The Atlantic Article on Lack of Savings

[NW-Bound]

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Originally Posted by daylatedollarshort The woman in the rust belt is still into status, "My son goes to a great school—two of the 2016 Pulitzer Prize winners are alums. I have a house cleaner. I go out to spendy restaurants about twice a week. And I always have $400 on hand in case of an emergency. And yet my 2015 taxes reveal that my income was $43,000." Yet she lives in an area where the other households make almost twice as much: "the median income in Shaker Heights, where I live, is $75,177." I give her credit for a low cost of living part of the country but if I had that kind of income I would be cleaning my own house and cutting Domino Pizza coupons until I had my retirement funded...

Well, if you don't have status, what else counts?

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And I guess having $400 in savings is now the new black.

When the bar is set so low, more people can feel good.

I have to go back to early college years when I did not have $400 cash. And $400 back then was worth more.

[daylatedollarshort]

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Originally Posted by NW-Bound Well, if you don't have status, what else counts?

Stories of bargain buys at the 99 Cents Only stores?

[NW-Bound]

Quote:

Originally Posted by daylatedollarshort Stories of bargain buys at the 99 Cents Only stores?

... and at Grocery Outlets.

The trick is you have to hang out with the right crowd.

[kcowan]

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Originally Posted by NW-Bound There are many cities in between the extreme of coastal metro areas and rustbelt cities, where housing cost is more manageable and good jobs can be had. I recently have seen a few articles talking about people who do not hold high-paid tech jobs wanting to leave SF area. Even the rank-and-file high-tech workers are hard pressed to buy a home there. My brother refused an offer to go back to Google, which came with a high 6-figure option. He and his wife did not want to give up their 4000-sq.ft. home in Phoenix.

Speaking of the Bay Area, here is a great read on topic:Throwing Rocks at the Google Bus - Rushkoff This is a good read
and here is the one hour video:

Douglas Rushkoff: Throwing Rocks at the Google Bus—How Growth Became the Enemy of Prosperity - YouTube

[NW-Bound]

I just finished watching this hour-long video.

Thanks for posting, though this goes off further from the thread topic. In his Black Swan book Taleb touched on the phenomenon of "winner takes all" of modern economy, but Rushkoff went much deeper in analyzing the source of the wealth disparity that people have been lamenting about. And he suggested some examples on how to combat it. And even though what he proposes will reduce the investment return for passive shareholders like myself, it is hard to say that it would not help the average worker who does not have millions invested to live off that capital.

And no, he is not talking about taxing rich people until they are no longer so, but about how wealth generation can be of a more distributive manner rather than centralized.

The above is an enlightening talk. I will read his books, and if his writing is of the same style as his talk, I am sure I will enjoy it.

Now, back to how people cannot save up $400 for rainy days...

[kcowan]

Yes I have been thinking what role us ER folks would play in his versions of the best society. But he makes much sense.

[daylatedollarshort]

There is now a follow up article in The Atlantic:

The Circles of American Financial Hell
http://www.theatlantic.com/business/archive/2016/05/american-financial-hell/481107/

"Yes, it’s not real poverty, and, yes, Gabler made bad decisions. But Gabler’s straits, and the straits of millions like him, demonstrate gross dysfunction at the core of the American system. If millions of people with healthy incomes are in Gabler’s situation, something is very wrong."

"Why can’t people live below their means, save up some money, and kick up their feet?"

The author blames education and housing.

Yet compare that to the OCED Better Life Index:"The United States performs very well in many measures of well-being relative to most other countries in the Better Life Index. The United States rank at the top in housing, and income and wealth."
http://www.oecdbetterlifeindex.org/c...united-states/

I am not sure I would exactly call that standard of living a financial hell, if cutting back a bit to LBYMs means living like people in other developed countries. Our relatives from the old country visit us here and laugh at the size of American cars, appliances and houses.

[papadad111]

"In a sense, the people who say rising wages would help are on to something, but the key is not getting households more money—it’s about building a different system, one in which the upside to getting ahead isn’t so high, and the downside to falling behind isn’t so low. Better wages are a symptom of such a system, but they don’t themselves bring one about. That would require systemic changes—changes to the tax code, changes to corporate-governance practices, changes to anti-trust law, changes to how schools are funded, to name a few. Such reforms are far off, or may never come at all. So for the foreseeable future, Gabler’s problem may be yet unnamed, but millions will know it all too well"


Gee...sounds like communism. Even the Chinese know now that it doesn't work as an economic system.

[Sarah in SC]

daylate, reading that reminded me of the book I read a number of years ago, called the Two Income Trap, which mentioned a lot of the same issues. Housing and education are inextricably tied to one another, and represent a huge investment for parents, regardless of where they fall on the income spectrum.
Thanks for sharing that. I'm always grateful to read about these different perspectives on the economy, because I tend to spend time with people like myself, and it is helpful to remember I might be an outlier.