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Old 01-09-2011, 05:32 PM   #81
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Originally Posted by dex View Post
Do some research on that - see below.
I think the relevant research looks at workers with above-median wages and asks if they have employer subsidized insurance available. The gross number of people who have employer health coverage includes unemployed people, low income workers, and self employed.

I looked at the Kaiser site (the source of the Post article) and my estimate is "more than 85%".

I used Figure 5 here Snapshots: Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private Businesses, September 2010 - Kaiser Family Foundation
recognizing that the US median wage is around $42,000 per year and we're talking about a $60,000 job.

I believe the claim in the OP article is that a typical $60k worker has less real income than a minimum wage worker. A typical $60k worker has employer subsidized health insurance that isn't recognized by the author.
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Old 01-09-2011, 07:28 PM   #82
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Originally Posted by Independent View Post
I believe the claim in the OP article is that a typical $60k worker has less real income than a minimum wage worker. A typical $60k worker has employer subsidized health insurance ...

Something to aspire to?
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Old 01-09-2011, 09:01 PM   #83
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Originally Posted by kyounge1956 View Post
I hear these stories about fancy sneakers and the like too. Are these run of the mill welfare recipients or are they extreme and atypical examples? What percentage of the total number do they make up?
OK, I promised a more full background of what I know about this. It's not data, so take it for what it's worth. If you have data, please share. It's important to know who I heard this from and why I don't think it is isolated.

A member of our extended family is teaching in a underprivileged school in NY City. I've known him since he was ~ 10 YO, and he's had some tough times, a broken family, alcoholic (but good hearted) Father who died (probably as a result of the alcoholism, but details were vague) while he was out of the country. Despite what many would cite as reasons why he might not do so well, this young man excelled at a prominent college, went on to join the Peace Corps, and then chose to teach in one of the worst schools in NYC. His wife has a similar background. He is an outstanding person, someone I'm proud to know and he kind of re-instills your faith in humanity. He doesn't sound like any stereo-typical conservative, does he?

So we were talking over the holidays a few years back, and he's telling me about his experience with these kids. Despite living in the vibrant NYC with so many opportunities, most of them have never ventured out of their neighborhood (he would take them on field trips). And he said despite their poverty status, they mostly had brand name sneakers, high end cell phones (not just any cell phone), and on and on. Better than what he chose to buy with his own money that he was working for. Imagine - kids in 'poverty' with better phones and clothes than their teacher. Why?

To hear it from him took it from some vague bumper-sticker-welfare-queen-throw-out-line-from-conservatives and really made an impression on me. He didn't say this was one or two kids, it was the norm for his class.


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And where exactly is the money to pay for these thing coming from? Is it actually public money, or are the goodies coming from somewhere/someone else, as in the case of tryan's tenant?
Does it make a difference? If someone in their life is willing to provide 'goodies', why do they need OPM (or MM or YM) for the basics?

Quote:
I don't think it's possible to say, because this person has nice shoes or a pretty ring, they must be scamming the system. Maybe the shoes were on sale, or from Goodwill, ...
Yeah, that must be it. Just savvy shoppers doing the LBYM thing. Maybe they have some tips for T-Al and his garage sale jeans.

Quote:
I'm grateful that my exposure to these sorts of programs was relatively brief (although it seemed endless at the time) and many years ago. I do remember that I had to demonstrate, by coming into the Unemployment office with a list of jobs I had applied for, that I was actively looking for work, in order to continue getting unemployment benefits. I don't know if that's still required. Maybe things have gotten more lenient since the 1980's. I also remember it was the most miserable two years of my life so far. If having to experience repeated rejection by potential employers plus being treated like dirt by the people in the "Employment Security" office (maybe I was just projecting the fact that I felt like dirt onto them) in return for barely enough money to live on doesn't incentivize people to get off of unemployment I don't know what would. I certainly wanted out as fast as possible.
And if I had to avail myself of these services, I'm sure I'd feel just as you did. However, I think that gets to what is being discussed here. There are groups of these people, living in the same area, maybe for generations. There may not be the same stigma. And through conversations, they learn from each other how to get the most out of the system. Joe next door is doing it, you get some too, here's how, let's talk. I suspect it is just a different world from you or I. They probably talk about this in the same way many of us here talk about optimizing our IRAs for tax purposes.


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Old 01-09-2011, 09:36 PM   #84
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Originally Posted by Independent View Post
I think the relevant research looks at workers with above-median wages and asks if they have employer subsidized insurance available. The gross number of people who have employer health coverage includes unemployed people, low income workers, and self employed.

I looked at the Kaiser site (the source of the Post article) and my estimate is "more than 85%".

I used Figure 5 here Snapshots: Trends in Employer-Sponsored Health Insurance Offer Rates for Workers in Private Businesses, September 2010 - Kaiser Family Foundation
recognizing that the US median wage is around $42,000 per year and we're talking about a $60,000 job.

I believe the claim in the OP article is that a typical $60k worker has less real income than a minimum wage worker. A typical $60k worker has employer subsidized health insurance that isn't recognized by the author.
This is a good chart also. It shows more people have ins than I would have guessed.

Snapshots: Health Benefit Offer Rates and Employee Earnings - Kaiser Family Foundation
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Old 01-10-2011, 09:52 AM   #85
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More on the numbers in the OP.

The table shows $13,034 in "Payroll and Federal Income Taxes". We all know that SS + Medicare is 7.65% of wages, so that's $4,590, leaving $8,444 for FIT.

But, when I look at the tax form I get FIT as $2,304. That's $6,100 less than the number in the OP.*

We could also add the value of a retirement plan to the $60k income. According to the EBRI, about 68% of the people with wages about $50k participate in employer sponsored retirement plans (more have plans available, not all participate). (Figure 25 http://www.ebri.org/pdf/briefspdf/EB...ticipation.pdf) The average cost to the employer of a participating employee is probably more than 5% of income (more for DB than DC).

Given these issues, I thought I'd find the original source and see what the author had to say about his methods. So I tried the Cleveland Current, typed "Wyatt Emerich" in their search box, and got zero results. Search I Googled a little, got lots of references to this article, but no source. Maybe someone else can do better.



* The math goes like this:
60,000 AGI
$8,400 Standard Deduction for head of household
10,950 Three personal exemptions @ $3,650 each
------
40,650 Taxable income

$5,504 Tax from table
$2,000 Two child credits @ $1,000 each
$1,200 Child care credit, 20% of $6,000
------
$2,304 Tax
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Old 01-11-2011, 01:00 AM   #86
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Originally Posted by Independent View Post
(snip)Given these issues, I thought I'd find the original source and see what the author had to say about his methods. So I tried the Cleveland Current, typed "Wyatt Emerich" in their search box, and got zero results. Search I Googled a little, got lots of references to this article, but no source. Maybe someone else can do better. (snip)
I poked around a little and found what I think is the original article here, and this appears to be an op-ed piece he wrote about the article in another paper.

A web search will also turn up plenty of hits contesting the conclusions in the article. One point made which I think makes a lot of sense is that many of the amounts in the chart in the minimum wage household can't properly be called "disposable income". Subsidies or benefits yes, but they are not the same thing as cash in hand. Suppose a family is eligible for the school lunch program. According to the School Lunch Fact Sheet, the program provides free or subsidized lunches to school children from low income (<130% of poverty level) families. On a second look at the figures in the chart, I am getting very suspicious. Figuring 20 school days in a month, this family is supposedly getting $90 a day for the children's lunches! I usually buy lunch at work rather than brown-bagging it, and it doesn't cost me $90 per month, let alone per day (We're talking food-court food, not sit-down restaurants.) Again according to the fact sheet, the daily subsidy amount for a free lunch is $2.72. At 20 school days per month that is a subsidy of about $55 per child per month. IIRC, this hypothetical family had three children. If so, the total subsidy is much closer $180 than $1800, and referring once again to the fact sheet, this money is paid to the school, not to the family. It's not a check handed to the parents, of which they can keep any remainder as extra "disposable income".

I don't have time tonight to check the rest of Emmerich's chart and see if the other amounts are any more accurate than this one. I chose school lunches at random and it appears to be exaggerated by a factor of ten. I'm not impressed.
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Old 01-11-2011, 02:46 AM   #87
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OK, I promised a more full background of what I know about this. It's not data, so take it for what it's worth. If you have data, please share. It's important to know who I heard this from and why I don't think it is isolated.

A member of our extended family is teaching in a underprivileged school in NY City. I've known him since he was ~ 10 YO, and he's had some tough times, a broken family, alcoholic (but good hearted) Father who died (probably as a result of the alcoholism, but details were vague) while he was out of the country. Despite what many would cite as reasons why he might not do so well, this young man excelled at a prominent college, went on to join the Peace Corps, and then chose to teach in one of the worst schools in NYC. His wife has a similar background. He is an outstanding person, someone I'm proud to know and he kind of re-instills your faith in humanity. He doesn't sound like any stereo-typical conservative, does he?

So we were talking over the holidays a few years back, and he's telling me about his experience with these kids. Despite living in the vibrant NYC with so many opportunities, most of them have never ventured out of their neighborhood (he would take them on field trips). And he said despite their poverty status, they mostly had brand name sneakers, high end cell phones (not just any cell phone), and on and on. Better than what he chose to buy with his own money that he was working for. Imagine - kids in 'poverty' with better phones and clothes than their teacher. Why?

To hear it from him took it from some vague bumper-sticker-welfare-queen-throw-out-line-from-conservatives and really made an impression on me. He didn't say this was one or two kids, it was the norm for his class.
OK, anecdote for anecdote. I was clearing out my email at work today and while deleting one of the pre-Christmas emails about the office Giving Tree, noticed that one of the kids had asked for (and I assume gotten) a pair of Nikes. So now we've canceled each other out.
What's the alternative? Sumptuary law - Wikipedia, the free encyclopedia so it's illegal for poor people to wear clothing "above their station in life"?

Quote:
Does it make a difference? If someone in their life is willing to provide 'goodies', why do they need OPM (or MM or YM) for the basics?
It does to me. The one example we've had presented in the thread is that of tryan's tenant. Taking tryan's remarks at face value, this lady is really disabled, not a scammer. Under the rules of the program, she qualifies to receive benefits. Let me pose a hypothetical question:if you had a parent, relative or friend who was disabled and living on a limited income from government benefits, would you perhaps supplement it with extra money for gas or groceries, or nicer clothes than they would be able to afford otherwise? Or even give them your old car instead of trading it in when you buy a new one? Should you be prohibited from doing those things by the rules of the program? Do you really want the micromanagement, the reams of additional regulations, that would be required to keep track of every bit of supplement that people get, who it came from and whether it's OK for that person to provide financial assistance to the person on disability income or not? It's OK to buy them gas but not to pay their mechanic's bill. It's OK to buy them a jacket but not a party dress. It's OK to give them a beater, but not a nice car that runs well. And on and on and on. Where would it end? Or, to cut the cost of administration, should it simply be forbidden for anyone to provide any financial assistance whatsoever to any recipient of government benefits? It may be in very questionable taste (to put it no more strongly than that) for tryan's tenant to be driving around in a fancy car wearing a bunch of bling that her boyfriend bought her, but I don't see how it would be possible to keep her from doing that without also preventing you from helping your family member or friend in the same situation in what (I assume) most people would consider a completely unobjectionable way. I don't see how it would be possible either, to determine accurately whether an item in the possession of a person on government benefits is their property or borrowed, or cost too much, or came from a permissible source, without bending the 4th Amendment into a pretzel.


Quote:
Yeah, that must be it. Just savvy shoppers doing the LBYM thing. Maybe they have some tips for T-Al and his garage sale jeans.
There is no way to know where the shoes came from. Maybe they were from a sale, or a Giving Tree, or maybe the person getting benefits just allocated the money they got in a way you wouldn't approve of. Maybe they decided they'd rather do without one meal a day than do without the fancy shoes. That's crazy, but should it be considered fraudulent? It seems to me though that there is an unspoken assumption here that most people who receive government benefits are frauds. That is an assumption which needs to be supported by more than anecdotes, even very credible ones, before being accepted as factual. I know it wasn't true of me, when I was receiving government benefits, so I don't assume it is true of others in the same situation I was in.

Quote:
And if I had to avail myself of these services, I'm sure I'd feel just as you did. However, I think that gets to what is being discussed here. There are groups of these people, living in the same area, maybe for generations. There may not be the same stigma. And through conversations, they learn from each other how to get the most out of the system. Joe next door is doing it, you get some too, here's how, let's talk. I suspect it is just a different world from you or I. They probably talk about this in the same way many of us here talk about optimizing our IRAs for tax purposes.


-ERD50
How is that any different than people here discussing how to get the maximum number of dollars from Social Security? Should there be a stigma attached to that? How is that any different from the E-R commenters (about half of those who responded on the thread, IIRC) who essentially told a poster a few weeks ago to go ahead when he asked whether he should accept a property tax exemption, aimed at low-income seniors, that he qualified for but didn't really need? Yeah, there is almost certainly some fraud on these programs, and undoubtedly a lot of room for better design and management so the programs encourage people to move up and off rather than sit there, but it seems to me that there is also an element of scapegoating involved, a seeking for someone it's OK to feel superior to and to look down one's nose at. If this is really about benefiting welfare recipients by getting them to the point where they're able to stand on their own feet economically, why aren't there threads here making similar suggestions to benefit farmers, with an itemized chart of the various kinds of subsidies a farmer may get, and suggesting that market forces should be allowed to operate and force the price of corn or wheat down until it finds its own level, as was suggested for the labor of welfare recipients earlier in the thread?
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Old 01-11-2011, 02:51 AM   #88
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(snip)So, in this environment, I'll turn your implicit question around: is it right for the government to provide a standard of living to people who are not working that is higher than the standard of living of someone who works?(snip)
Maybe the people receiving the benefits have more disposable income, although after a little checking on just one of the items of the chart in the original post, I begin to doubt the truth of the original Emmerich article. But low income single moms definitely don't have a higher standard of living. The $60K family may well be buying their home rather than renting. Even if they are renting, it's probably in a nicer building, in a neighborhood with less crime, better schools, more stores and services and on and on.

If minimum wage earners really did have a higher standard of living than $60K households, the latter would be quitting their stressful jobs and joining the ranks of the happily impoverished.

And with that, I regretfully conclude my participation in this thread. I've gone from occasionally staying up a little later than I should, to repeatedly staying up way past my bedtime, and this thread is a major culprit. It's just too absorbing, and I'm very slow organizing my thoughts and getting them down in words.

See you all elsewhere on the forum.
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Old 01-11-2011, 08:25 AM   #89
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And with that, I regretfully conclude my participation in this thread.
So, there really is such a thing as a free lunch?
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Old 01-11-2011, 08:59 AM   #90
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Originally Posted by kyounge1956 View Post
I poked around a little and found what I think is the original article here, and this appears to be an op-ed piece he wrote about the article in another paper.

A web search will also turn up plenty of hits contesting the conclusions in the article. One point made which I think makes a lot of sense is that many of the amounts in the chart in the minimum wage household can't properly be called "disposable income". Subsidies or benefits yes, but they are not the same thing as cash in hand. Suppose a family is eligible for the school lunch program. According to the School Lunch Fact Sheet, the program provides free or subsidized lunches to school children from low income (<130% of poverty level) families. On a second look at the figures in the chart, I am getting very suspicious. Figuring 20 school days in a month, this family is supposedly getting $90 a day for the children's lunches! I usually buy lunch at work rather than brown-bagging it, and it doesn't cost me $90 per month, let alone per day (We're talking food-court food, not sit-down restaurants.) Again according to the fact sheet, the daily subsidy amount for a free lunch is $2.72. At 20 school days per month that is a subsidy of about $55 per child per month. IIRC, this hypothetical family had three children. If so, the total subsidy is much closer $180 than $1800, and referring once again to the fact sheet, this money is paid to the school, not to the family. It's not a check handed to the parents, of which they can keep any remainder as extra "disposable income".

I don't have time tonight to check the rest of Emmerich's chart and see if the other amounts are any more accurate than this one. I chose school lunches at random and it appears to be exaggerated by a factor of ten. I'm not impressed.

Isn't the article based on annual numbers If so, then $55 per month per child X 3 is $165 X 9 months = $1485... so not far off of the $1800

(only looking at your post... so I do not know what is in the article)...

Also, money if fungible... If I do not have to buy my kids lunch at school, that leave me with money to spend somewhere else... hence, disposable income... it does not matter if it is paid directly to the school or not... it is money that is NOT coming out of my pocket...

So your first argument fails and I also believe your second one does too...
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Old 01-11-2011, 09:04 AM   #91
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OK, anecdote for anecdote. I was clearing out my email at work today and while deleting one of the pre-Christmas emails about the office Giving Tree, noticed that one of the kids had asked for (and I assume gotten) a pair of Nikes. So now we've canceled each other out.
What's the alternative? Sumptuary law - Wikipedia, the free encyclopedia so it's illegal for poor people to wear clothing "above their station in life"?

It does to me. The one example we've had presented in the thread is that of tryan's tenant. Taking tryan's remarks at face value, this lady is really disabled, not a scammer. Under the rules of the program, she qualifies to receive benefits. Let me pose a hypothetical question:if you had a parent, relative or friend who was disabled and living on a limited income from government benefits, would you perhaps supplement it with extra money for gas or groceries, or nicer clothes than they would be able to afford otherwise? Or even give them your old car instead of trading it in when you buy a new one? Should you be prohibited from doing those things by the rules of the program? Do you really want the micromanagement, the reams of additional regulations, that would be required to keep track of every bit of supplement that people get, who it came from and whether it's OK for that person to provide financial assistance to the person on disability income or not? It's OK to buy them gas but not to pay their mechanic's bill. It's OK to buy them a jacket but not a party dress. It's OK to give them a beater, but not a nice car that runs well. And on and on and on. Where would it end? Or, to cut the cost of administration, should it simply be forbidden for anyone to provide any financial assistance whatsoever to any recipient of government benefits? It may be in very questionable taste (to put it no more strongly than that) for tryan's tenant to be driving around in a fancy car wearing a bunch of bling that her boyfriend bought her, but I don't see how it would be possible to keep her from doing that without also preventing you from helping your family member or friend in the same situation in what (I assume) most people would consider a completely unobjectionable way. I don't see how it would be possible either, to determine accurately whether an item in the possession of a person on government benefits is their property or borrowed, or cost too much, or came from a permissible source, without bending the 4th Amendment into a pretzel.


There is no way to know where the shoes came from. Maybe they were from a sale, or a Giving Tree, or maybe the person getting benefits just allocated the money they got in a way you wouldn't approve of. Maybe they decided they'd rather do without one meal a day than do without the fancy shoes. That's crazy, but should it be considered fraudulent? It seems to me though that there is an unspoken assumption here that most people who receive government benefits are frauds. That is an assumption which needs to be supported by more than anecdotes, even very credible ones, before being accepted as factual. I know it wasn't true of me, when I was receiving government benefits, so I don't assume it is true of others in the same situation I was in.

How is that any different than people here discussing how to get the maximum number of dollars from Social Security? Should there be a stigma attached to that? How is that any different from the E-R commenters (about half of those who responded on the thread, IIRC) who essentially told a poster a few weeks ago to go ahead when he asked whether he should accept a property tax exemption, aimed at low-income seniors, that he qualified for but didn't really need? Yeah, there is almost certainly some fraud on these programs, and undoubtedly a lot of room for better design and management so the programs encourage people to move up and off rather than sit there, but it seems to me that there is also an element of scapegoating involved, a seeking for someone it's OK to feel superior to and to look down one's nose at. If this is really about benefiting welfare recipients by getting them to the point where they're able to stand on their own feet economically, why aren't there threads here making similar suggestions to benefit farmers, with an itemized chart of the various kinds of subsidies a farmer may get, and suggesting that market forces should be allowed to operate and force the price of corn or wheat down until it finds its own level, as was suggested for the labor of welfare recipients earlier in the thread?

Don't want to quote the quotes you had for these answers... I am to lazy...

I have no problem with people getting help from friends, relatives, boyfriend/girlfriend etc. etc... the question that this article seems to ask is are we supplementing a certain number of people at a level that is to high IOW, should we be giving all these incentives not to try harder to improve ones life... and the lives of their family...

It seems perverse that we can provide so much to people that they are willing to not even try to get out of their situation.... but as someone else pointed out... there are some stupid people out there and they probably can not do any better..
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Old 01-11-2011, 09:07 AM   #92
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On a second look at the figures in the chart, I am getting very suspicious. Figuring 20 school days in a month, this family is supposedly getting $90 a day for the children's lunches! ...

I don't have time tonight to check the rest of Emmerich's chart and see if the other amounts are any more accurate than this one. I chose school lunches at random and it appears to be exaggerated by a factor of ten. I'm not impressed.
May I suggest a THIRD look? That $1,800 is an annual number, as are all the numbers in his chart. The min wage worker certainly is not being compared to someone with a $60,000 monthly income ( $720,000 annual).

So using the typical 180 days of school per year (I googled it), for four kids, that is $1800/180/4 = $2.50 for lunch per day per child.

Quote:
Again according to the fact sheet, the daily subsidy amount for a free lunch is $2.72.
Oh, so it looks like he underestimated it? Thanks for the correction.


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And with that, I regretfully conclude my participation in this thread.
This seems to be a trend with you, IIRC you did the same in a pension thread, maybe another? Why should we engage if you're going to stomp off?

I'm sure you don't mean it this way (you seem like a considerate, caring thoughtful person), but when you say that after engaging in all this, it sounds to me like you are essentially saying "If other people don't agree with me, they must be too stupid to 'get it', so I give up."

Perhaps you will reconsider when you see you used your own math error to try to invalidate the OP article.


Maybe later, I'll address your other points. If not for you, than for myself and possibly others. They are non-sequiturs in a similar vein as your math error.

edit/add - He doesn't cover this point in his article, but I know for a fact in IL that once you qualify for the 'free lunch program', you automatically qualify for all sorts of other benefits. Many school fees are automatically waived/reduced, you qualify for a free cell phone and 30 minutes/month (about 10x what I use). On and on. The $1800 is way understating it, far beyond $2.72 vs $2.50.

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Old 01-11-2011, 09:09 AM   #93
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Maybe the people receiving the benefits have more disposable income, although after a little checking on just one of the items of the chart in the original post, I begin to doubt the truth of the original Emmerich article. But low income single moms definitely don't have a higher standard of living. The $60K family may well be buying their home rather than renting. Even if they are renting, it's probably in a nicer building, in a neighborhood with less crime, better schools, more stores and services and on and on.

If minimum wage earners really did have a higher standard of living than $60K households, the latter would be quitting their stressful jobs and joining the ranks of the happily impoverished.

And with that, I regretfully conclude my participation in this thread. I've gone from occasionally staying up a little later than I should, to repeatedly staying up way past my bedtime, and this thread is a major culprit. It's just too absorbing, and I'm very slow organizing my thoughts and getting them down in words.

See you all elsewhere on the forum.

I am sure you will be back... at least I hope so...


I do agree with some of your posts... but not completely... it is not that the $60K person wants to stop working so hard and get down to the minimum wage person... it is that the minimum wage person does not want to do anything to become a $35K person... or a $45K person.... because they will start to lose their benefits and they will not have increase their standard of living with their extra income...
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Old 01-11-2011, 09:16 AM   #94
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Originally Posted by Texas Proud View Post
I am sure you will be back... at least I hope so...


I do agree with some of your posts... but not completely... it is not that the $60K person wants to stop working so hard and get down to the minimum wage person... it is that the minimum wage person does not want to do anything to become a $35K person... or a $45K person.... because they will start to lose their benefits and they will not have increase their standard of living with their extra income...
It's like the old saying;

"Give a man to fish and he'll eat for a day,
teach him to fish and he'll sit in a boat and drink beer all day"

Well, we certainly taught 'em how to fish, (for benefits) and now we're paying for the beer and the boat, too.
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Old 01-11-2011, 09:32 AM   #95
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Originally Posted by kyounge1956 View Post
I poked around a little and found what I think is the original article here, and this appears to be an op-ed piece he wrote about the article in another paper.
Thanks. It turns out that the zerohedge story mistakenly identified him as writing for the Cleveland (Mississippi) Current. In fact, the original is in a weekly newspaper that you found.

Reading both articles, there is no real support for his numbers. "Anybody can check them on the internet ...", without any links. His argument for excluding health insurance benefits was "... a large percentage of the jobs no longer come with free company medical plans." He has no support for this, awarness that health insurance benefits are strongly skewed by income, or explanation why he wouldn't include the typical subsidy provided by employers.

Nor is their any support for his FIT numbers. (BTW, I looked at the Misssissippi income tax instructions here: http://www.dor.ms.gov/nactp/indiv/20...v_80100097.pdf It looks like he also missed the state income tax number, which appears closer to $2,300 than the $3,000 he claims.)

Adding up what I've found so far, I'd estimate that he misses about $18,000 of after tax compensation for a typical $60k job. ($9,800 for health insurance subsidy, $6,100 for FIT, $700 for SIT, $1,800 for retirement benefits.)

Edit: Looking some more, I see he made the same state income tax error for the low wage earner. It should be $105 instead of his $725. This mostly offsets the $700 error for the high wage earner.
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Old 01-11-2011, 09:37 AM   #96
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Originally Posted by ERD50 View Post
May I suggest a THIRD look? That $1,800 is an annual number, as are all the numbers in his chart. The min wage worker certainly is not being compared to someone with a $60,000 monthly income ( $720,000 annual).

So using the typical 180 days of school per year (I googled it), for four kids, that is $1800/180/4 = $2.50 for lunch per day per child.
The table is for a "three person family". Presumably one adult and two children. You're correct about the "annual" and 180 days, so this means $5.00 per day per child.
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Old 01-11-2011, 10:17 AM   #97
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Originally Posted by Independent View Post
The table is for a "three person family". Presumably one adult and two children. You're correct about the "annual" and 180 days, so this means $5.00 per day per child.
Ah, I stand corrected, I somehow read " A one-parent family of three " as four total, and then further mistook that as four children. Thanks.

BTW, I am interested in your tax calculations. There may well be something there that would make these numbers look different. But regardless of the specific numbers, I think there is something to this. I feel it is certainly worth questioning if these programs are providing the type of incentive to get off of OPM that they should. That is a sliding scale, not a single number. But it would be good to see verifiable numbers.

-ERD50
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Old 01-11-2011, 10:36 AM   #98
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Originally Posted by Independent View Post
Adding up what I've found so far, I'd estimate that he misses about $18,000 of after tax compensation for a typical $60k job. ($9,800 for health insurance subsidy, $6,100 for FIT, $700 for SIT, $1,800 for retirement benefits.)

Edit: Looking some more, I see he made the same state income tax error for the low wage earner. It should be $105 instead of his $725. This mostly offsets the $700 error for the high wage earner.
I haven't dug into these numbers, but let's assume you are correct (and I do trust your numbers far more than some random journalist). That still means that the $60,000 worker is only ahead of the min wage worker by ~ $15,000, and some of that fits into the 'delayed gratification' area (retirement benefits). And we ought to weigh the health ins subsidy by the % that do not get it, if we want to talk in averages.

And I feel it is worth questioning if that is enough incentive for these people to work to get off of OPM. Another way to look at it (if I dare attempt more arithmetic) is, the $60K family makes $45.5K more than the $14.5K family, but only 'sees' $15K of that. It is essentially a 67% 'marginal tax rate' on the added earnings. That seems pretty high for a one parent family of three making $60,000.

-ERD50
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Old 01-11-2011, 11:01 AM   #99
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Originally Posted by Texas Proud View Post
. . . it is not that the $60K person wants to stop working so hard and get down to the minimum wage person... it is that the minimum wage person does not want to do anything to become a $35K person... or a $45K person.... because they will start to lose their benefits and they will not have increase their standard of living with their extra income...
I think this is likely more important (but less "catchy") than the 60K vs part-time min wage question. How fast do the benefits cut off, and to what degree is this a disincentive to seek employment--employment that could eventually lead to a way out of this cycle? If the low-income person loses $1 in benefits for every $2 earned, then that "feels like" a 50% tax rate. I don't know if that's a disincentive to work, but it's certainly a disincentive to work "on the books."
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Old 01-11-2011, 02:00 PM   #100
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Originally Posted by ERD50 View Post
I haven't dug into these numbers, but let's assume you are correct (and I do trust your numbers far more than some random journalist). That still means that the $60,000 worker is only ahead of the min wage worker by ~ $15,000, and some of that fits into the 'delayed gratification' area (retirement benefits). And we ought to weigh the health ins subsidy by the % that do not get it, if we want to talk in averages.

And I feel it is worth questioning if that is enough incentive for these people to work to get off of OPM. Another way to look at it (if I dare attempt more arithmetic) is, the $60K family makes $45.5K more than the $14.5K family, but only 'sees' $15K of that. It is essentially a 67% 'marginal tax rate' on the added earnings. That seems pretty high for a one parent family of three making $60,000.

-ERD50
I think this is the correct way to look at it. The best answer is in the middle somewhere, not at the extremes.

We have conflicting goals. We want people to keep "most" of the economic value they create. We also want people (especially children) who seem to have come up short in creating value to at least have the necessities of life.

So the questions are whether we're providing enough to cover the necessities and whether we're providing so much that we're creating disincentives. In some cases it may be hard to find a point that satisfies both goals. This will be especially true in families with children.

Based on my adjustments to this guy's numbers, I think the numberss go like this:

The low wage family gets about $18,200 of unrestricted cash, $13,300 in vouchers for food and housing, and about $6,500 in extra medical benefits (part of that is the lack of a premium, part is a zero deductible, and part is coverage for dental and eyeglasses). Some of the unrestricted cash will go to childcare for both families.

The high wage family gets about $50,800 in unrestricted cash, no vouchers, and pays the extra $6,500 for medical (repeating, because they have a premium, a deductible, and have to pay dental/eyeglasses out of pocket), and gets some retirement plan that may be worth $3,000.

Are we providing too much to the low income family? If so, is there a way to reduce it without creating an excessive disincentive to go from no earned income up to a minimum wage job? Or, are we taxing the high income family too much? If so, is the solution to shift taxes to someone else or cut spending?

I don't think we've got the perfect solution today. I've suggested other ways to handle medical care and I think we should both cut spending and shift taxes. But, I don't think our current compromise is grossly wrong either.
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