Our economy stinks

originally posted by: KnoxMSP
You just cant argue with people who got where they are today with more usd buying power. They refuse to acknowledge that a more valuable dollar, and not "their hard work" got them an advantage. Young people today start on a lower rung than their parents and grandparents did, then these same parents and grandparents, with their head start and advantage of a more powerful dollar, percieve the younger genwrerations failure to achieve what they could with their more powerful dollar, as not working as hard. That is simply not true.

1967 minimum wage had the same purchasing power (minutes of work to buy X) as $31/hour today.

originally posted by: Aazadan
1967 minimum wage had the same purchasing power (minutes of work to buy X) as $31/hour today.

Yeah... no, I think I'll call BS on your BS...

"Adjusted for inflation, the federal minimum wage peaked in 1968 at $8.68 (in 2016 dollars). Since it was last raised in 2009, to the current $7.25 per hour, the federal minimum has lost about 9.6% of its purchasing power to inflation."

Link

And again... minimum wage laws do far more harm to our economy and the people in it than good.

Enacting a law imposing a minimum wage of $20/hr on a business that cannot afford to pay that much for some of its entry level jobs only causes that business owner to cut employee hours/positions, or even install automation processes and permanently eliminate those entry level jobs (like the fast food joints are doing today with kiosks and the like).

Minimum wage jobs are and were never intended to be jobs where you are expected to live off of for any length of time by yourself, much less raise a family on. These kinds of jobs are for teenagers who want to save up for a down payment for their first car, or retired folks who want to earn a few extra bucks to supplement their retirement income (or just not be bored out of their minds).

originally posted by: pexx421
?? How can we have a merit based economic system without merit based employment? That is a stark contradiction.

Ignorance much?

Do you honestly not understand that every single business, from the smallest Mom & Pop shop, to Amazon, have their own set of rules, business philosophy, processes and practices? That there is no one set of rules dictated by government?

At any rate, it depends what you mean by success. Many of our most successful earned it during the days of robber barons and in war. Like the rothschilds, Rockefeller’s, bayer, bmw, etc. So no, people can work hard and smart, and will most likely never become a powerful magnate with the power to purchase legislation.

Yeah, like 99.9% of people who come to this country because of the opportunities it offers, My dream/goal is not to become a robber baron. I'm content to earn enough to provide a comfortable lifestyle for my family.

Over 50% of Americans want nothing more extreme than to be able to pay their bills and provide a home, food and security for their family. And they work hard. And they can’t achieve even that.

I call BS again. I say they actually are achieving that, as we speak.:

Real median household income was $59,039 in 2016

That’s not, as you state, a sign of a lazy society. It’s a sign of a failed system.

Tell that to all of the people currently succeeding - and now, under Trump, doing so far more than just a few years ago - in your so-called failed system.

And just because I had the fortune and grace to succeed, that doesn’t give me the illusion that those who didn’t are lazy or stupid.

I never said all of them are/were. I was talking mostly about kids today, who have their shelves full of 'participation trophies' and go to college to party and get a degree in lesbian dance theory, then whine and cry and shake their fists at the unfairness of the world (and some of whom then join Antifa).

Dude, 60k a year is not enough for a household to put anything away, and survive in todays world.

Wages are a poor way to equate our current system anyways. You have to look at buying power and cost of living. Wage manipulation by Govt is part of the problem we face today.

originally posted by: tanstaafl

originally posted by: pexx421
?? How can we have a merit based economic system without merit based employment? That is a stark contradiction.

Ignorance much?

Do you honestly not understand that every single business, from the smallest Mom & Pop shop, to Amazon, have their own set of rules, business philosophy, processes and practices? That there is no one set of rules dictated by government?

At any rate, it depends what you mean by success. Many of our most successful earned it during the days of robber barons and in war. Like the rothschilds, Rockefeller’s, bayer, bmw, etc. So no, people can work hard and smart, and will most likely never become a powerful magnate with the power to purchase legislation.

Yeah, like 99.9% of people who come to this country because of the opportunities it offers, My dream/goal is not to become a robber baron. I'm content to earn enough to provide a comfortable lifestyle for my family.

Over 50% of Americans want nothing more extreme than to be able to pay their bills and provide a home, food and security for their family. And they work hard. And they can’t achieve even that.

I call BS again. I say they actually are achieving that, as we speak.:

Real median household income was $59,039 in 2016

That’s not, as you state, a sign of a lazy society. It’s a sign of a failed system.

Tell that to all of the people currently succeeding - and now, under Trump, doing so far more than just a few years ago - in your so-called failed system.

And just because I had the fortune and grace to succeed, that doesn’t give me the illusion that those who didn’t are lazy or stupid.

I never said all of them are/were. I was talking mostly about kids today, who have their shelves full of 'participation trophies' and go to college to party and get a degree in lesbian dance theory, then whine and cry and shake their fists at the unfairness of the world (and some of whom then join Antifa).

Then where is the system merit based? Ignorance is thinking we’re ok when 40% of those about to retire, those hard working baby boomers who came up in a far better economy than now, have NOTHING saved for retirement. The next 20% have less than 50k saved. That’s 60% of our population about to retire that’s about to become a burden upon their lazy kids because they didn’t work hard enough. The top 20% has 150k or more. So fully 80% of possibly your generation haven’t provided for themselves to survive their elderly years. How much do you have saved up for retirement?

Minimum wage was enacted to support a minimum standard of living, which it no longer does, Over a time we had a much stronger middle class, and jobs that offered much better benefits, and often pensions. This is no longer the case. At a time when minimum wage doesn’t cover what it used to we have massively expanded the costs of healthcare and education and reduced people’s ability to support themselves in retirement. In a nation that claims to care about families, the elderly, and other such lies.

originally posted by: KnoxMSP
Dude, 60k a year is not enough for a household to put anything away, and survive in todays world.

Wages are a poor way to equate our current system anyways. You have to look at buying power and cost of living. Wage manipulation by Govt is part of the problem we face today.

Right? That’s two parents making $15 an hour. I’d call that poor. The median income in the richest nation in history is poverty.

a reply to: tanstaafl

Inflation calculators use CPI which does not accurately measure inflation. What it measures since 1980 is the increase in household spending on certain goods per year.

The only way to measure it is in terms of minutes of work to buy products.

a reply to: Aazadan

And rent price inflation seems to be the biggest motivating factor for the housing market.
Thus far I'm seeing a lot of multi family new construction with tiny floor plans and using the cheapest construction techniques. Probably be future FEMA camps, but Millenials seem content to live in their parents garages until there i some wage inflation.

a reply to: Slichter

Because there’s no way to afford better. A single house payment should be no more than 3% of post tax monthly income. For most people today it is closer to 45%. People are spending far more on housing than they can afford.

a reply to: Aazadan

Landlords don't work for free, so eventually it should become less expensive to own.
That may take a while though so these new multi family complexes with the Elven sized floor plans will likely prove profitable. HUD provides a list of fair market rents that can be charged for section 8 housing not sure what would happen if the Dems got back into power?

a reply to: Slichter

Buying should in theory be cheaper. One of the big reasons why renting will never be cheaper, is that buying a home locks you in at a certain rate. Where as renting will be subject to inflation and the value of the housing market. Meaning the same place will cost more and more rent every single time a new family moves into it. All while the payment never changes.

Which brings us to another point. If buying is too expensive, and logically renting is even worse... where does that leave people who need to afford shelter? It leaves families paying more than they can safely afford to purchase homes, and that in turn means the amount they can save is reduced, thereby significantly limiting economic mobility and jeopardizing retirement. Not to mention what it does to disposable income which in turn reduces local economic activity, resulting in a need for higher tax rates.

Landlords don't deserve all the blame for this though. They're still buying properties at current values after all. It's a game of hot potato, and anyone who stops, loses the game. That leaves people paying ever increasing amounts of money to buy homes, and that in turn is creating an artificial bubble on housing prices. In some places of the country right now, the market is so hot that you can buy a house using what's called an interest only loan (basically, you make nothing to the principal), with 0% down, and after a couple years the equity has gone up so much that you can sell it at a large profit.

When people are buying homes and flipping them successfully using those types of terms... it's a good sign that the market has ceased to be rational.

originally posted by: pexx421
Then where is the system merit based? Ignorance is thinking we’re ok when 40% of those about to retire, those hard working baby boomers who came up in a far better economy than now, have NOTHING saved for retirement.

Is that because 'the system sucks', or because they decided it wasn't important to create and execute a retirement plan?

Two guesses as to which of those is my answer.

and the next 20% have less than 50k saved.

Ditto.

That’s 60% of our population about to retire that’s about to become a burden upon their lazy kids because they didn’t work hard enough.

Correction: because they chose not to execute a retirement plan.

The top 20% has 150k or more.

Because they chose to execute a retirement plan.

So fully 80% of possibly your generation haven’t provided for themselves to survive their elderly years. How much do you have saved up for retirement?

I'll be fine, because I made those decisions and followed through.

Your comments remind me of the old fable, the Ants and the Grasshopper.

Minimum wage was enacted to support a minimum standard of living, which it no longer does,

It never did, it is a misguided attempt to legislate something impossible to legislate, and as usual when government gets involved, only destroys jobs and harms businesses, young people, and retirees living on fixed incomes.

Over a time we had a much stronger middle class, and jobs that offered much better benefits, and often pensions. This is no longer the case.

Correct - one of the many 'unintended consequences' when government tries to manipulate private businesses.

At a time when minimum wage doesn’t cover what it used to we have massively expanded the costs of healthcare and education and reduced people’s ability to support themselves in retirement. In a nation that claims to care about families, the elderly, and other such lies.

Minimum wage jobs were never intended to provide anyone with a job they can live off of without help. Rhetoric that they were or are is a lie.

originally posted by: Aazadan
The only way to measure it is in terms of minutes of work to buy products.

Insane.

One person time is not worth the same as anothers.

originally posted by: tanstaafl

originally posted by: Aazadan
The only way to measure it is in terms of minutes of work to buy products.

Insane.

One person time is not worth the same as anothers.

That is not what they are saying. They are referencing the buying power of the dollar on average.

Yes it stinks and it's simple math and I'm not even good at math (at least with most teachers I was since they are so boring).

Income of the US government is about 3.6 trillion (note: not all numbers are 100% correct but not big difference anyways).

US government cost on interest on debt this year will be about 600 billion.

US government cost on defense: 700 billion

US government cost on healthcare/medicare: 1.8 trillion.

Just 3 things (of course there are many more) but those 3 things alone is about 3100 billion with an income of about 3600 billion. Just those 3 things and the government almost has no money left to spend on other things.

So each year the US government has to spend about 1000 billion more (for the last 10 years or so), otherwise there would be no growth in the economy and this number is rising each year.

Not even talking about the states them self which also have huge debts and a big income/spending problem- as well as pension funds which are in big troubles.

So of course now you see these trade wars against China and Europa happening.

Just look at the debt increase each year, under Obama the debt almost doubled (from about 9.5 to 19.5 trillion).
With Trump it even goes faster (not the presidents fault really).

Of course the economy stinks bad time, only faith and believe in the economy and growth is important, but it's FAKE! They are BROKE big time but pretending things where never better and trying to make other economy's around the world weaker because of it (with sanctions, tariffs or other means). Or start some war(s).

a reply to: Aazadan

Very well explained!
Near the peak of the last housing boom around 2006 a lot of investors were buying properties for use as rentals since the "days on the market" for flips was increasing. As prices started coming down those buyers that had overextended their credit ended up having to dump their properties in foreclosure. I think it was predictable that people would take advantage of exaggerated home equity and fail. During down turns some renters and home buyers get terrific bargains from distressed properties.

I wonder if it will be different this time around? The Case Shiller price index for Los Angeles and San Jose started falling before the mortgage interest rates dropped recently in those bellwether cities.

a reply to: tanstaafl

Ok but you can measure time to buy products for people performing well paying and low paying jobs and clearly see that the people with low and average paying jobs are losing purchasing power.

a reply to: Slichter

I think that one thing we should do is make all properties in the US rent to own as the standard rental contract.

Renters should have a portion of their rent placed into equity on the property they are renting. This wouldn’t give them a say on the sale of the property, that would belong to the person responsible for the property but it would give them something back for renting.

This would increase home ownership over time while reducing bubbles, but still allow for reasonable investment in property. On mobile at the moment but I will type out a more fleshed out idea when I’m at a real keyboard.

a reply to: Aazadan

But then they wouldn't be averages.

a reply to: Dfairlite

Yes they would. You're simply measuring how much people are capable of purchasing rather than the dollars themselves they're making.

www.census.gov...

Look at table H1, in particular compare the upper limit by quintiles by year. That will get you the 20th, 40th, 60th, 80th, and 99.99th income percentiles.

I'm going to look at just a couple years here. The first year available which is 1967 and the last year which is 2017.

I'm also going to cross reference this with average housing data:
fred.stlouisfed.org...

Now, we could break this down to specific areas, but the data I can quickly find isn't complete, so not all of it overlaps.

If you look at this data, the average home price in the US in 1967 (Q1 as the other chart measures March prices) was $24,000. In 2017 it was $374,800.

Finally, as the income spreadsheet posts incomes in 2017 CPI-RU Adjusted dollars, I will be converting those raw values to 1967 dollars using this calculator
www.usinflationcalculator.com...

Here's the posted income for 1967 quintiles followed by it's value when run through the calculator to arrive at the actual wage in 1967 dollars (rounded to the nearest dollar):
20 - $19,305 - $2,630
40 - $37,644 - $5,129
60 - $53,429 - $7,280
80 - $76,190 - $10,382
99 - $122,264 - $16,660

Now, the final piece of information we need is these same quintiles incomes in 2017 which is in the spreadsheet:
20 - $24,638
40 - $47,110
60 - $77,552
80 - $126,855
99 - $237,034

Taking this information we can find the number of years worth of income one would need to purchase the average home in 1967 and then in 2017.
20 - 9.13, 15.21
40 - 4.68, 7.96
60 - 3.30, 4.83
80 - 2.31, 2.95
99 - 1.44, 1.58

So by percentile, here's how purchasing power has declined in homes:
20 -39.97%
40 -41.2%
60 -31.67%
80 -21.69%
99 -8.86%

That is in just homes. The lower quintiles have lost purchasing power in just about every single product or service, with the exception of buying gasoline which has gotten more affordable for everyone.