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.
December 9, 2010 1 Comment
“This apparent contradiction makes sense only if you understand what has become so manifestly obvious that writing it out makes me bored and angry: conservatives do not care about deficits or the national debt. Nothing they have done over the past several decades—from the record deficits of the Reagan and Bush/DeLay years to their party-line opposition to nearly every legislative measure (public option healthcare reform, cap and trade) that would reduce the deficit—suggests otherwise. The great spokesman for the so-called fiscal hawks in the GOP caucus, Wisconsin’s Paul Ryan, not only voted against the largely conservative recommendations of the president’s deficit commission but in 2003 cast the deciding vote for Medicare Part D, a corporate giveaway and entitlement expansion that was unfunded and will, according to the Washington Post’s Ezra Klein, add “$400 billion to the deficit in the first 10 years, and trillions more in the decades after that.”
What Republicans do care about is defending the incomes of the country’s wealthiest, distributing income upward and cutting taxes in order to make progressive governance impossible. Obama was right to say in his press conference that tax cuts for the rich are the Republicans’ Holy Grail.”
So this was Chris Hayes’s post on the tax cut “Compromise” that essentially puts the lie to any and all wankery about “deficits.” And he’s spot on, and the only thing I wish he’d added to it was to call it what it is: class warfare. As Sherrod Brown said the other day on John King: “I work in a place that too often sings with an upper-class accent…I’m not engaging in class warfare, I’m just pointing out what happened.”
See, when people cry “class warfare” in this country, it inevitably means “they’re coming for my money!” It’s the rich whining about it, and the idea is that people don’t want class warfare because they might someday be part of the class with the cash. But let’s be real, here: if I ever get to a point where I make $250,000 a year, I will gladly pay more in taxes, especially if I’m making that kind of money in an economy where 10% unemployment is becoming normal.
Let’s put some other key votes that happened today into context as well, shall we? Don’t Ask Don’t Tell was the focus for a lot of people, but Claire McCaskill tweeted about the bill and brought up what else it contained: “Rs just blocked modest pay raises 4 military cuz we haven’t yet given them tax cuts for multi millionaires.”
And if that isn’t disgusting enough, how about this, from the New York Times? “Republican senators blocked Democratic legislation on Thursday that sought to provide medical care to rescue workers and residents of New York City who became ill as a result of breathing in toxic fumes, dust and smoke from ground zero.”
This is the same party that has used 9/11 as a political football for the last nine years, insisting that we get felt up at airports and invade two countries, that we couldn’t have a community center near the site of the attacks that might have a place for Muslims to pray inside it, but they just voted AGAINST pay raises for the troops they claim to support, AGAINST health care for the rescue workers who rushed in to help the victims that day.
Let’s stop pretending this is anything other than a blatant attack on the working class in the name of further enriching those who are already rich. Let’s call it what it is, already: it’s class warfare.
December 3, 2010 1 Comment
Edrie Irvine: I think the first thing, I don’t know whether it’s unique to the media, but in general, is that there are real people being affected by this. The unemployed have tended to be this sort of silent group of people off to the side, occasionally you see pictures and they’re standing in some long line or applying to jobs, but they’re not thought of as–they’re not thought of, is really what it gets down to. In terms of Congress, idea that they are linking tax cuts for people making millions of dollars a year, which will only deplete the economy, and linking that with emergency benefits for people who are jobless through no fault of their own, and spending the money to give those people these benefits will actually help the economy, is just crazy-making, I think. Congress doesn’t seem to realize that the rich can afford not to have their tax cuts and it won’t change anything for them. It won’t affect their lives. We don’t have that choice.
So here in the good old U.S. of A., we have this new term floating around. We call people “99ers” when they’ve reached 99 weeks of unemployment, and somewhere in our genius, we have decided to CUT OFF benefits for these people. Because they’re just not trying hard enough, right? RIGHT? All those jobs out there…
Sarcasm aside, Congress is too busy blathering on about all sorts of useless crap to vote to extend benefits for the 9.8% of America still unemployed (oh, you know, about 15 MILLION people). Republicans are demanding spending cuts when they’re not also demanding tax cuts and for some reason the only street protests gaining traction in this country are FOR “austerity” as defined as taking it out on poorer, darker-skinned people than those in the protests…
OK, clearly this all makes me pretty angry.
You’d be angry too if you’d spent your workday watching these two lovely women, who’ve worked hard all their bloody lives, discussing calmly and coolly their unemployment benefits running out.
See, the unemployed are getting ORGANIZED. For now it’s not become a “movement” on the scale of the “Tea Party,” probably because the Koch brothers and the Murdoch media don’t actually give a fuck about them. But if you watch these two women talk, maybe you’ll want to get involved…
Connie Kaplan: They’re just in denial, they’re blinded by their greed, they know the reality of their situation. There are 55 people in Congress, I’m not going to name them now, who are millionaires, so there’s sort of a conflict of interest here. They’re fighting for things that affect them personally. They’re not concerned with people like us. I spent–when I used to get unemployment–every single penny was toward paying rent or food. Bills were a luxury. I have to have the internet–can’t get a job without the internet or a cell phone, one of the two.
Laura Flanders: How do you feel being used as a hostage in the party political fighting that’s happening in Washington–we saw a delay in benefits this summer and they eventually came through, people say these will eventually come through, but in the meantime, what happens to somebody whose benefits are in the balance?
Connie Kaplan: To me what happened yesterday with that letter that the Republicans delivered on the floor…
Laura: That they will not even consider it till the tax cuts have been extended…
Connie Kaplan: they’re not going to do anything, they don’t even care about other things, like the START treaty, which is critical for our national safety. These people are using a form of blackmail and I’m a victim.
November 19, 2010 4 Comments
From the WSWS:
Annual bonuses rose by 11 percent for executives at the 450 largest US corporations last fiscal year, according to a new survey published by the Wall Street Journal. Overall, median compensation—including salaries, bonuses, stocks, options and other incentives—rose by three percent to $7.3 million in 2009.
The increased payouts were the result of soaring profits at top companies, which doubled from a year earlier, leading to a 29 percent increase in total shareholder returns. This, in turn, was the direct result of the offensive that corporate America has waged against the working class, with the full backing of the Obama administration and both big business parties. Over the course of the last two years companies have slashed payrolls, wages and benefits, replaced full-time workers with temporary and casual workers earning poverty level wages and ratcheted up productivity.
Cost-cutting and streamlining were the principal pursuits of all the CEOs pocketing large pay packages last year. The top five were: (1) Gregory B. Maffei of Liberty Media Corp., who got $87.1 million in compensation last year, four times his 2008 package; (2) Larry Ellison, Oracle’s billionaire founder, who received $68.6 million; (3) Ray R. Irani of Occidental Petroleum Corp., who got $52.2 million; (4) Yahoo’s Carol Bartz, who took in $44.6 million; and (5) Leslie Moonves from CBS, who got $39 million.
With the S&P 500 Index up 7.5 percent so far this year, top executives are expected to see even bigger compensation packages in 2010. “Many companies are beating earnings expectations, stock prices are up and performance is good, so bonuses will be good,” Mark Reilly, a partner with the Chicago-based Compensation Consulting Consortium LLC, told the Journal.
I love a jobless recovery, me.