
Almost 80% of US workers live from paycheck to paycheck - pmoriarty
https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich
======
Sharlin
As an outsider, I really don’t understand how the US economy continues to
function. With almost nonexistent social safety nets, jobs you can be fired
from if you don’t come to work while ill, lack of paid maternity leave
combined with really expensive daycare, and healthcare you can only afford if
you’re healthy anyway, the only way for an average person to be able to
prepare for contingencies is to have a lot of savings. But at the same time an
average person cannot afford to save any money! Boggles the mind.

~~~
BartBoch
This IS the reasons a US economy is so strong. You got it all wrong. Extreme
consumerism, inability to be unemployed (unemployment can end up in being
homeless, so the transition period between jobs is almost non-existent, so the
economy won't feel it, and the government don't need to pay benefits long
term), enforcing businesses and insurance companies to cover the healthcare
(inflating costs, creating jobs for middleman to shift the responsibility,
building fear in people that if their wealth decreases they will be
uninsured), not many social programs (so more money can be spent on public
projects). All of those things are fuel to the economy, not dead weight.

~~~
jpatokal
The tail end of your argument is the broken window fallacy. On every
conceivable metric the vast amount of bureaucracy and paper-pushing required
by the uniquely dysfunctional US healthcare system fails to deliver any
benefit proportionate to its gargantuan costs.

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"?

~~~
BartBoch
The question will be then if the increased amount of uninsured people will
affect the economy badly (by the inability to access professional health
services) and if this will result in creating a new market for more efficient,
low-cost health providers. This will be controlled by the government as always
by relaxing the laws.

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.

------
slfnflctd
We are socialized from elementary school or earlier to value the most exciting
toys, cool clothes and awesome food. If your family attempts to be frugal, it
affects your social life. Kids grow up almost inevitably developing a
magnetic, unconscious attraction to spending more than they can afford.

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.

~~~
amelius
> while easing off on the consumerism

In order to make this work, we need a different metric reflecting the
performance of our economy.

------
vladd
The article presents a graph where two metrics are overlapped on the same
scale (union membership and percentage-based middle-class income), with a
graph title suggesting that one causes the other. This isn't necessarily true.

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.

~~~
egocodedinsol
> in general correlation doesn't imply causality.

Yes, we know. But it's often a sign that something interesting is going on.

------
CompelTechnic
What percent of workers around the world live paycheck to paycheck? Or by
country? Comparative data is important and also hard to Google in this case.

~~~
bogwog
Why is that important? Being able to compare to other countries isn't going to
improve the lives of people living paycheck to paycheck.

~~~
CompelTechnic
It would help to understand whether this is a uniquely American phenomenon
based on our culture/safety net/whatever. It would help me know whether this
is a typical scary clickbait headline focused on the US.

------
blfr
_Simply put, the vast majority of American workers have lost just about all
their bargaining power._

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.

~~~
maxerickson
It's because the economy isn't a fixed size pie. More people means more
demand, especially in a consumptive economy like the US has (those scary trade
deficits we run are clear evidence that consumption is higher than
production).

It's also not the case that borders can protect workers from competition.
Especially in the long run.

~~~
blfr
The increased demand is the other side of the squeeze on regular people
driving the housing prices up. So they lose bargaining power both with their
employer and their landlord or developer.

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_

~~~
cjalmeida
Oh, please. If your educated, English speaking, healthy, native born fellow
can’t compete for jobs with an Honduran refugee that can barely spells his
name; the problem might not be with the migrant to start with.

~~~
JoeAltmaier
The Honduran will be cheaper, and there's no competing with that for many
labor jobs. Which are disappearing, which creates the problem.

Labor a shrinking market demand and a growing supply, and we're not going to
fix that.

------
amelius
What's making this sad is that salary and worker performance are almost always
completely disconnected. A responsible worker has no way out of their
situation. It's pretty demoralizing if you ask me.

~~~
kebman
A responsible worker might not buy such an expensive home or such an expensive
car, or live such an expensive lifestyle. And perhaps then he could afford to
work less – or perhaps continue to work just as hard, and instead invest the
proceeds, and then become truly independent. That's a choice for everyone in a
free country to make. That they choose to not do it, is no fault of “the
rich”. Expecting other people to pay for your own failing, is at best morally
questionable.

~~~
Broken_Hippo
You are somehow thinking that a responsible worker has money left over.
Savings doesn't matter much if you are already using used cars, living
somewhere cheap, eating cheaply, and yet still in the position where a flat
tire is an emergency or getting sick and missing a day of work throws your
finances in disarray. Saving $30 left over after paying for basic crap doesn't
help and completely ignores mental health. Investing doesn't even come into
the picture because there is never enough money to gamble (invest) with.

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.

------
hydrox24
This is an opinion article; if you're interested in the fact in the headline,
it was produced by joint CareerBuilder/Harris Poll study. The results and
details are here: [http://press.careerbuilder.com/2017-08-24-Living-Paycheck-
to...](http://press.careerbuilder.com/2017-08-24-Living-Paycheck-to-Paycheck-
is-a-Way-of-Life-for-Majority-of-U-S-Workers-According-to-New-CareerBuilder-
Survey)

------
stmfreak
What exactly constitutes NOT living paycheck to paycheck?

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.

~~~
herval
Is that rethorical? It means being able to save money on every paycheck, or
have enough saved (or a social safety net) that allows you to lose a job and
not go bankrupt/lose assets if you spend a few months without pay. That’s by
no means “being rich” in developed countries...

------
jpeter
How is that even possible if the median income is $59.000?

~~~
richardknop
That’s 4900 dollars per month before taxes. Substract taxes, health insurance,
rent, bills etc and I think it becomes obvious why you’d live paycheck to
paycheck. 59k is not much given how expensive some of the essential
necessities (place to live, healthcare etc) have become. Throw in car and
student loans just to get rid of any left over money you might struggle to
save per month.

~~~
cup-of-tea
What's strange is Europeans are constantly told that everything is so much
cheaper in the US. I used to earn that median salary according to current
exchange rates, and I had an incredibly comfortable life. Owned my own car.
Never worried about finances at all.

~~~
richardknop
Well some things are way cheaper in US, like gas which makes owning a car
cheaper. Most consumer goods are also cheaper due to no VAT and stuff like
that. But Europe has things going for it too. Free healthcare and free
education being the top 2 areas were you save a ton of money compared to US
(literally tens of thousands dollars per year you don’t have to spend).

------
Simulacra
The rest of us live direct deposit to direct deposit.

------
cimmanom
Were talking a lot here about median wage. The article specifies 80% or
workers. What’s the 80th percentile income?

------
avar
There's many arguments in this thread to the effect that if Americans had more
money they'd just spend more, and not save, with others claiming the opposite
is true.

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-...](https://www.npr.org/sections/money/2018/07/27/633230414/gdp-
omg)

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?

~~~
nickthemagicman
I'd be interested in looking at the categories of this increased consumption
as well.

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'.

~~~
avar
Maybe I just have a simplistic view of these things, but I don't see how given
sufficient data across the economy you couldn't tease out whether people were
overspending or truly living at the limit.

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.

~~~
nickthemagicman
I agree with everything you just said. Paycheck-to-paycheck is subjective, you
need more data to explain the situation.

This would be really interesting data to mine cross correlate if you can find
good sources.

------
conquistadog
Robert Reich has become a very compelling and rational voice on these issues,
making the problems and their causes much easier to understand. I strongly
recommend his documentary at
[http://inequalityforall.com](http://inequalityforall.com) as well numerous
other easily found pieces he's put out.

~~~
kebman
Reich is a Socialist who wants to take everyone's freedom away for
collectivist ideals that are proven to not work. It's a shame so many people
fall for his crap. Inequality doesn't necessarily mean worse standard of
living. I think most Venezuelans can attest to that... That's why everyone
should be extremely wary when listening to Marxists.

~~~
pmoriarty
_" Here's a fun game to play with a right-leaning American: say the word
"socialism" and count the number of seconds it takes for them to scream
"VENEZUELA" in response. It is unclear how many conservative Americans could
identify Venezuela on a map but, boy, they all seem keen to inform you that
the beleaguered country is a shining example of why socialism will never work,
certainly not in the US..."_

[https://www.theguardian.com/commentisfree/2018/jul/29/social...](https://www.theguardian.com/commentisfree/2018/jul/29/socialism-
no-longer-dirty-word-us-scary-for-some)

~~~
subjectsigma
What a _horrible_ article. Sneering, unnecessarily polarizing, full of ad
hominems, and almost devoid of any real numbers or argument. Panders to the
lowest of the left by picking on the lowest of the right and saying, "See!?
Look!" Literally "stop thinking differently than me!!!" codified to vaguely
resemble actual thought. The topics it is grouped with betray it as clickbait
garbage.

~~~
dang
Would you please stop using HN for ideological battle? This is not what the
site is for, and destroys what it is for, so we eventually have to ban
accounts that do it. Ditto for posting rants in general.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

~~~
subjectsigma
Why does the comment I replied to not deserve the same warning?

~~~
dang
That commenter doesn't make a habit of it.

~~~
subjectsigma
Ban me, then. I can't find a way to delete my account and I'm tired of this
crap.

------
jcopa
can anyone compare this to canada ?

------
shalmanese
If everyone from people earning $10 an hour to people earning 120K a year are
living "paycheck to paycheck", then it seems misguided to think that the
solution somehow lies on the wage side rather than paying attention to the
consumption side and the issues of modern capitalist marketing.

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.

~~~
Lucent
This is a great point and it equally applies to housing. Not just which
neighborhood you live in, but whether you own a house at all. Spend a quarter
million dollars minimum and get locked into a mortgage for decades for what
actual improvements over a mediocre rental? Nicer baseboards?

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.

~~~
scarface74
_This is a great point and it equally applies to housing. Not just which
neighborhood you live in, but whether you own a house at all. Spend a quarter
million dollars minimum and get locked into a mortgage for decades for what
actual improvements over a mediocre rental? Nicer baseboards?_

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.

