Too complex to succeed

A new article reiterates what I’ve seen for awhile: Many Americans aren’t making enough money to make ends meet, much less save for retirement.

 

“Our research has shown that 78 percent of people are living paycheck to paycheck,” financial expert Chris Hogan said on Yahoo Finance’s On the Move. “That means if one check doesn’t show up, they don’t have enough to really make basic needs met month in and month out. So we need a wake-up call all the way around, and people need to engage in this and get more serious.”

Hogan added that he doesn’t think “people understand that it’s really important for us to make sure that we’re putting money away and saving because if we don’t save some money, we won’t have any to spend later.”

https://finance.yahoo.com/news/personal-finance-us-debt-wakeup-call-180504062.html

Survival mode

While that second paragraph is true, I’m not sure Hogan understands how deep this crisis really is. I’ve worked two jobs in the past 10 years where I’ve earned between $9 and $10 an hour. The first job was in a call center, with mostly college-age kids earning spending money. The second was at a company serving adults with developmental disabilities. Many of the people I worked with there had second jobs or took overtime whenever they could because they had a family to provide for.

No one can live on $10 an hour, which is above Ohio’s minimum wage of $8.55 an hour (but not by much). Saving money for a rainy day isn’t an option. It’s already raining.

The unemployment rate is 3.6 percent, the lowest rate in five decades. Yet hourly income rose only 3.2 percent over the last year, less than earlier projections.

https://www.nytimes.com/2019/05/03/upshot/unemployment-inflation-changing-economic-fundamentals.html

Debt inevitable?

The Yahoo article further states that according to a recent survey conducted by Freedom Debt Relief, 41 percent of Americans have not set aside any money at all for retirement. The main reason indicated was due to the cost of everyday expenses.

Debt was another impediment to saving adequately. About 79 percent of those surveyed said they have debt: Credit card debt accounted for 46 percent, mortgage debt 41 percent, and auto loan debt 28 percent.

“Having fallen into that trap myself and taken a few years to get out of it, I really want to encourage college students to avoid this trap,” Hogan said. “Credit card debt is something that once they get their hooks into you, this can take you 12 to 15 years if you’re not aware of it to attack it and get it out of your life. So, I want people to understand credit.”

 

Hogan works for daveramsey.com, which abhors debt of any kind – including mortgage and credit card debt.

Hogan and Ramsey have a point, but I won’t go that far. I will say this: Don’t spend more than you can pay off every month. We have a major credit card; debt is not an issue for us, because we write a check for the balance before each month’s due date. We have a mortgage, but again we make the monthly payments on time.

We can afford the payments. That kind of debt is acceptable, in my opinion.

When I worked for the call center, we dipped into our savings to pay the bills. When I had the second $10 an hour job, my wife also was (and still is) working, so between us we covered our expenses.

While unemployment is low and the economy appears to be booming, wages have not kept up. If you work in the tech industry or in a few other sectors, you’re making good money. But many folks aren’t sharing in the wealth. If the best you can do is $10 an hour – or if that’s all the company or industry is willing to pay – then you will struggle to make ends meet.

A complex economy

But the economy is not that simple. According to inequality.org:

 

The higher the U.S. income group, the larger the share of that income is derived from investment profits. By contrast, Americans who are not among the ultra-rich get the vast majority of their income from wages and salaries. This disparity has contributed significantly to increasing inequality because of the preferential tax treatment of long-term capital gains. Currently, the top marginal tax rate for the richest Americans is 37 percent, while the top rate for long-term capital gains is just 20 percent.

 

I had one job for 24 years that offered a generous 401(k) plan. I don’t consider myself “ultra-rich,” but that investment plan will soon pay dividends as I near the time when I can begin withdrawing from it. The money I put into the 401(k) during my working years was pre-tax money that we never saw. We learned to live without it.

Oh, for simpler times when we could spend less than we brought home, and when we could afford to invest part of our paychecks into a retirement fund.

This is why we need education beyond high school, whether college or a trade school, to learn skills so that we can make a living wage.

Simplicity outdated?

In the June/July 2019 issue of AARP The Magazine which came in the mail this week, Jeff Daniels describes his role as Atticus Finch in the Broadway version of To Kill a Mockingbird. AARP compares Daniels’ version with the 1962 movie, which has never been remade, in which Gregory Peck portrayed Atticus.

AARP compares the two men’s versions of Atticus with these words:

 

While Peck’s Atticus represents virtues that are timeless, he is perhaps too simplistic to be a modern figure, just as “I Want to Hold Your Hand” is too simple to be a modern love song. His Atticus is modest, fierce, brilliant, austere and self-contained. Though people need him, he doesn’t need other people. Daniels’ version has a broader range of feeling and a decided warmth …

Peck’s portrayal is, in addition, from the era when American movie heroes … met danger courageously and hoped to persuade by their example … Daniels’ Atticus, by contrast, seems to be shadowed by the awareness that doing all he can might not be enough. Along with the rest of us, he seems to share the modern awareness that life is possibly too complex, and too many interests are at stake, for a single moral stance to answer all situations. (emphasis mine)

 

Is our modern life so complex that we can’t determine what financial and social values would benefit society as a whole? Do we not even care about that anymore?

Are we so caught up in our own individual pursuits that we have lost the big picture of life?

I’ve met many wonderful people making less than a living wage. Many hop from job to job, trying to get ahead. We too often are leaving these folks behind, in the pursuit of our own goals.

Can we work together to improve all of our lives? Is that even possible today?

I wonder.

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