Those government tax refunds, and other stimulus programs don't seem to provide the boost to the economy that government had hoped for. Nor, it turns out, are most Americans spending their paycheck as fast as they arrive. These results were discovered in new research by the University of Michigan and are based on users of a smartphone app that tracks user's spending. For 300 days, the researchers tracked a random sample of about 23,000 anonymous U.S.-based users who received regular payroll or Social Security payments.
They found that individuals shelled out about 70% more than average on the days after a payment arrived. But the bulk of this tended to be monthly bills that were scheduled to occur soon after funds arrived.
So the researchers picked out a single type of spending that's easily influenced by the perception of disposable income: cash shelled out for fast food and coffee. Here, most people's spending barely increased after a paycheck, the team reports online today in Science (paywalled). Obviously, those with lower income tended to spend more of their paycheck than others, and some do in fact spend whatever is available. But by and large, the average user did not increase discretionary spending in response to a bump in income.
The finding suggests that tax rebates and other cash infusions may not boost the economy as some have suggested, as most people would probably save the windfall for a rainy day, and money doesn't necessarily burn a hole in our pockets. The finding could help governments better stimulate the economy. If they could find ways to target tax rebates to people who have little cash in reserve (not to mention pent up demand), the payments might stimulate spending more effectively because these people are more likely to spend it. Harnessing the power of the spendthrift, as it were.
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @11:10AM
Tax rebates only benefit people who pay taxes. Because only half of Americans pay tax, any rebates benefit only people with disposable income. They're already saving, and much more likely to save a small windfall than rush out and buy toys.
(Score: 4, Interesting) by ilPapa on Saturday July 12 2014, @01:25PM
That is simply not true. Everyone who works pay taxes. As we are told constantly by people on the Right, the biggest problems in the US are entitlement programs, and everyone who works has taxes deducted from their paychecks for those entitlements. In fact, the percentage that people on the low end of the income scale pay in those taxes is way way higher than people at the high end.
I hate zombie lies like, "Only half of Americans pay tax". They make people stupider and that makes problems worse.
You are still welcome on my lawn.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @12:46AM
True, but Social Security and Medicare taxes are not the ones rebated. "Tax rebate" is implicitly "income tax rebate," and that only benefits people who earn enough income to pay income tax (ie, not have any withholding completely returned in April). At least the new laws will make a few of the very wealthy pay medicare tax on their investment incomes.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @02:57PM
That is simply not true. A lie or a false hood or an exaggeration?
http://data.bls.gov/timeseries/LNS12300000 [bls.gov]
From the stats. We are currently at about 59% employment rate. So ok maybe not 50% but 60%. Not the ~90% that the unemployment rate may indicate. Which is why they use it.
the biggest problems in the US are entitlement programs
That is the largest looming problem. However, the bigger problems are poor oversight and mandated spending across *all* programs. We currently 'owe' 121+ trillion in to be issued debt. With about 17.5 trillion in issued debt. Our gov can literally not tell you everything it owns. As it does not keep track. It does not even bother to. Why not? The budget for next year if we need something we will just buy it again. Do not want to have a smaller budget next year do you?
In fact, the percentage that people on the low end of the income scale pay in those taxes is way way higher than people at the high end.
I as a higher earner pay proportionality more than they do. Both % wise and dollar wise. That is the voodoo economics at work. It just does not sting as much as I have more of the remaining percentage to cover other costs. Somehow the laffer curve turned into a way to create social justice. When in fact it creates the opposite effect.
http://steshaw.org/economics-in-one-lesson/chap05p1.html [steshaw.org]
http://steshaw.org/economics-in-one-lesson/chap18p1.html [steshaw.org]
http://steshaw.org/economics-in-one-lesson/chap19p1.html [steshaw.org]
Taxes are a cancer on our society. Unfortunately we need them to pay for things everyone needs as no one else will do it. We then create exceptions to encourage production and perversely create the opposite.
I stated taxes are a cancer on our society. Specifically in savings. I can buy a blob of gold. Lets say I did this in 1950. Then today I sell it for a wild profit. But then decide 2 seconds later 'no I was wrong I want my gold back'. I literally can not buy back that blob of gold. I owe money in taxes now.
I like this infographic as it puts everything in one nice picture.
http://www.usdebtclock.org/ [usdebtclock.org]
The are taking in ~10k from every person in the united states then spending 11.5k. This number is even higher if you consider only people who pay taxes. They are eroding our future by giving money to banks. Then double eroding our future by taxing us to do it.
Specifically back to the original summary. I told people this many times. A one time bump in money gets you nothing. You have to have continuous income to see someone change their habits. I get an extra 300 bucks I might by a 'nice stereo' but that would be it. However, I question the use of studying fast food. As you buy 1 meal you are done for that meal you are not going to buy a bigger meal. Unless you are changing your eating habits. It seems to be a very poor correlating statistic.
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @02:12PM
FTFY
(Score: 2) by cockroach on Saturday July 12 2014, @11:16AM
Right. Admittedly this may be different in the US but where I'm from I would expect people to eat less fast food as their income increases. Seems like a silly type of spending to focus on...
(Score: 3) by Dunbal on Saturday July 12 2014, @11:20AM
Not to mention the fact that you can only eat so many burgers and drink so much coffee in a week anyway.
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @11:32AM
> Seems like a silly type of spending to focus on...
It sounds like they made the common error of picking something easy to measure because it is very simple and then extrapolating that to apply to something that was much more complicated, which by definition doesn't work the same way as the simple thing.
For all they know, the money was saved up for a larger purchase at the end of the month, like a new appliance or a down-payment on a new car.
(Score: 2) by davester666 on Saturday July 12 2014, @06:33PM
Or even to catch-up on overdue bills.
(Score: 3, Interesting) by FatPhil on Saturday July 12 2014, @02:11PM
I'm aghast that anyone's idea of treating themself is to have junk food.
Which reminds me, I need (yeah, right! I want, I desire, but no, there's no need, I will admit that) some taiwanese milky oolong, and some really meaty spanish olives, so it's time to hit two of my favourite shops...
(And strangely enough, for the price of one person's burger meal at ${BIGNAME}burger, I can buy enough milky oolong to give me a delicious afternoon tea, with top-ups, every day for a month. I'm really not being that extravagent.)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @11:53AM
Coffee and fast food tend to be habits, and kind of inelastic. You're not going to suddenly start going to Starbucks rather than your usual Dunkin Donuts if you have extra money in your pocket. You're not going to get the more expensive macchiato if you like your coffee black. You aren't going to add an extra cup to your day if it keeps you up all night.
A better thing to look at would be spending on entertainment, where there's more upward room for substitution with the same experience. You might go to the movies instead of downloading from Netflix or picking up at redbox. You might go to a concert in addition to buying the album. If you already go to concerts you might get better seats.
The other problem is that most people have a mountain of debt hanging over them -- of course they're going to feel like if they have more money they should save it! Especially if doing so doesn't mean they have to change their habits. Maybe economists should take a look at how their obsession with policy prescriptions for increasing the velocity of money, rather than increasing wealth (or reducing poverty and indebtedness), has brought us to such a pass.
Considering how capricious tax law is in the US, it's not unreasonable to hold onto the money until April when you know you're going to be able to keep it. A temporary tax break or one time handout isn't like a new job with a contract and a raise. Of course you're not going to change your consumption habits unless you know that the flow of money will last, unless that's why you're poor in the first place. It's nice to see a bit of bourgeois received wisdom validated by economic research, maybe economists should ponder on that for a bit.
(Score: 4, Insightful) by tathra on Saturday July 12 2014, @02:17PM
that was my first thought. this reeks of an agenda; i expect this to be used to support 'trickle down economics', claiming this as evidence that "giving money to poor people doesn't help the economy!" but hopefully thats just me viewing things through shit-colored glasses.
(Score: 2) by FatPhil on Saturday July 12 2014, @03:32PM
I agree - reeks of agenda, and I'm guessing it's the far right hand that's pulling the strings.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @05:09PM
If the far right were pushing an agenda here, it would be what? Less taxation? Smaller welfare transfers?
But that's not what it's saying. This article is about how more case in people's pockets doesn't translate immediately into higher spending except for those at the bottom. (Whether or not you think the study was methodologically sound is a separate question.)
If anything, this pushes the idea that additional funds intended to boost the economy should go precisely to people who are living from hand to mouth because those funds will be spent promptly, instead of stuffed into an account somewhere. It pushes the idea that nibbling at the pockets of the more well off won't hurt because they have the saving habits, while the people who don't have, or can't achieve, savings should be given more money.
What it completely fails to address is what the multiplier effect is like in each case, and I have a strong suspicion that it doesn't work well for the left wing argument. Here's what I mean:
If Joe Sixpack is given some kind of government handout, he will promptly spend it on articles which ... have almost no effect on the economic position of his peers. His peers are working for low fixed incomes at point of sale or bulk manufacture. That sixpack of Budweiser is made in an industrial scale brewery, shipped by company trucks, put on (mostly) corporate store shelves and checked out and bagged by people near the bottom of the pay scale. The fact that Joe just paid a few bucks for a sixpack doesn't make anybody but the shareholders of the companies significantly better off.
In short: if that is the basic story, that kind of cash injection can only have a long term effect if trickle-down economics does work, because once it has flowed up to the corporate level it can't flow to everyone else unless it trickles down. This is one of the big hidden stories behind the left wing rhetoric of recent years; that if you work with the assumption that Joe Sixpack spends it immediately, it gets largely sent up the monetary food chain (and if you subscribe to the theory that Gigantic Evil Corporations are experts at extracting that cash, which is a common left wing shibboleth, then you assume that the money flows straight to corporate coffers) and presumably stays at the upper reaches of the corporate wealth chain.
If you really want the money to go to, and to stay with, the lower economic strata of society then you have to structure things somehow so that money spent is more likely to go to people with lower incomes or a closer connection to the health of their businesses. Reducing taxes on small producers to make them more competitive, reducing their red tape burden, doing things to make it easier for Joe Sixpack to spend his money on Jane Sixpack's brewery down the street from him rather than at the bar with Bud on tap, these would be real distributionist policies.
But I don't hear much about that from the left. Just more like this kind of study showing what we already knew - that people with a low propensity for accumulating money tend to spend it quickly.
On the other hand, the right wing studies are usually structured around how terrible taxes are for productivity and stuff like that. This whole topic really doesn't tend to be what the right wing even likes to talk about.
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @09:20PM
What you wrote is useful in defining the problem.
Your tax-based solution, however, is lacking.
If working class people want solutions for the working class, they have to take individual responsibility.
If you want to maximize the Multiplier Effect, try to make every one of your purchases LOCAL in scope.
If possible, *don't* patronize a national chain; go to a LOCALLY-OWNED business.
If that business is a COOPERATIVE (a worker self-directed enterprise)[1], [google.com] that serves even more to keep your cash out of the hands of the 1 Percent.
If the goods you purchase are also *produced* LOCALLY (town, county, state, region, country), it keeps the Multiplier Effect closer to home.
If those goods are produced by a COOPERATIVE, again you are empowering the working class and making the 1 Percent less powerful.
[1] Hmmm. Professor Wolff is only in the #5 position.
(His weekly "Econonic Update" radio show|webcast [kpfa.org] is great stuff.)
-- gewg_
(Score: 2) by Appalbarry on Saturday July 12 2014, @11:17PM
The Local thing tends to an equal amount of nonsense and rose-colored thinking.
In my experience those small local businesses often:
NOTE that I am NOT saying that ALL small businesses are like this, but a large proportion of them are.
Similarly, I've seen non-profits of all types that were horrid places to work, and which were badly managed.
It's not about size, or about your choice of corporate structure, it's about the integrity of the people running the show, and the regulations and enforcement that will otherwise keep them in line.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @04:00AM
Basically, your plan relies on people being sensible and self-aware.
Good luck with that, let me know how it works out for you. I'm excited. Are you excited? I'm really excited.
If you want a structural change, it helps if you can nudge people in a way where their day-to-day decisions change based on what's in front of them. Ask people to drive less? Doesn't work much. Double the fuel price? Works like a charm.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @12:51AM
No, this is excellent evidence against 'trickle down economics.' The trickle supposes that if you allow rich people to keep more of their money, they will spend/use it in ways that grow the economy. And so tax cuts and rebates, that return money to people who pay the greatest income taxes specifically target those rich people. Here you have data that they don't bother to spend it. ie: giving money to rich people doesn't help the economy. Which few people believed to begin with.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @03:55AM
While your description of trickle-down economics isn't bad, your analysis that this research damns it isn't accurate.
Let's assume Quintus Haverford Moneyfart III gets a wad of cash. Shock! Horror! He doesn't spend it at once (over and above his usual disgustingly extravagant way of life involving eating peeled grapes from the navels of strippers). That actually doesn't make any difference to the trickle-down story, because the idea is that the money he does spend is already pretty lavish, and pays for a lot of strippers' boob jobs, but any surplus money he has on hand is invested and thus pushed back into the system in ways which foster business development.
Trickle-down was never supposed to be a theory based strictly and solely on the spending habits of the wealthy.
The question then becomes what the marginal productivity difference in the economy is by virtue of the rich investing it, as opposed to the poor immediately spending it on pork rinds and moon pies, which then immediately flows up into the coffers of Pork Rinds, Inc. and Moon Pies, Ltd. which large, wealthy corporations then invest it anyway in more business.
Whether you prefer to lavish transfers on the poor and hope trickle down works once the globocorps get their hands on the moolah, or just leave it with the rich and hope it trickles down anyhow, is the divide between the mainstream right and left on the economic transfer front right now.
(Score: 3, Insightful) by lubricus on Saturday July 12 2014, @12:48PM
...urance all along.
Unemployment benefits, food stamps, etc. have long been argued to have a greater impact on the economy ($1 of benefits creates > $1 economic activity... some estimates of the multiplier are around 1.6), than tax cuts (which have a fiscal multiplier of 1) for this exact reason.
These benefits merely replace a portion of the previous income with money the family needs to survive, and will be almost immediately spent on fixed costs.
Tax breaks are additional income, which is more likely to be pocketed because it is given to those who can pocket it.
Not really that complicated, but it's nice to have the expectations assessed more directly than previous efforts.
... sorry about the typos
(Score: 2) by lubricus on Saturday July 12 2014, @01:11PM
I meant: tax cuts (which have a fiscal multiplier of 1).
Also, it's simple: If you want to use fiscal policy to improve the economy, there's no need to convince the spendthrift to spend the tax break you give them, when you have poor and unemployed who, out of necessity, will spend any benefits you give them.
... sorry about the typos
(Score: 2) by sjames on Saturday July 12 2014, @01:20PM
Well, yeah, but then they'd have to give the money to poor people.
(Score: 2) by khallow on Saturday July 12 2014, @02:18PM
I thought the argument for unemployment insurance was that it was insurance. Lose your job and this program helps tide you over till you find a new job.
(Score: 2) by lubricus on Saturday July 12 2014, @04:24PM
you're right, I meant government unemployment benefits. Also, I still meant $1 tax cuts generates less than $1 in economic activity. (I guess the less than symbol is sanitized away).
... sorry about the typos
(Score: 2) by maxwell demon on Saturday July 12 2014, @04:39PM
To get the less-than symbol, <, you must type <.
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by khallow on Saturday July 12 2014, @02:13PM
This leaves the great unanswered question, "Why do we consider economic activity so important?"
(Score: 2) by tathra on Saturday July 12 2014, @02:23PM
because we're a capitalist society, thus our society's measure of "success" is based on the flow of money (while personal success is based on the hoarding of money).
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @06:19PM
Incorrect.
Capitalism does not even rely upon the existence of a currency whatsoever. You can have a capitalist society based purely on barter of goods. Capitalism relates to the management, development, distribution and application of capital which is any store of value. A shepherd breeds sheep with finer wool? Capital. A blacksmith builds a better forge? Capital. A merchant develops a more efficient stall for his wares? Capital. A scrivener cuts a supply of new pens from quills? Capital. No cash required.
Money makes transactions more efficient, but you can have money in a noncapitalist or even anti-capitalist society. Money can even be used as a way of measuring who is accumulating too much value and as evidence for identifying and punishing them.
I know that it's popular to equate bags of money with capitalism as a way of organising a society, but that's really just not true.
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @07:42PM
>> because we're a capitalist society, thus our society's measure of "success" is based on the flow of money
>
> Incorrect.
> Capitalism does not even rely upon the existence of a currency whatsoever.
Ok then, "our society's measure of "success" is based on the flow of capital"
Fucking pedant geektard.
(Score: 2) by khallow on Sunday July 13 2014, @01:45AM
Economic activity more than flow of capital.
No gratitude for being shown the error of your ways?
(Score: 2) by tathra on Sunday July 13 2014, @11:17PM
the AC clarified what i meant, but it wasn't me like you seem to think. name calling is less than productive, and encourages this place to become a vacuous echo chamber and i'd really love it to not be one. excessive pedantry is annoying, but insults and general negativity won't be what fixes it.
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @10:38PM
The examples you gave have no evidence of other workers (wage-earning employees) nor outside sources of resources (investors).
Those are classic features of Capitalism.
The classic definition of Marxism is that the worker(s) own the means of production.
All your examples fit that description.
Now, if the blacksmith is in hock to a banker for his tools, THAT would be Capitalism--and it wouldn't really be the blacksmith's business; it would be the bank's.
-- gewg_
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @04:19AM
Actually, no. They're also perfectly viable features of other (related) economic systems including mercantilism and fascism. That said, I didn't even stipulate that they had to be owners. The blacksmith could be a journeyman working in another's forge. The scrivener could be working for a solicitor. The principle holds regardless of whether they're working for wages or not. Outside investment is not a necessary feature of capitalism although it is one of its better possibilities, and very probably arises when successful capitalists gather more value than they can invest in their own right. The blacksmith might have built a better forge, not for his own use, but for a franchise of blacksmiths he has established based on his own reputation.
By your definition (which actually does Marx something of a disservice - he was quite a bit more nuanced than that) a farmer is a capitalist pawn when he gets a mortgage to buy land, a capitalist drudge when he works the land and pays off the mortgage, and a marxist once it's paid off.
As it is generally understood, the farmer is a capitalist as long as he is using the combined forces of the capital sources at his command (including but not limited to loans, his own sweat equity, his cousin's used-but-great tractor) to generate an ever greater store of value by improving the soil, breeding better cattle, and when he has a cash surplus investing it in a mutual fund.
Marx's real definitions also revolved around the labour theory of value, and the notions that capital only represents an accumulation of labour (a tenuous theory at best and largely disregarded these days) and therefore any accumulation of capital can only possibly represent surplus skimmed off somehow - the synergistic effects of capital and labour generally passed him by as part of an economic worldview.
Hope that helps.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @06:47PM
your definition[...]does Marx something of a disservice
Yeah, but look how many pages it took that long-winded dude to get his point across.
I did it in a few lines. ;-)
the labour theory of value
Yeah.
a tenuous theory at best
Remove the laborers from the picture and see what happens.
largely disregarded these days
...by the puppets coming out of the Neoliberal diploma mills.
Let's see how those economic systems do when they come up against a general strike. [googleusercontent.com] (orig) [wsws.org]
surplus skimmed off
You'd have to be blind not to see it.
I haven't heard anyone do a good job of refuting that being a negative.
The ridiculous compensation of executives is a prime example.
OTOH, Mondragon has thousands of happy worker-owners without anyone to do any skimming.
Hope that helps
Well, it further clarifies your ideology.
-- gewg_
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @05:37PM
What is important is people having goods or services which they value.
If you're dying of thirst, a bottle of water might be extremely valuable to you.
If your children are cold, a nice warm wool blanket, or fluffy jacket might be just the ticket.
These things don't, as a general rule, just manifest for our convenience. We have to work to produce them. The more we produce and distribute to people, the happier the ultimate recipients probably are (granted that there's no pleasing some people).
Managing and measuring this aspect of the human condition is called economics. The word itself is a derivation of the greek word for household management.
So, yes, economic activity relates to giving people what they value and measuring that is a way of assessing how well we're doing.
Any other questions?
(Score: 2) by khallow on Sunday July 13 2014, @01:40AM
Not necessarily. The Broken Window fallacy is a counterexample.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @04:24AM
The broken window fallacy is a fallacy in the sense that it states that catchup after a loss of value constitutes helpful activity, when in fact in terms of accumulated value it's a dead loss over time compared to the alternative.
That does not mean that giving people what they value isn't a feature of either scenario. The owner of the broken window now values a replacement window, or in the alternative scenario where the window isn't broken, other valued transactions (including simply investing the money in an annuity or whatever) take place. Either way, it's the same principle behind it: transactions freely entered into for perceived benefit.
(Score: 2) by khallow on Sunday July 13 2014, @05:43AM
The point here is that one can "break windows", spurring economic activity while simultaneously resulting in a net loss of value to society.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @06:22AM
Granted, but the distinction is between economic activity for its own sake on the one hand (replacing broken windows) and on the other hand accumulating new capital without the penalties of having to fix broken windows.
In another sense, it's the difference between measuring GDP and measuring net national wealth.
(Score: 2) by khallow on Sunday July 13 2014, @05:40PM
What distinction? You're not going to measure that distinction by only measuring economic activity. This is a large part of the basis for my original question.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @11:37PM
Ok, your original question was why we consider economic activity so important.
The fact is that, assuming the rate of deterioration of society-wide capital (the rate of windows breaking, if you like) is a given, any increase in economic activity represents a net benefit with respect to the condition without it. You produced more stuff. You did more stuff.
If you're suggesting (which I didn't see in any of your postings - maybe you can help me here) that the rate of deterioration (window breaking) is somehow linked to the rate of economic activity, such that a higher rate of economic activity might not actually be a net benefit, then assuming you can actually back that up with some real information I'm bound to agree that economic activity is not a useful measure in isolation.
However, I am unaware of any measure other than economic activity which measures .... economic activity. Since we care about rates of production, this matters.
(Score: 2) by khallow on Monday July 14 2014, @05:39AM
It's not. The assumption is unwarranted. That's what I've been saying all along and why I'm concerned about the emphasis on economic activity. I think the problem here is that people and societies are currently making a lot of real world decisions that increase economic activity at the expense of deterioration of society-wide capital. The emphasis on economic activity in the story is a symptom of this.
(Score: 2) by c0lo on Saturday July 12 2014, @09:44PM
Simple blindness - while important, it should not be considered "so important".
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 5, Interesting) by PizzaRollPlinkett on Saturday July 12 2014, @02:37PM
The problem with economists is they don't understand people who live paycheck to paycheck. So they are bewildered when their theories don't work in the real world. Instead of doing studies, they'd learn more just working at a dead-end job for a few years.
People who live paycheck to paycheck save a lump sum for the next emergency. They know the next car repair is coming. It's uncanny how the next emergency costs almost exactly the same amount as the lump sum you just got. My parents used to say they hated to get a lump sum, because they knew it was time for the next emergency. Any extra money beyond that is used for regular stuff like school supplies, clothes, etc. This money isn't just spent immediately. When you get a tax refund, you splurge on a book or something (used to be a music album back in the day), and maybe eat out.
This is why poor people stay poor. Every time I see talk about forcing minimum-wage employees to put money in retirement accounts, where they have to pay penalties and taxes to get it back, I cringe, because when you live paycheck to paycheck you have to survive the next emergency. You literally can't think beyond the next emergency, because that's how you survive. You can't get ahead, because standing still takes everything you've got. You might could save a few hundred dollars a year, but then the next emergency would wipe that out. It's literally impossible to save for more than the next emergency or two. And if you're always surviving emergencies (like getting the car you have repaired because you can't afford anything else and have to work), you can't have a plan for the future.
The situation is worse now than it was when I was growing up, because goods today are shoddy and don't last. You spend all your money buying the same stuff over and over and over. I have bought more toaster ovens in the past couple of years than I've bought in my life, because they're junk.
Now you know more than the best and brightest economists. If you don't believe me, live on a dead-end job for a few years.
(E-mail me if you want a pizza roll!)
(Score: 0) by Anonymous Coward on Saturday July 12 2014, @03:06PM
Are you saying that the American Dream is a myth? Why do you hate America?
(Score: 2, Interesting) by Anonymous Coward on Saturday July 12 2014, @04:42PM
You've hit the nail on the head. The study does nothing to answer the questions on how someone is able to handle a fiscal crisis. Often it is better to be destitute than merely just poor. When you are poor, people still expect you to pay them for services like medial care. When you are destitute, at least you can plead for charity. This is the slippery slope that the middle class is perched upon, waiting for the next crisis that might push them towards the poor house.
(Score: 2, Informative) by Joe Desertrat on Saturday July 12 2014, @07:59PM
You also might add that genuine savings plans are mostly unavailable to the poor. Unless the lump sum is in the many thousands, putting it in the bank will cost them money in fees if it drops below a certain point or in any of the myriad fees that get charged to accounts, usually far, far more than any pitiful interest rates offered. As you say, at least some of the money is often needed for the next emergency, so locking it up for months or years in a CD or retirement account is simply not an option for someone living paycheck to paycheck.
We need to pass a "Milliways Account" law, where banks have to offer a no minimum amount limit savings account in which interest is compounded and no fees are charged in perpetuity. Otherwise how will anyone afford lunch?
(Score: 2) by kaszz on Saturday July 12 2014, @05:12PM
People are more likely to spend more if job security of job salary increases. And fast food as measure of willingness to spend?? Must be American biased research. Better to watch spending on clothes, travel, stuff etc. You can only eat so much food and more disposable income are better spent on better food.
So there are angles to explore. But this study seems botched.
(Score: 4, Informative) by Phoenix666 on Saturday July 12 2014, @05:58PM
I participated in a hackathon last year that worked on an app to help underprivileged neighborhoods in Newark, NJ. Specifically, we were trying to tackle food-price gouging and access to quality food in those areas. The problem in those places is that there are no large grocery stores and no green markets, only the corner delis. The corner delis don't carry fruit and vegetables, only processed food. And there are no price tags on anything. Items cost what the guy at the counter says they'll cost. Strangely, prices for items at the beginning of the month, after people get their checks, go up, and to cover the rest of the month after the money's been exhausted neighborhood residents have to rely on credit from store owners, at interest. So not only are people there chronically hungry, but what food they can get has given them heart disease, diabetes, and a host of other diet-related ailments.
That is the definition of hopelessness in America.
Washington DC delenda est.
(Score: 0) by Anonymous Coward on Sunday July 13 2014, @06:36AM
Call me crazy, but I see a business opportunity in this situation. It works like this:
Get a storefront. A small one will do.
Sell basic cooking tools at or near cost.
Sell easy cookbooks with simple but wholesome recipes at or near cost.
Sell clearly marked, easily identifiable, quality produce at good prices. If you can't sell cookbooks, give out free recipe cards with the ingredients you sell.
Watch the money roll in.
No underpants gnomes plan here.
Now you may discover that the local government is corrupt, the corner delis are a mob, and you'll get lynched, but then at least you will have discovered something important about the environment which goes beyond localised exploitation.
If not, you'll be helping a lot of people have a great improvement in their quality of life.
And maybe - just possibly maybe - you'll make a decent chunk of change on the side. And if your tender heart can't possibly contemplate bleeding the hapless proletariat for their last groats, at least establish a quality food cooperative. Help them establish urban farming for fresh food. Go in together on the big ticket items with a friendly farmer.
I'm sure the hackathon was interesting, but hungry people can't eat bits.
(Score: 2) by khallow on Sunday July 13 2014, @05:50PM
I imagine a large part of the problem is cooking takes infrastructure and time. You have some parts of it covered, but you may have a situation where the resident simply can't cook in their apartment or the place is bug heaven and they don't want to eat anything in there. And if it takes them an additional half hour to eat each day than if they just buy stuff at the corner deli, then that could be $5 a day in labor that they're out.
So perhaps include an emphasis on fast, portable cooking and things for carrying lunches (lunch pails, cheap plastic dishes, sandwich bags, etc).