May 5, 2011 Leave a comment
January 28, 2011 1 Comment
(This post originally appeared on this ain’t livin’.)
If there’s one thing I am pretty much guaranteed to see a lot of during a recession, it’s helpful news articles about financial planning, doing more with less, etc etc. Though these articles are ostensibly provided for the benefit of readers, one thing I note about them is the tendency to take a certain set of underlying assumptions unexamined. As a result, they are of questionable utility to the people they are supposedly aimed at. Sometimes they are just laughably wrong and at other times they seem to be more actively harmful.
One thing I note, over and over, is insistence that people need to save money and put a little by. Apparently unemployed folks are excused from this obligation, but no one else is. This ignores the fact that many people cannot, functionally, save money, because every paycheque is spent, down to the last penny. Not on those ‘frivolous’ purchases people are told to cut out of their budgets, like lattes at the corner coffeehouse in the morning, but on basic necessities like food and transportation to get to work (you know, the place where you earn the money you’re supposed to be saving?).
People are taken to task for profligate spending in a lot of these columns with the assumption that everyone spends money like the columnist. Even if people don’t want to admit it, they ‘splurge’ now and then on silly things or things that are not strictly necessary or things they could get more cheaply. These columnists assume that everyone’s budget has room for trimming, because theirs does. They assume that everyone should be clipping more coupons, because they aren’t always good about using coupons. They assume that everyone has some money left over at the end of the month, because they do.
People talk about long term financial planning and projected futures like these concepts are universal to everyone, and like no one ever feels just completely alienated by them. <em>Of course</em> everyone wants to save money to start a college fund, right? Naturally, everyone is planning on buying a house. And everybody is thinking about retirement. The idea of having not just long term finances in question, but short term survival under threat, is just not even considered or discussed in most of these financial advice columns.
Even though, for many people, this is the reality. Even people considered members of the cultural middle class, and marginal members of the economic one, may only be one paycheque between comfort and financial disaster. All it takes is one slipup to slide down the rabbit hole. For them, financial planning is not as simple as setting aside a set percentage of each month’s pay to get ready for the future, because they are too busy struggling to survive in the present. One mistake. That’s all it takes.
And not necessarily your mistake. What happens when the bank messes up processing your mortgage payment and it never goes through? You sent it in, it got cashed, you assume everything is under control, and you’re shocked when you get the doubled bill next month with late fees out the wazoo and your interest rate just got jacked up. The response here is probably ‘well just call the bank and fight them on it until the issue gets resolved’ but what if you do not have time to do that? What if you need to do a gazillion other things, so you just sigh and pay the big bill and the late fees, knowing that paying the mortgage will be increasingly hard because your safety cushion just disappeared and the monthly payments, carefully factored into your budget, are going up because of the higher interest, and pretty soon you’re between a rock and a hard place. Not by your own doing, but as a result of a bureaucratic error.
Financial planning seems like a quaint luxury to a lot of people because, functionally, it is. It should not be, but it is, and refusing to talk about this fact means that conversations about money, concentration of wealth, fighting your way to get ahead in this culture, end up fundamentally skirting over a pretty critical issue. If you start a financial planning discussion with the ground assumption that everyone has money to spare and can trim the budget to make more, you’re pretty much telling a big chunk of your readership to just not even bother.
And, of course, these discussions also usually revolve around spending a lot of time on financial matters. Not everyone is able to spend time on the phone asking for lower interest rates, not everyone has the ability to renegotiate rents, to ask for a change to the terms of a loan to make it easier to manage. Time is a commodity just like money and it is not accessible to all people, although it is often framed as such. When I read something directing me to invest time in something, my thoughts turn to <em>how</em> I am going to restructure my schedule to do that, when my time is very precisely measured out and efficiently used, and I know that the same holds true for many other people.
Not having enough money is treated like a personal failing, having the wrong priorities, not being organised enough, when in fact it’s about a lot more than that. It’s about social structures intended to maintain class divides and keep people poor, for example, it is about eating up time so that people cannot hope to get ahead. It’s about reminding poor folks from the start many goals and hopes and dreams like retiring, attending college, having money for emergencies, are just not attainable and they shouldn’t even bother.
December 26, 2010 3 Comments
One of the assumptions that gets made a lot about poor folks in this country is that they are stupid, and not capable of making good purchasing decisions in places like the grocery store. It’s always charming to be reminded that people assume both that poverty is the result of a personal failing/stupidity, and that poor folks aren’t capable of managing their own affairs because, you know, they’re poor, so that obviously renders them incapable.
Newsflash, for those of you not previously aware of this: Poor folks are not stupid. But they are often forced into shitty purchasing decisions for a whole lot of factors. We’ve talked about some of them before here; issues like lack of access to options, limited transportation, having to juggle lots of tasks with shopping, and so forth. There’s something I want to zero in on right now because I’ve been noticing it coming up a lot. I call it the econopack problem.
Generally, when you buy something in bulk or you buy a lot of stuff packaged together, the per unit cost is cheaper. It’s cheaper for me to grab rice out of the bulk bins at Harvest than it is to buy a bag. I can buy the same amount of rice for less, even. It’s cheaper to buy 24 rolls of toilet paper, per roll, than it is to buy four. A lot of manufacturers offer economy packaging and it’s a lot less costly to buy things that way.
There are a lot of reasons for doing this. It definitely encourages people to cut down on packaging, which is good for the environment. It’s less expensive for manufacturers to package stuff in big containers than it is for them to make a bunch of small ones. And so forth. It’s just generally cheaper to buy larger sizes of things.
It is not cheaper in terms of the overall sticker price. If you are living on a food budget of $20/week, say, you cannot AFFORD to buy an economy-sized bag of beans that costs $5, so you’re forced to buy the little pack with the higher per-unit price for $.99. Because that’s what you can afford on your budget. If you’re buying toilet paper, you would probably prefer to buy 24 rolls for a low per-unit price, but you have to buy the four pack, because it is what you can afford.
Packaging is shrinking and prices are going up; my five pound bag of sugar is now a four pound bag of sugar. Poor folks are feeling this acutely right now. The response is often that they should just buy the larger package or go for bulk. Neither of these are good solutions. The larger size package is too expensive. And buying in bulk isn’t an option if your store doesn’t have a bulk section, which, you know, a lot of stores do not. Bulk tends to be more common in upscale stores, I’ve noticed, which are both more expensive and located in areas poor folks may not be able to reach.
Being able to buy large sizes is also a function of having a place to put them. People who are homeless or who live in small spaces (like, say, people renting rooms in a house where there’s no safe place to put supplies other than their rooms) do not have oodles of space for stacking up their bulk goods. People living alone (already experiencing a higher cost of living) may not be able to finish something packaged in bulk on their own before it goes off, and thus buy small containers. I do this a lot with things I know I can’t eat in full and I hate it, because I hate the waste of packaging involved, but throwing out food is pretty awful too.
People act like poor folks are too stupid to know they’d save money by buying large packages. Trust me, most poor folks are well aware of the fact that per-unit costs drop radically when they buy stuff in bulk or in big packages. They would much prefer to pay $.39/roll than $.99/roll for their toilet paper. But that option is not available to them because their bottom line won’t permit it. When you are operating on a very limited budget, you cannot simply decide to blow your whole week’s available funds on a giant package of toilet paper even though you know it’s cheaper and would be a better buy.
The focus on improving conditions for poor folks is often on individual education, treating it as a personal rather than a cultural and systemic problem. The issue here is not that poor people don’t know how to do math and are getting bamboozled into buying miniature containers of everything. The issue is that they cannot afford to buy things with high overall price tags, even when the per-unit cost is cheaper and they are well aware of it. You cannot get blood from a stone; if you have a limited food budget you cannot exceed, you cannot magically make more money appear so you can buy things in bulk. You can’t cut your food budget to save money for bulk purchases because, probably, your food budget already doesn’t really cover your food costs.
Every time we tell poor folks they are failing at life, we are telling them that everything is their fault, their problem, and their responsibility. Poor folks didn’t wake up one morning and decide to make it more cost effective to package in bulk than it is to package in small sizes and they most definitely didn’t think it would be awesome to have limited food budgets that force them to make crappy purchasing decisions.
December 22, 2010 Leave a comment
Originally posted on this ain’t livin’.
I’ve often noticed that many people who have never had to rely on government benefits, or who have never come into close contact with those who do, do not really understand how benefits work. This is not terribly surprising. It’s hard to understand an experience you haven’t lived and there are lots of things I don’t understand because I haven’t experienced them or interacted with people who have. But I think one of the problems we face when it comes to talking about benefits programmes is that a lack of understanding about them creates a lot of confusion and sometimes that expresses in odd ways.
So, let’s talk about welfare and disability benefits, because the systems for both are deeply broken, and there’s a very specific issue I want to address today, because it’s important: the poverty trap. Both welfare and disability, by design, keep recipients poor, limit opportunities for advancement, and in fact actively penalise people for trying to get ahead. This is a serious problem, especially when many people want to be on benefits temporarily, not for life, or want to use benefits to supplement their lives to create a safety cushion, using financial planning to think ahead about how they want to manage their money. Both of these things are very hard to do (legally) on benefits and as a result they create a situation where people are stuck on benefits even when they don’t want to be.
If you want to get government benefits, the income threshold varies by region, but it is generally extremely low. Just for example, looking at this .pdf of eligibility guidelines for SSI, I can see that as an individual, to qualify I need to make $674 and I cannot have more than $2,000 in assets. As I say, eligibility guidelines are a bit more complicated than this (there’s a range of incomes to qualify, with a 300% max, usually) and in some regions they are higher to reflect cost of living and other issues. In all cases, they are very, very low, though.
If you make more than the income threshold, you may be eligible for partial benefits. If you make too much, none at all. This becomes very important. If you’re not working because of a disability or unemployment and you go on benefits, you get full pay[1. Which, by the way, is nothing to write home about. The amount you can get varies depending on a lot of factors but reviewing my own Social Security statement, I can tell you right now I could not afford to live on the amount the government would give me if I went on disability or welfare.]. So here you are, on benefits.
You are not allowed to have any assets, really. $2,000 is not a lot of money. It can seem like it, but it’s really not. Imagine only being allowed to have that much money. You can’t start a savings account and put money in whenever you can set some aside. Depending on how assets are calculated, your ability to own things is limited. If you have any assets, you have to put them in trust, in someone else’s name, to be administered on your behalf. You cannot independently control your assets. So, you’re on benefits, you don’t need them, right? How are you going to pay the deposit when you need a new rental? What about when the rear differential on your car goes and you need to fix it? What if Medicare/Medicaid refuses to pay for a treatment you need and you have to pay out of pocket?
Functionally, people on benefits are actively discouraged from saving money. Despite being told left and right that we need to take charge of our finances and put aside funds for a rainy day, despite being given tax advantages for certain types of savings schemes, we tell people on benefits that they cannot save and should not have assets. Does anyone else think there’s some serious classism going on here, when we tell certain groups of people that they shouldn’t strive to achieve what society expects people to achieve? What, indeed, society judges people for not achieving? Home ownership, for example, is held up as the holy grail of accomplishment, yet it’s effectively denied to anyone on benefits.
It gets more complicated than that. Eking out a living on benefits is very, very hard. Many people have to have roommates, they scrimp and save, they may compromise their safety and health to survive. And as soon as they start working, they start losing benefits. You are allowed to earn up to a certain amount, and then your benefits get correspondingly cut. Eventually, you pass beyond the threshold of eligibility, and you’re on your own. But you’re not making enough money to survive, really. And thus, you often find yourself looping right back around to being on benefits. Which aren’t enough, so you try and find work, you finally start to get ahead, your benefits get yanked, you fall behind, you go back on benefits, and the merry go round is endless. Endless.
There’s a reason for this; the government very much doesn’t want people who don’t need benefits to access them. I think this is entirely reasonable. However, in its zeal, it’s also actively punishing people through the benefits system, and I cannot help but feel that since the poverty trap created by benefits is a well known issue, since the government can clearly see that benefits are not pacing inflation, that this is being done deliberately. There’s no earthly reason to keep people in a state of enforced poverty, unless you think they should be poor. And the government seems to think that a lot of people…should just be poor.
November 23, 2010 2 Comments
One consequence of the credit crunch was a reduction in available credit, and a tendency among pundits and the like to claim that the days of free and easy credit were over. That’s definitely true, to some extent, but in another sense, it’s not. Debt culture is very much alive and well and it seems like a number of lenders have not learned from their mistakes. Exploitative lending still flourishes, after a brief period of suppression. It’s almost like people think that making the same mistakes twice won’t result in exactly the same outcome.
I’ve really been struck by this recently when examining the crisis in college funding. College students are finding it harder and harder to afford college, with rising tuition/fees and grants not really keeping pace with college costs. Student loans are available, but they usually aren’t sufficient, and some students find loans out of reach, or are intimidated by the sheer volume of debt involved. I had to borrow a comparatively small amount to go to college, despite attending expensive schools, because I went in an era when there were more grants. If I was enrolling in college this year, being faced with the kind of financial aid packages being offered, I’m not sure I could afford to take on that level of debt.
Student loans aren’t the only debt taken on by students. At least student loans are, at least in theory, an investment. They come with very low interest and generous repayment terms. In an ideal world, the amount will start to seem pretty negligible as students work on paying it off. It’s hard at first to make payments right out of college with poor job opportunities, but over time, the seemingly insurmountable sum of the monthly payment starts to seem more reasonable. Of course, we don’t live in an ideal world. A lot of college graduates can’t get jobs at all, not even poor ones, and a lot of students are forced to take on so much debt that the payments really are impossible. And you can’t escape student loans. They will persist through bankruptcy and pretty much everything else, except in very rare circumstances.
Many students also find themselves deep in credit card debt. There are a number of reasons for this. Some students take on credit cards because it’s the only way to afford college. They can’t pay for books and other supplies without buying on credit. They also can’t repay their cards because they’re in school and struggling to make it as it is, so the debt mounts, and mounts, and they pay huge service charges. Other students enter college, are presented with a smörgåsbord of credit cards, and take up the offers right and left, treating them like free money.
It’s easy to get trapped that way if you have never managed your own finances or interacted with people who have. The money is abstract and has no meaning because you swipe a card and get things. Want, take, have, as it were. Then the bill comes due and everything changes, suddenly that money is very real, but it’s too late. The bills mount over the months, you keep buying ‘just little things’ and you end up very, very deep in debt to creditors who charge extremely high interest and get extremely aggressive, because they want your money.
Allegedly, one of the reforms proposed for the financial system was a crackdown on predatory lending practices. I’ve written about abusive and predatory lending before, but I didn’t spend a lot of time in that piece talking about college students. Credit card companies prey on college students, and I am really not exaggerating; when you have multiple tables for credit card applications right at orientation, it’s a big problem. Some students avoid them, others are familiar with credit cards and finances and can handle it, others have only ever thought about money in the abstract and they end up in deep trouble, cheered along by a smiling representative who says ‘sign here, you don’t really need to read that closely.’
Some colleges offer orientation workshops and classes to incoming students, covering financial issues. I attended a few when I started college and what I was struck by was the fact that people least likely to need those classes were the most likely to be in them. Most of my fellow students in those classes had had their own bank accounts for a long time, had established credit histories, had worked through high school, were very familiar with handling finances, with debt, and with using money wisely.
Meanwhile, I ran into students outside of class who had never had bank accounts before and whipped out an array of credit cards at every opportunity. I’m not interested in concerntrolling or lecturing people on how to live, so I rarely said anything, but I often wondered about the consequences of profligate spending and where these students would find themselves after graduation, with hundreds of dollars due on credit cards every month before the student loan payments even came due. It’s hard to dig yourself out of that hole, once you’re in it. You can work, endlessly, and pay down the cards, but meanwhile, you don’t have enough money to live on, so you keep using the cards. It’s hard to understand, before you fall in it, how deep that hole is.
A lot of people simplistically talk about austerity and how people ‘just have to spend less’ but it’s not always that simple. It’s not always possible to cut your spending down. If you’re already living on the bare minimum, perhaps already receiving government assistance, where exactly are you supposed to cut? How are you supposed to get ahead when even a tiny unexpected expense throws everything off? You have to repair the car because you can’t get to work otherwise, you have to go to the doctor’s for pneumonia, you have to take time off for whatever reason, and you’re trapped in an endless cycle that’s impossible to escape.
I worry about our college students who have been victimised by predatory lending and their ability to survive after college in this grim economy, I really do.
November 10, 2010 1 Comment
In September, I linked to a story discussing the fact that the poverty statistics released by the Census were, to be blunt, incorrect. The story pointed out that people horrified by the poverty rate disclosed in the Census numbers would be even more horrified if they knew the true picture of poverty in the United States and, indeed, we might better understand class disparities in the United States if we fully comprehended the extent of poverty in our population.
24% of the income in this country is accounted for by just 1% of the population. That’s what I would like to call a profound disparity. Expand our reach a bit, and you will see that the top 10% earns almost 50% of the nation’s income, which leaves 90% of us to duke it out amongst each other for a little over 50% of the income available in this country. When we talk about class disparities, this is the kind of thing we are talking about. It’s not just that wealth is concentrated, it’s that the concentration is almost obscene; are you telling me that 10% of the population does almost 50% of the work?
The top 20% controls over 80% of the income. What’s interesting to note is that many people are not aware of the depth of the class disparities when it comes to income, and are, thus, not aware of the fact that these disparities have been increasing rapidly and radically. People have a distorted view of how income is distributed and as a result, it’s hard to have conversations about poverty in the United States; while people know things are unequal, they don’t know how unequal they are, and the reality is really quite stark.
The Census, as a major source of statistical information about the population of the United States, has a duty to collect data as accurate and meaningful as possible. Which is why it’s a tremendous problem that the Census is using metrics from 1955 to estimate poverty rates.
They ignore many key factors, such as the increased costs of medical care, child care, education, transportation, and many other basic costs of living. They also don’t factor geographically-based costs of living. For example, try finding a place to live in New York that costs the same as a place in Florida.
Correcting for problems with the Census numbers yields a much larger and much more frightening number, especially when we start thinking about people who are living on the margins, in the paycheck to paycheck sense. They may not be considered poor in terms of their income, but they have limited to nonexistent assets, putting them in a position of extreme vulnerability.
People spending the bulk of every paycheck to survive don’t have money to put into savings or investments. They usually don’t own their own homes (where would they get the down payment?). Their cars are beaters, or they’re sinking a lot of money into car payments every month, and by the time the loan is paid off, the car has depreciated significantly. They don’t have things like art and jewelry and all of those other things wealthy people talk about as ‘investments.’ They have nothing, which means when the job dries up, when the hours get cut, they are helpless.
It’s not just that people have to contend with disincentives to save, it’s that they can’t save even if they wanted to, because they are too busy trying to survive and they are caught in a poverty trap where any additional money they make is immediately swept away in taxes or lost in benefits, keeping them functionally in the same position. When you look at people in the United States who are ekeing out a survival, whether by working or with government benefits, without any assets as a safety net, you start to realise it’s a pretty big percentage of the population. A scary big percentage. 60% of this country’s population makes the bottom 5% of the income. 186,221,597 people have to fight for a tiny fraction of the money earned in this country. You can bet your bottom dollar, so to speak, that most of them need some form of government assistance to survive, and are probably not getting it.
This is wrong. I don’t know any other way to describe it. It’s wrong, and the way the government presents statistics makes it harder for people to see that it is wrong. Providing true and accurate pictures of poverty in the United States would be jarring for many people, but the reality on the ground here is that the situation is bad, and it’s getting worse. One of the reasons it’s getting worse is that people don’t realise how bad it is.
Thinking about just the people I know, and taking into account the fact that the plural of anecdotes is not data, I know very few people with assets to support them in the event of job loss or major life events. Most of the people I know live from paycheck to paycheck, freelancing job to freelancing job. It’s not just that, it’s that people with assets are remarkable to me. The thought of having a lot of money in savings or a house is alien and unfamiliar and it seems weird when I meet people who have these kinds of assets.
I live in a fairly wealthy community. Only 16% of the population of Mendocino County is living below the poverty line and the median income is around $36,000. The cost of living is definitely very high, but the point is that demographically, we are doing much better than some communities in the United States. And I see poverty everywhere. I see evidence of poverty in so many ways, I can’t even begin to count it. If this ‘idyllic’ community has such stark reminders of poverty and living a marginalised existence on not enough, I can’t even begin to imagine what conditions are like in the rest of the country.
October 28, 2010 1 Comment
Originally published at this ain’t livin’.
The environmental movement has some serious housekeeping to do, and it’s always kind of amazing to me that it is, technically, a branch of the social justice movement, because, well, the environment is a social justice issue, but the environmental movement has a lot of work to do on its handling of social justice. The future of the environment has serious implications for us as a society and many of those implications are deeply tied with social justice issues, from the exploitation of immigrant labour to the communities that are mostly likely to suffer the immediate consequences of environmental damage.
There are so many -isms in the environmental movement, it’s kind of hard to know where to begin. Vicious fat hatred, for one thing. Ableism, with leading lights of the movement suggesting that people with disabilities are a waste of resources and we should just die, already, or not be born. Sexism, as members of the movement reinforce binary gender roles and attitudes about gender. Classism, and the closely entangled racism. Janani Balasubramanian wrote at Racialicious last year about the race and class issues entangled with the food movement, and these issues are still very much present, and still very much preventing the movement from making some important and meaningful changes.
This is a pretty classic example of why intersectionalism is important. It is not enough to say that the environment is broken because of our actions and we need to fix it. Both of these things are true and they are important, but the way we deal with it needs to take place in context. Some injustices involved in the current way we approach things like food production and environmental policy are explicitly social justice concerns; race and class injustice are closely tied with things like who is exploited to produce our cheap food, and who winds up in neighbourhoods used as dumps for our unwanted toxic waste.
In these cases, it’s not just the environment that matters. It is the tangled relationship between environment, race, and class. If we drop race and class out of the equation, and if we ignore the reasons race and class are so bound up with each other, we are not only failing to address these issues, we are not going to fix the fundamental problem. Thus, the environmental movement needs to be thinking about these issues if it wants to meet the stated goal of creating change.
Likewise, cultural contexts also need to be considered in the development and evaluation of plans for addressing environmental issues. For example, people who discuss food politics and want people to eat more fresh food need to find ways to make that food more accessible. That means addressing food deserts, addressing overwork that limits the time people have to prepare food, addressing cultural differences in the way people approach the preparation, handling, and sharing of food. It’s not as simple as announcing that everyone should eat more fresh food.
Very real barriers are simply ignored because they don’t fit in with the desired narrative. Class creates true situational barriers, making it impossible for people to do things, even if they think those things are the right thing to do, even if they want to do those things. The exchange of information is also all one way, with people being lectured by the environmental movement, but the environmental movement not really taking lessons from the people it is lecturing. Maybe if it did, it would learn about things that disadvantaged communities are doing to help the environment and it would do something other than figuring out how to monetise those things. How much cheap plastic crap is made to do things people in impoverished communities have already been doing themselves for decades?
The environmental movement acts surprised when people don’t universally embrace it, conveniently ignoring the history of embedded -isms, many of which are openly espoused by people prominent in the movement to this day. It’s kind of hard to take a movement seriously when it says rather bigoted things about people like you and fails to consider, at all, the context in which it is occurring. The environment is not a vacuum, and acting as though things like sexism and racism are ok in the environmental movement because it’s for a greater cause misses two fundamental truths.
1. No, they are not ok. They are not ok because they are unilaterally not ok, period. And because many people think they are not ok, including the victims of those -isms, tolerating these things in the movement and sometimes actively promoting them will result in alienating people. People will tune out and not be interested in following or engaging with the movement because they have been given no reason to think that the movement would welcome them.
2. Ignoring -isms in the movement also means that the movement is ignoring underlying intersectional -isms leading to environmental problems. Even if you have no problem alienating people by telling them they don’t matter and aren’t human beings, if your stated goal is addressing environmental problems, you need to actually address those problems. That includes looking at the ways that social attitudes contribute to environmental problems. Just for example, viewing people with brown skin as a source of disposable labour contributes to environmental degradation caused by the agriculture industry.
Can the environmental movement clean up its act? I certainly hope so, because I think the environment is important, and I think it’s telling that there are a number of splinter groups working outside the environmental movement on environmental issues because they don’t feel comfortable in the movement. When people feel strongly enough about your ‘movement’ that while they are working towards the same goal, they don’t want to be associated with you, I think you have a pretty serious problem.