn't think of the discount factor just in terms of dollars spent. We can compare the pleasure today of drinking Pepsi, smoking, etc. with the probable pain later associated with losing one's home, etc. How many units of future pain is that Pepsi worth?

"much too high discount factor to future cash flow"

Easy to say. Except they know too many people who had $400K in their 'future' and now have $150K; or who've worked all their lives and are now destitute for medical bills.

The 'system' has been screwing those folks for 30 years. And then a couple years ago it started working its way up the food chain. And now the middle-class is starting to take their jobs.

And you talk about future cash.

The way I understood it was that, considering that they couldn't make rent on their unemployment income, the wages still wouldn't have been enough to keep them from having to give up the house.

I'm trying to be sympathetic, but I'm having trouble getting the numbers to work. He picks up $700 per week in unemployment compensation. That's $3000 per month. How much is their rent? Have they considered making special arrangements with their landlord? I doubt if she has many other options (other tenants or a buyer).

I really felt bad for this family until she turned the job down. In my mind, that changed everything.

Probably a little bit under a grand: http://southbend.craigslist.org/search/apa?query=middlebury&...

You're right it's probably doable on a strict budget, but kids are expensive, I've heard. Then again, so is beer and lotto tickets, but he might not be exaggerating when he says that's the last thing keeping him sane.

Then again, so is beer and lotto tickets, but he might not be exaggerating when he says that's the last thing keeping him sane.

Indeed. There have been times when I spent my last $10 on chips, dip, and soda, just for the temporary mood boost.

They're living so hand-to-mouth that she simply couldn't afford the immediate cash-in-hand loss of the job despite any future payoff. By the sounds of it, the landlord was pretty damn stretched, I doubt they could have negotiated. Maybe there's the option of replacement tenants downsizing for similar reasons, otherwise I feel a bit sorry for the poor landlord..

I really felt bad for this family until she turned the job down. In my mind, that changed everything.

That's understandable to me; she'd essentially be paying to work. That would both worsen their immediate cash situation and make it harder for her to search for a decent job. The real problem is the ridiculous incentives caused by unemployment payments that immediately go to zero once you have any source of income.

The point where I lost sympathy was when the guy was making a good salary and was determined to spend every cent of it. If you're living paycheck to paycheck in the best of times, you are going to get screwed, it's just a question of when.

Considering that the guy eats donuts and drinks jugs of Pepsi, I think that spending $40/week wouldn't kill them.

Yeah, I was reading that, and the bit about having 8 beers every week after collecting his unemployment check, and the bit about buying 4 packs of cigarettes, and various other things, and thinking - wtf? No wonder you're broke. Get your priorities straight.

That's one way to look at it. Another is, if people wouldn't accept jobs that don't pay a living wage, wages would rise. Supply and demand and all that.

Or they'd buy Software to keep the books and build robots to paint the RVs.

Unskilled labor needs to be cheaper than mechanization or it'll become mechanized labor.

Of course, someone has to babysit the software and fix the broken robots.

(Which is why I don't see automation as a bad thing, even only taking into account the effect on the job pool.)

You are talking about replacing a large number of unskilled labor positions with a small number of skilled positions. I do not see this as avoidable (nor do I believe it should be avoided) but this process is not quick nor is it painless.

Aside from the automation, keep in mind that there are people that don't necessarily need a high wage.

For instance, what is a living wage for a college student can be very low. My college job started at $7 and it paid my living expenses. Similarly, if one person in the household is earning enough to cover the bills the partner might be content earning enough for luxuries.

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