"Haves" and "have nots" - What are you?
Moms View Message Board: The Kitchen Table (Debating Board): "Haves" and "have nots" - What are you?
I keep hearing about the widening gap between the Haves and the Have Nots and the decline of the middle class and it's interesting to me. I think I've spent time in both groups and I find a lot of truth in the saying, "The rich get richer and the poor get poorer."
Does anyone have any thoughts on this? Do you see the middle class disappearing? Do you see poor folks making it to the monied side and wealthy folks losing everything?
When you have money, from what I have seen, there are so many other things that get put into place to keep you wealthy. There are little things like "free checking and checks/ATM card" if you keep a certain balance in your checking account and higher interest rates if you keep a certain balance in your savings accounts.
There are bigger things like money for private schools that leads you to make friends (network!) with other wealthy families that can lead to better job opportunities later on (either for the parent of the kid).
There's also professional courtesy that kicks in and you get things like free legal work because you play golf with an attorney at the club. The people with the money to pay for things, get them for free instead.
And on the poor side, it also seems to domino. First you can't afford health insurance which means a minor medical issue can be financially devastating.
Or not having money, leads to poorer neighborhoods, which leads to worse schools and teachers, which leads to bad education, which leads to low paying jobs.
Or poor folks have to pay banking fees bec they don't maintain that high balance and they might bounce checks bec they don't make that much which the bank, of course, charges them for (wealthy folks are not charged for bounced checks). Or even worse they have to use a check cashing business and pay those high fees and take home even less pay.
I think it would be very bad to lose our middle class. Once you're poor it's hard to escape it. If we are going to lose the middle class, folks should try very hard to move up instead of down which means living way beneath your means.
We have 4 computers, with internet access, all networked together. We do have health insurance, which was VERY nice, when Emily needed her appendix out. We may not have LOTS of clothes, but we do have clothes and they aren't in tatters. We do own a house, and several cars, and can afford all the insurance.
So, we are sort of, in the "have" category. I don't think we could afford private schools for our kids, though, although, that wasn't a priority, for us.
I've never been on a cruise, or had a European vacation, although, I have been to Canada and Mexico.
It's hard to categorize yourself. I feel we have a comfortable life, but are hardly wealthy. Most of my friends are in about the same boat.
Very well put, and a very interesting topic. I have thought about this a lot lately, too. I was a child of the Fifties, when the "middle class" came into being. Before WWII, it seemed that there was either rich or poor, and the Great Depression further advanced that.
I think that my generation saw the United States at her best. We had just won the war, we switched our industrial gears to peace time production. GI's were coming home and building houses and families, which created an unprecedented need for appliances, furniture, cars etc. The suburbs were created, which also meant increased need for good schools, churches, and shopping facilities. The GI Bill enabled veterans to attend college, and therefore, to obtain more "white collar" jobs than previous generations.
No one was better than the USA in industry, finances, military power, or overall quality of life. The products that were "made in the USA" were the BEST. "Made in Japan" or "Made in China" was a euphemism for "junk". Items were being invented and produced everyday in America. I sometimes think that my generation enjoyed the best of times in America.
Slowly, we became more globalized in trade. We imported and exported more goods. The world seemed to get "smaller". As foreign goods became available at a cheaper price, jobs went away or moved overseas, for cheap labour. We have poured billions into foreign aid, sometimes into countries who have turned on us. The quality of public education (JMO) has eroded from what it once was. There are more social ills that require more specialized services from the public school system.
The family unit has broken down, resulting in more single parents (mostly women) trying to support children with no help, either financially or emotionally, from a spouse. Since there is such a wage disparity between men and women performing the same jobs, more women and children are living below the poverty line.
On the flip side, those who have been fortunate enough to become wealthy are not as socially concious as those in past generations (Bill Gates aside). I think, if the IRS ever did away with "tax write offs", charities would fold. In days gone by, those with wealth felt a moral obligation to leave a legacy for future generations. Many of our libraries, hospitals and churches survive today because of endowments. It seems like today, when we have sports figures and celebrities making obscene amounts of money, television shows and magazines play up the "bling"; the number of carats in so-and-so's ring, or the number of extravagant vehicles or homes they own.
We have become a very consumer driven society. I read a statistic (can't remember where) that said that the number of malls out number the number of schools in this country. People shop for fun, (just look at the used clothing bins overflowing). Storage units are the "up and coming" investment. We have so MANY material goods, that we can't even fit them into our own homes anymore. Our obesity rates are at an alarming level because we consume far more food than we need to, collectively, and we waste a great deal. Just look around a restaurant and see the food that people leave. Many folks also live up to every penny, not putting anything away for a "rainy day". Savings rates are at an all time low. The reason that many senior citizens seem to be doing alright today, is because they were a generation of savers.
The Bible says "much is expected from those to whom much is given". We are SO blessed in this country. Even a poor person here isn't as poor as a poor person in, for example, India.
So, very definitely yes, there is an ever widening gap between the haves and the have-nots. The have nots cannot climb out, even with certain social "safety nets" in place. And the haves just keep consuming at an alarming rate, with no thought for future generations, whether it be through money, the environment, or natural resources.
And yes, you are so right about how poor people are "victimized". In our area, where there is no public transportation, many have to take taxi cabs to the hospital or doctor. Because they don't have money to maintain a minimum balance in the bank (as you mentioned), they buy money orders (at 85 cents or more a piece) to pay bills. My DH works in the Post Office and says that some folks will buy eight to ten money orders at a time. Many will ask him to make them out for them because they are marginally illiterate. There is a grocery store in the next town that caters to the wealthy, (and we have them, at the seaside properties), but it is located in the center of town, and it is very expensive. Well, that's where all of the multi-family rental properties are, also, owned by out-of-town "slum lords". Many of the tenants have to walk to the stores and laundromat, etc., so that is the only grocery store within walking distance for them. And speaking of laundromats, have you priced them lately? I wash my comforters and my DS's sleeping bag there because I don't want to put the stress on my washer. I can't imagine having to pay those prices to wash and dry my laundry every week.
Many are on medical assistance, and the "better" doctors won't participate because of the low reimbursement rate.
I fear for our society because a strong form of government, such as a democracy, is dependent upon a strong middle class.
I'll shut up now. It's just a subject that I feel real strongly about.
I think we are "haves" because we have a lot more than a lot of folks. We own our home free and clear, have two cars, pay all our bills on time, have excellent health insurance. We eat well, have sufficient and stylish clothing. We don't wish to travel, as we did all we wanted in the military, but we could. We have money in the bank, and can go to a movie or a restaurant whenever we want.
However, I try NEVER to forget where my blessings come from, and to be aware that we could lose it all tomorrow. We give to charity, support our church, and help those in need. We probably should give even more.
I keep a "gratitude journal", and every night, I write down three things that I am grateful for in my life. It's very grounding and really puts things in perspective, and makes us realize how blessed we are.
The only reason we are able to provide healthcare for our family is the military. We tried civilian life, DH worked as an EMT, and we could barely pay our bills, let alone have health care. The working class is getting poorer by the year, and it's sad that the relatively small salary that the Army pays is the best we can do, especially since they provide us with healthcare. This year we've finally gotten on our feet after struggling for so long on the civilian side, and our bills are paid, we have savings, and don't have to worry about something coming up, like my van needing new tires right now. 2 years ago that would have been an absolutely disaster, and we wouldn't have been able to do it without borrowing money. It's a sad state of affairs.
Ditto Crystal. I think the middle class is disappearing, and at some point it's going to be the poor and the rich with nothing in-between.
We are by no means rich and on our one income we have to watch what we do with our $, but we are the haves without a doubt. I've worked with so many have-nots over the years that I now know what that looks like and compared to that, we ARE rich. We have a comfortable home, make our payments on time, have nice cars,have a few extras, and have more than enough in the way of basic needs. We have lots of savings and excellent insurance (which we thankfully can afford because of DH's job). Sometimes I get frustrated because of the material things that we have to go without now since going to one income, but I've never doubted that it's so worth it. It's just getting used to a lifestyle change.
As a 'have', I feel so fortunate that I can stay home with our daughter by choice, and still have a comfortable lifestyle. We have our $ moments where we have to tighten up or worry a bit, but that's usually just because we're so picky about our finances. In comparison to the 'have nots', it's nothing.
Hol- I mentally do the same thing (as your gratitude journal), edpecially when I'm feeling greedy! I look around my own life and then think about the people that I see each week and realize how 'rich' I am. I see people who have literally NOTHING. Having a car to drive would be great, but they couldn't fill it with gas. Their homes are dark and small and usually should be condemned.
I was definitely part of the *haves* in my childhood - doctor's daughter, house on the lakefront, membership at the country club, modeling school, etc. When I was 12 my parents divorced, my mom moved us from GA to New Orleans, we lived with HER parents for a year before we got an apartment. We weren't totally - but we were sort of - part of the *have nots* - things were very tough for many years, we had the bare necessities and really no extras for a while.
Fast forward to adulthood - I still think DH and I are somewhere in the middle, though I do agree that the middle class is disappearing.
But we aren't hurting for anything, and we do take vacations. However, we don't go out regularly all year - we don't eat out more than a couple times a year, we don't go to the movies, we just don't spend money weekly on entertainment/eating out, but we DO plan our vacations.
We have cable TV & internet, each of us has our own laptop, we own our home though it is by NO means elabarate (or paid for!). We are driving 1998 model cars with over 100,000 miles on each of them, but we have no car notes. We have health insurance, homeowners and flood insurance and car insurance and we now have retirement accounts.
So I suppose by some standards we are the *haves*.
I was a have-not most of my life. Grew up, literally, in a "cold water flat" (the landlord provided water, but my dad and Grandpa installed a hot water heater) with space oil heaters; my folks bought my clothes from Robert Hall (an early Chicago version of K-mart); at one point (though I didn't know it then) because both my parents lost their jobs, we almost lost our house. I will say that I never knew we were poor, although we were.
My parents bought two new cars in their entire lives, one in about 1950 and the other the last car they ever bought, in about 1985. We were definitely have-nots for about 90% of my marriage, including an 18 month stint on welfare and medical assistance. And then, I was a single mom from 1976 on.
I was always stretching my paychecks and making decisions, though the utilities and mortgage always got paid, and except for that one period we always had health insurance. A lot of my sons' clothes, and mine, came from thrift shops.
When my parents and I moved in together and bought a house together, things were a bit easier because we had 3 incomes and were frugal. But when their car had to be replaced, it was a stretch for them and me. After dad died, mom's income was so low she qualified for the prescription assistance program in Pennsylvania. It wasn't until about 4-5 years ago that I started seeing that I had some money left over out of each pay period after paying everything that needed to be paid, and was able to start saving a bit. But the biggest difference was when I started collecting Social Security a bit over 2 years ago and kept on working full time. I have an IRA, and have contributed to 401(k) plans for several years, but I have to say, I don't know what I will do if/when I am no longer able to work and have to depend on my retirement accounts and SS.
So, all in all, I am not a have not, but I don't have much. I have nice house that is about half paid for (with a new roof 3 years ago, and new siding and windows 5 years ago), and a fully paid for car. My mortgage, real estate taxes, homeowners & car insurance (the *really* fixed expenses) are about 30% of my net income, and at present I have no credit card debt and about 3 months salary (plus set aside for real estate, etc. taxes) in a cash savings account. I'm going to have to spend between $5,000 and $10,000 on home repairs/improvements in the next couple of years, including a new hot water heater, washer and dryer. Right now, I can manage that - which I couldn't have done easily 10 years ago, and don't know if I could 10 years from now.
And I don't feel deprived - in fact, most of the time I think I've led a fairly sheltered life. I've always had a leak-proof roof, heating, hot water, food, clothes, and health care. I never went without anything I really needed, and I have almost always had a few bucks for non-necessities. I have known a lot of people who could not say that.
Thinking about this thread, I did some quick research, and found a site - the Economic Policy Institute - EPI. Yes, of course, it's a "left wing" economic think tank - what else would you expect from me. But, it provides solid sources for all it's data.
Here is a brief look at the economy and how it is affecting workers - low and middle income people. economy.
Another summary is a chart on the ratio of CEO earnings to worker earnings: ratio It is a bit scary to realise that the "average" CEO earns as much ore more in one day than the "average" worker earns in a year - the ratio right now is 262/1, where it was 100/1 in 1997.
I have good health insurance, and my company recently changed carriers so that I have a better plan - with lower copays for doctor visits and prescriptions - than last year, and I don't pay anything for it (HMO, single, no dependants). But there were 6 million more people without health insurance in 2004 than there were in 2000.
Although the question was directed to "me" and "you", I am concerned about "us" - the whole range of middle income and lower people in this country, the disparities, and how much harder it is for "us" to make ends meet.
Hol - interesting comments. My mother was age 11-21 during the 50s and she says it was the best of times! Things have certainly changed since then.
It's the consumer driven economy that fascinates me the most. I feel like this is a time to reign it in. Stop spending. Pay off debt. How long can we sustain the buying, the ever larger houses, the things and stuff?
In our area folks own 4500+ sq foot houses yet can't afford furniture for multiple rooms. The owners can't handle the recent gas increase they were living so close to the edge. These are the folks who are going to take a dive to the have nots should something happen to their income. I mean these folks appear middle class, even upper middle class, but they are really working class. Interestingly, our area has one of the highest foreclosure rates in the country, yet our home prices are some of the cheapest. How is that??
I think the current administration (and I really didn't intend to have a political discussion) is just a taste of what life will be like without a middle class.
Mommmie - I agree! That's the way it is here! It seems like there's just no end to the overspending on the outrageous homes that they can't afford to furnish, the boats, the jet skis, the high end cars....
The people who live this way here work at our automotive plants. They do NOT have degrees of any kind and make a minimum of $70K/year without any overtime. (And overtime is a standard, so most are well into 6 figures, in an area where the cost of living is low.) Now that these auto plants are starting to see some major wage changes in the next few years, these same people will literally be in the 'have not' category if they don't get their ducks ina row. I am personal friends with many of these people and they are literally living hand to mouth to pay for all of this "stuff". I couldn't sleep at night! Their washer and dryer died and they couldn't afford to buy new ones for heaven's sakes. DH is an engineer at one of these auto plants and you wouldn't believe the things people tell him!
Sometimes it seems like it won't end.
It's very interesting because DH and I have traveled to Europe multiple times and in speaking with the locals, they don't even understand 'credit' there. Very few people own their own homes because you don't get a loan there. If you don't have it, you don't buy it, you rent instead. They laugh when you pull out a credit card in a non-tourist area. It's a very straightforward way of living financially. That sort of thinking in the States is incomprehensible to many people. I most definitely use my cc on a regular basis, but never have a balance on it because that's just the way we are. I think a lot of people don't even think "can we afford this?" they just know that little piece of plastic is in their pocket so whatever they want is accessible.
Vice versa, all of the families of poverty that I've worked with over the years seem to think they are owed something. They think they should have more because they deserve it, not because they have jobs, have safe sex that prevents multiple unwanted babies, and are getting educated in some chosen field. It feels like both ends are spiraling out of control in a sense.
Interestingly enough (IMO), our family is finally moving from the have-nots to what I consider the middle class. For the first time in about 7 years, I don't have to scrape for every little extra and I can take an unexpected expense or two without having to juggle our budget for the next 3-6 months to make that payment. We have a reasonably-sized home, our dks don't have all name-brand clothing but I'm not embarassed by what they wear and we'll be able to have a nice family vacation next summer. Our car is fully paid off but not large enough for us so we'll have a car payment again soon but not having a car payment made it easier to pay off debt and get us out of the have-nots.
I think spending the time as a have-not has made me so much more appreciative of having what I do have. Most people wouldn't consider us a have but, looking back to just a few years ago, I know that DH has come a long way in his career and we've both made some huge changes in our financial attitudes.
My brother and sister-in-law both work, my db has a job that puts him at $60K+ with no college degree but I see the stupid decisions they make and the stress they are under and it just makes me cringe. The rest of the family really worries about them because we just can't see them learning a lesson without hitting some MAJOR bumps in the road in the next few years. They are definitely in that group that lives like a have but could be a have-not in the blink of an eye. I hope we are wrong but I don't think we are.
I like my little house! It's only 1600 sq ft. I'll probably never live in a "shack" (our pet name for big fancy houses), but I don't care. I think a lot of the people who live in the big fancy houses, are living on the edge of existence and are one crisis away from having all come crashing down on them. I do wish we had a master bathroom, sometimes, but I can live without it!
Dawn - My little house is only 920 sq. ft, but it is enough for us. We have three bedrooms and one bath. It is home to the four of us, we raised two other kids here, and took in my parents at one point when my Dad became terminally ill (my Mom couldn't care for him), and my FIL when my MIL passed away.
It is easy to heat and cool, and easy to clean.
I agree that "we" (society) need to reign in the extravagance. When I was growing up, you saved up to buy something. You didn't use credit. My parents had one (used) car. If Mom needed the car, she had to drive my Dad to the home of a co-worker who took him to work.
There are certain small extravagances that I will indulge in because I didn't have them growing up. I LOVE big fluffy bath towels, but I buy them at a Big Lots type of store for a third of what you would pay at Penney's or Kohl's. My Mom had towels that came free in a box of laundry detergent. No kidding!! They were like cheesecloth.
My other splurge is good coffee. I joined Gevalia, and I have a real state-of-the-art coffee pot that I got for joining, and I buy their coffee. It costs me about $33.00 every three months. My Mom always drank Maxwell House instant coffee. (Yuck!!)
Other than that, I shop at yard sales, thrift shops and ebay. I also buy most consumables at Walmart.
As I stated before, I am most grateful for all that I have.
I'm with you, on the fluffy towels! My SIL gave me nice towels for Christmas last year. I have loved using them!
I have a nice yard to go with my house, too. Many houses in Sheboygan, don't have as big a yard, as we have here! I love that, too.
We are defintely in the have. There are some great statistics about US vs the world. Talks about just how rich we are in comparison.
But even by Us standards i know that I am a HAVE. We eat out alot, we do have a house that is really too big for us, more tv's that I care to admit to  I grew up as a have not. I knew we were poor, but really had no idea how poor. I know the numbers now. My dad made 35K, my mom made 20k, but she paid a helper her entire salary for the last 5 years. Long story, but it was about being able to work long enough to medically retire. And then her medical costs exceeded 10k at least 3 different years. So knock that down to 25k for a family of 4. We lived off very little. I really remember making decisions on going to the doc based on cost and necessity.
What is interesting is I know what we make, I know what we spend. I also know where we are frivoulous (sp). I also know what we save and what goes into our retirement plan. But really I am amazed at people that make the same as we do and just how much more they have. I am not complaining, because we have plenty, but I don't feel like we have what others in the same bracket have. We drive a paid for odyssey and we 1 year ago bought a used accord.
Ultimatly I feel like a lot of people may or may not be in debt, but even if they are not, I doubt they really save for retirement. We also choose not to spend as much on our kids on stuff as others. For example, for bday parties my kids get 150 dollars. Period, they can get a gift, or they can have a party. If we throw a party, they don't get a gift from us. That just isn't the reality for most people. My dd is 12, she is the only one in her group that does not have an ipod, a cell phone and a digital camera. Apparently these are necessary for all 12 year olds, I had no idea. But both her dad and I do have cells, so we can hand her one if needed, oh and I just replaced my digital camera so she has access to mine, if she wants to borrow it. It is just interesting to see how others live.
I grew up in a "have not".
We are definitely a Have. We have not always been. It took several years to build up to where we are. We carry a mortgage and car loans but do not have any dept on credit cards. I do give my children a lot of things that I did not have as a child (lots of clothing, 2-3 vacations per year, dance classes, baseball camp, etc.) They do not have cell phones or ipods. I try to keep it under control. I do not want spoiled rotten children.
We put money away for college and retirement. This is very important to me.
We eat out about 3x a month. We do not go out a lot and if we do it is the whole family. We have a home theater room (big screen TV & Bose surround sound system) so I buy a movie every week. Instead of going out, we have family movie night every Saturday night. It is something everyone looks forward to. We usually make a pizza or some other favorite food to enjoy while watching the movie.
Hol--I am a coffeeholic. I love Gevalia coffee too (cinnamon is my current fav). I just bought Costa Rica Cafe Britt and it is very good!
I also keep a gratitude journal.
Deanna-- I understand what you said about some people who think they are owed something. It seems they always have way too many kids. We had 2 so we could afford them. I would have loved a big family but did not want my kids to go without. I get so frustrated when you see people on TV complaining how hard it is and they have 6+ kids.
Yvonne - Thanks for the recommendations on the coffees. I'll have to give them a try. I always get the same thing (Light Roast) because I'm afraid I might get something I won't like. And some coffees are too acidic for me and aggravate my reflux.
Coffee is my guilty pleasure, too.
Growing up we were definitely in the have nots. We didn't have a lot, and didn't have a lot of money to buy things. But we still had clothes (bought on clearance, at Goodwill or given to us), food (some from food stamps and freebies) and lots of love. Christmas presents were whatever my mom could make us, toys or clothes, either sewn, crotched or knitted, from whatever material she could scrounge together. We always qualified for free lunches at school and we were always one of the families getting a box of stuff at Thanksgiving and Christmas from the community. We were dirt poor and us kids knew it. All three of us got jobs in high school and started buying our own stuff as soon as we could. That helped my parents out a lot and we got what we wanted (and paid for it, learning quite young we had to work for things).
Now, we are in the haves. Dh and I don't want for much and neither do our kids. If we want something, we usually can afford to buy it without worrying about if our other bills will get paid. We live in a great house and both drive nice cars. Mine's paid for and dh's will be within the year. We don't go on vacations not because we can't afford it, but because we usually can't find the time. When we do go on vacations it's to visit family. We've never been on a real vacation, but may try to go to Vegas next year (only because the kids and I will be there anyway for our karate seminar!). We don't overspend. If we see something we'd like but it's really expensive, we don't buy it. Usually we didn't need it anyway. We don't wear designer clothes only because I won't pay what they want for them. Growing up the way I did I can't see paying $50 for a pair of jeans!!!
I was just thinking of this post earlier while I was making cookies. Growing up, if we wanted to make cookies (or a cake or whatever) we had to make sure we had all the ingredients or could get them (Grandma lived next door). If we didn't or couldn't, we didn't make whatever. Today, I not only made cookies not worrying about having the ingredients or affording them, I used three different kinds of chips in them (white chocolate for Randy, butterscotch for me and mini-chocolate for everyone else). Growing up that would have been unheard of. We may have had regular chocolate in the house, but we would have skimped on them to save some for another time. We are truly blessed now and I'm very thankful for that. My mom is still on the verge of the have nots.  She pays the necessities and uses what's left for groceries every week. Part of that is my brothers fault and part is just never really pulling yourself out. I do agree to some extent that the rich keep getting richer and the poor stay poor. There's got to be a better way.
I see so many other people out there with lives so much harder than ours. I am on the high end of have not. By most people standards I would be considered poor but I have much more than the have nots do.. We still have our struggles but they have become less frequent with time. But I have seen neighbors loose their jobs and loose their homes. I have seen little kids go with out and mothers and fathers beat down with no light to find their way out.. No matter how low we went we never went hungry and our children have never done with out.
I could never dream of living in a big house or having a new car or even taking a vacation.. But I am happy with my life.. I am proud of myself, all I have been through and who I have become.. I am blessed, poor or otherwise, I have been blessed..
I don't know. Technically we're a low income family by federal Canadian standards but that feels really weird. Some things are a squeeze to get but mostly we have what we want. It's simply that we keep the wants relative to our income.
We want to get away? We camp or visit relatives. We want a computer for gaming? We buy a $500 one and get our games from the bargain bins. We want a reliable car? We research and buy used. We want a piece of furniture or appliance? We watch sales or check freecycle. We want to splurge on a uselss shopping spree? We head for the thrift shop.
We have what we want, we just get it in slightly different ways then people who make more.
We are haves. But, we have worked hard, and made smart financial decisions to get here. We only spend what we can afford, and we make sure to save. We do have a nice house, and it is more expensive then most, but we have a low payment because of equity we have built up with our many moves. We also like to take nice vacations. However, we don't spend a lot on clothes. I shop Target, Old Navy, and Kohls for the boys and myself. We also don't spend lots of money on cars. We just bought a new van, only because our old one was 9 yrs. old with 100,000 miles, and starting to break down. This is the first time in 5 yrs. that we have a car payment. We don't have any credit card debit, or any other debt. We only buy things when we can pay for them outright. The only thing we have is our house payment, now a car payment, and daily living expenses. We do have a savings account, 401K, and college funds set up.
I am very proud of dh. He was definitely a have not growing up. He has worked hard, put him self through college, and worked his way up in the company he works for. He now makes a very good salary.
I do think that there is a growing gap between have and have nots. But, I think part of that is the new generation of young people who want everything now. I think a lot of people are stretched beyond their income. They have growing debt because they can't wait to buy anything. I feel a lot of people are living beyond their means, and pay check to pay check. Foreclosures are on the rise. Part of this is due to people getting ARM home loans, so they can buy more then they can really afford. Now, interest rates are rising, and so are their payments.
I also feel that we really need to reform the gov assistance in this country. Instead of just giving assistance to people, we need to provide them with the tools... education, job training, etc. to help them better themselves. I think, in most situations, this should be a requirment of receiving govt assistance.
Ditto, Debbie!!!
Debbie, I think they are trying to do that, in WI. I'm not sure how successful it is, but I know they have stuff set up for job training and stuff like that.
Debbie, education and job training *should* indeed be required for public assistance. But, what is required instead is, by the new HHS rules, a minimum of 20 hours of work in any legal, minimum-wage job. And only 6 weeks for job search, training, education, before their state is financially penalized if they don't have a wage-paying job for at least 20 hours a week. At the same time, federal government subsidies for child care have been cut.
Ever since the Welfare Reform Act of 1996, there has been both a limit of the period of time for receiving welfare - I think it is 5 years - and a work requirement. Some states have counted school and job training as *work*, but the federal government says no, if a wage is not earned, it is not work.
In addition, when a state reports the number and percentage of welfare recipients who are working, they must include in this count grandparents who are taking care of minor children who are receiving welfare.
And, funding for Medicaid (the health program for poor people) is being cut. As a result, California, for example, is proposing cutting Medicaid for people who earn between 61-100% of the poverty level for a family of 3 ($9,160-$15,000). Other states are considering similar drastic cuts. As you know, there are darned few jobs paying between $9,160-$15,000 that offer health insurance - so people won't get health care other than in emergency rooms, which actually costs a lot more.
I am proud to say that Pennsylvania will shortly be one of the 3 states that is officially striving for 100% health insurance coverage for children. The health insurance will be free for some, and there will be graduted, supported premiums depending on the family's income level, family size, and family necessary expenditures. I just hope that dental coverage is included, and glasses.
I do agree that a lot of people are not taking debt seriously. I read an article in the NYTimes yesterday that was talking about the interest-only and minimum payment mortgage loans (where the minimum payment was not even paying the interest, let alone all of the principal for that month). As I remember the article, 7 or 8 years ago these kinds of loans were less than 5% of mortgages and now they are about 1/3. Credit cards - multiple credit cards - are entirely too easy to get, and the interest rates on some are appalling. I shudder when I see people use their credit cards to pay for groceries, for example (though some may pay off the card in full each month - I don't know, but it still gives me the shudders).
Ginny, regarding using the credit card use for groceries - DH and I have an American Express card that we get points for using - we will end up getting free flights, a free cruise, shipboard credits - depending on how many points we have at a given time. We have been using that in place of our debit card, for everything we would normally use the debit card for. When the bill comes, it gets paid in full each month. I know a number of other people who do the same. My co-worker has a Disney Mastercard - she uses it in place of her debit card and she gets Disney passes, or motel rooms, etc. for using it.
Bobbie/Dawn A, I wish more people felt that way!
An adjustable rate mortgage, helped us get a lower interest rate, when we bought our house. At the end of the 3-year term, though, we refinanced to a fixed! Gary says we are paying off more principal, now, when we are paying our mortgage! It's a good thing!
I use my credit card all the time. It's just easier than carrying around enough cash. We pay the bill in full each month and have never carried a balance. I think (hope!) a lot of people do that. It's just so much simpler to carry one piece of plastic and never be caught short!
Dawn, I'm not talking about an ARM. The kinds of mortgages listed in the article were the "interest only" mortgages, and a kind of mortgage where the homeowner pays what they choose each month as long as they make the minimum payment set by the mortgage lender, and this payment is usually not even enough to pay the monthly interest, let alone anything on the principal. ARMs make a lot of sense some times, as long as the borrower handles it carefully, which obviously you did.
Karen and Kate, I realize a lot of people do pay off their credit card bills in full each month, and use them for everything because of the points. But most people don't, and do use credit cards for necessities without paying off the bill in full each month. When you read the numbers on credit card debt (how much is owed in the U.S., in the aggregate, vs. how much people have in some sort of savings or investment) it is scary.
As Debbie points out, an increasing number of middle-class families are on the edge, with high debt and little or no savings. All it would take is a layoff or down-sizing or a catastrophic medical even, and that family is 3 months away from foreclosure and maybe welfare.
Welfare in Ohio, unless medically unable to work, requires you to be employed or in training. There are requirements as to how long you have to work or be in training or your benefits are stopped. If you do not report increase in income with in 30 days you are cut. Get a minimum wage job and loose all assistance in most cases.. There are some parents that qualify for full aid with out employment and those cases generally are related to a non supporting parent. The welfare pays these low income parents what they are to receive from the parent that isn't paying and they go after that parent to get paid back. Being poor/low income isn't a sure way to get assistance.. It is very difficult for people with out children to get any help. And I agree with Ginny, that statistics that are posted don't break down who is being covered. Family members raising children qualify for assistance (which has always been the case, children are made "wards of the state"), which they go after the parents for repayment when they can in those cases and kinship care is a lot cheaper to pay out than full care in a foster home. Dead beat parents that we allow to go on not paying have children supported by the state. People that are medically unable to work that use up or have no disability/injury coverage through work, qualify for aid. They use state welfare assistance as a stop gap for SSI (Federal assistance). Meaning SSI doesn't pay enough to support a disabled or elderly person and they qualify for additional assistance from each state based on the cost of living in that state. There are many stories in the system, not everyone is a birth control commercial gone a rye. Not everyone is bilking the system. No matter what we can think to talk about their is someone out there that abuses the rules and everyone else gets punished. And our town had a major increase in people receiving assistance with in the last five years because we lost two factories and they down sized one company. Nothing has been brought in to replace those jobs.. Those people were the "middle-class families on the edge". In the paper Friday we had 15 houses up for for closure, this is a constant around here..
And Ginny, I use my debit card for everything. At a distance it looks like a credit card because it doesn't say anything but the banks name and Visa on it. So to some it would appear that I am putting everything on credit. I actually don't own any credit cards..
My Visa Check card, which is a debit card, has to be used as a credit card. It is supposed to make it easier on the customer, because we don't have to use our pin number. I love just sliding and signing. But you see the big Visa logo on it, and then see me say or punch in Credit, and you'd swear it was a credit card!
My old check card was like that - the new one says "check card" on it, and many of the machines automatically go to "enter PIN" - now that I think of it, I am going to ask my bank why.
Actually, I don't care how people pay for their groceries, but I "know" that a lot of people use their credit cards for necessities and can't pay them off in full, so they just get in deeper and deeper.
Thanks, Bobbie. Having been on welfare myself, and learning how the system really worked then - and reading about the draconian changes beginning in 1996, I am certain that welfare is not a bed of roses. The myth of the welfare cadillac is just that, a myth. From everything I've read, most of the cheating on welfare comes from stores that illegally pay cash for food stamps, clinics that bill fraudulently for Medicare, and so on.
I know what you mean Ginny - we use our cc for most everything and it's paid off each and every month without a second thought. We use it for the things we have to buy anyway so we get the cash rewards to buy something fun. BUT, when I'm charging my groceries, I'm always wondering if people think that I'm in the majority and am using my cc because I can't afford my groceries!! LOL Unfortunately, the ease of use of a cc makes it so that financially irresponsible people have waaaay too much credit on their hands. We get at LEAST 2 new cc offers in the mail every day. I have a relative that takes advantage of all of those and is in debt up to his eyeballs. My best friend has cc debt of over $30K and continues to spend and enjoy. I would be in a nuthouse with panic attacks. I guess everyone has their own comfort level, but these people just don't see that it's going to have to end at some point. It's sad.
We are a "have" society. We need to "have" it now. Easy credit makes it possible. Sadly, CC companies get kids going into college and these kids get hooked on "having" We are a society of instant gratification. There is no more waiting and saving. Why shoud you when you can buy it now and pay it off in 6 months with no interest (as some of the bigger stores do for large purchases).
Ame
Speaking of credit card debt, there is a timely column by Robert Samuelson in today's Washington Post. It says, among other things, "In 1946 households had 22 cents of debt for each dollar of disposable income. Now they have $1.26."
He points out that 3/4 of household debt is for housing, and that one of the results of what he calls "the 'democratization' of debt" is that homeownership has increased from 44% in 1946 to 69% today. He also notes that "In 2003 Americans had 1.46 billion credit cards, or five per person."
It's an interesting column, giving the history of the rise of buying on credit. Unwinding_the_credit_boom
Interesting stats there. I would not have guessed that 3/4 of debt is housing. The people that I know with huge cc issues, typically don't own their house, or bought something smallish. I guess it balances though. 90% of our debt is housing. Which ironically enough I don't consider debt. In the great US you don't ever own your house and while techincally you can pay it off, you still pay taxes and insurance for life. I think the taxes on your house should be cut after owning it for a set number of years. But currently there just isn't an incentive to actually own your house, with a payment you get the interest deduction.
Ditto Kaye. I've never considered my house as debt because we will be paying for a house until we retire and pay it off completely.
The people I know have huge house payments that take up most of their income, so then the "extras" that they "need" (high priced cars, well-furnished homes, and boats) are on cc's. Along with day-to-day things because they don't have enough cash each month for living expenses. My financial advisor told me just a few weeks ago that he has some clients making easily 6 figures (and that's a lot for this area and the cost of living here) that called him in a panic because their washer and dryer broke down and they needed to sell off some of their mutual funds to pay for it!! Yikes. We talked about this whole topic and it was very interesting. I can't imagine. People just don't think about all fo the incidentals (IMO) and then when they happen, they have no means except credit.
We are haves but, in comparison to others in my neighborhood, at the low end. We drive an SUV and a smaller car that are both six years old and we are not replacing them for a couple of years. We do eat out at least once a week and vacation at least once a year, sometimes more. We have good health insurance. Our house is six years old and bigger than we need. Ds goes to private school. However, we spend QUITE a bit less on "fun" and luxuries than most people I know that are our age. Our biggest luxury is that I don't work. So we forgo brand new cars, expensive clothes, huge TV's, pools or club memberships, maids, lawn keepers,etc. It's crazy...all the kids in our neighborhood have at least a four wheeler or golf cart to zoom around the neighborhood, zillions of video games and DVDs (not to mention DVD players for the car), designer clothes, cell phones, ipods. I'm not buying into it. He hates it when I tell him to "make up" a game to play but he does and his friends love it. Just yesterday he and a buddy nailed and screwed wood together to make a house for a lizard they caught.
Dawn, *grin* on the "shacks". That's what my family says too....boy to have to live in a shack like that....and its 15 million sq feet of house on the beach.....
my kids and I are have nots. Most of you who know me know why. BUT every penny I make goes to better my kids. I don't splurge anything on me or silly things. I buy $50 mouth pieces that ds needs for symphonic band, as being in that band is considered an honour and a professional piece is needed, or the calculator dd needs that is ACT acceptable. I buy all of their clothes on super sale so they have nice clothes. My van is falling apart and I don't know what I will do when it finally dies. Compared to some other have nots I think we have it pretty good, but I know how to budget and get the most for my money. You have to prioritize. In the community we live in though we do stick out. But that's ok. My kids are in the best schools too. And right now its all about the kids.
I do not agree that the rich are getting richer and the poor are getting poorer. Here's a different way of looking at it.
If the poor are getting poorer, then why are there fewer welfare recipients now than there have ever been in the past 30 years? It appears to me that the 1996 Welfare Reform Legislation was one of the most successful policy reforms in the history of the United States. As opposed to the prior system which rewarded idleness and dependency, the reformed policy has made major headway in helping welfare dependents become self-suffient and has reduced state welfare case loads by more than half. While the old system resulted in unwed pregnancy and a host of other related social problems, welfare reform has reduced child poverty and increased employment.
The new program had 3 goals: 1) To reduce welfare dependency by increasing employment 2) To reduce child poverty and 3) To reduce illegitimacy and strengthen marriage. At the time this was enacted, liberal groups passionately denounced it saying that it would result in substantial increases in poverty and hunger. As much as they thought (and probably still do) that conservatives want to throw poor people under the bus, the opposite has happened.
The substance of this reform essentially goes back to Ronald Reagan who wanted to make welfare mothers work in exchange for their benefits (but his efforts were always blocked by the democratic congress.) This relies on the basic conservative tenet that says that people should be assisted if they need aid, but they should not be given a one-way hand-out and should be required to take positive steps to get their lives in order. This reform actually said that some of the 5 million families (a record level in the mid 90's) that were getting aid under this program would be required to do community service work, to search for jobs, or to take training in exchange for the aid that they would get. What happened was that once there were requirements attached to receiving aid, the number of people interested in getting aid dropped and case loads began to decrease so that within a few years, the number of families dropped to about 2 million. Furthermore, as the families got off of welfare and started taking jobs, employment went up and the poverty rate went down. For example, the black child poverty rate from 1970 to 1995 was frozen at around 40-43% of all black children. Within a few years of the passage of the reform, that rate fell to a record low of around 30%, the largest decline of black child poverty in the history of the US.
Ever since 1965, around the beginning of the war on poverty, the number of children born to unwed mothers rose steadily from about 7% to about 33% by the mid-90's. When welfare reform came along, that number stopped rising and has remained at about 33% for the past 10 years.
Agreed, there are some limitations. The federal government runs over 50 different welfare programs for poor people and only one of them was reformed. Food stamps, housing, and medicaid have not been reformed. Furthermore, the state welfare beaurocracies have not reformed their programs in such a way that would promote marriage and discourage illigitimacy, the third goal of the 1996 reform. There is, however, finally a pilot program that was passed this year that will provide a way to help low income mothers and fathers get and stay married, which ends the requirement that mothers be on their own in order to qualify for aid. Hol mentioned that the family unit has broken down, and that is one reason why, among many.
Furthermore, the money that the government was spending on welfare has stopped rising due to the number of families that have dropped off the payroll. Now the government can more wisely spend that money on programs that reduce poverty.
As far as people cheating, many people (and I have known some) were cheating welfare by having jobs on the side as well, but they couldn't exactly report to their case worker on their progress of looking for a job as they would be required to do since they were already required to be at their job.
The only major upset has been the influx of immigrants into the US. Should the immigrants all be granted amnesty, it would totally wipe out all the progress that the welfare reform has accomplished up until now, would overwhelm the American taxpayers, and would cause the largest single expansion of the welfare system in the last 30-40 years.
http://www.heritage.org/Research/Welfare/wm1183.cfm
On the flip side, if the rich are getting richer, then why did the top 50% of wage earners (those individuals or couples filing jointly who earned $29,019 and up in 2003) pay 96.5% of all federal income tax in 2003? Also, the top 1%, who earned $295,495-plus, paid over a third, or 34.27% of all income taxes, up from 33.71% in 2002. From what I can see, the so-called rich are about the only ones paying taxes anymore.
(These figures can be accessed on the IRS website using Excel.)
http://www.irs.gov/pub/irs-soi/03in05tr.xls
So the bottom 50% pay 3.46% of all income taxes (Down from 3.50% in 2002) So think of it this way: less than 3-1/2 dollars out of every $100 paid in income taxes in the United States is paid by someone in the bottom 50% of wage earners while the top 1% is paying 10 times that amount. How can the rich possibly keep getting richer when they pay the lion's share of the tax burden year after year?
The rate at which the economy is growing has slowed a bit, but nevertheless, it does continue to grow. So I do not believe that the middle class is disappearing. As an example, when we had the heatwaves this year, I heard on the news that the reason there was so much more of a demand on the electrical grids was a result of more and more people having air conditioning this year. So, Americans who want to continue to improve their lives are in fact doing so. Obtaining air conditioning is only one way that many people have improved their lives.
I agree that our society today is definitely way too obsessed with STUFF and with obtaining stuff to the point where too many people put themselves in a dangerous position. Those who have embraced the "Buy Now Pay Later" and "Instant Gratification" standards have allowed themselves to spend recklessly. As Holly said, these folks appear middle class, but are really working class on the verge of disaster. However, I do not believe that they can look to the government or Bush for the blame- they can only look to themselves. Just b/c one can GET credit doesn't really mean that one can AFFORD to be in debt. I think we can all agree that a large degree of personal responsibility needs to be accepted when one overextends oneself to the point of near disaster.
A lot of the discipline that is required to make wise financial decisions, as I have read here, comes from childhood. My son has a friend who gets everything he demands from his mother, and it drives me crazy just thinking about what he will be like when he is an adult. Parents who indulge their children teach them nothing about responsibility, living within one's means, or earning what they get. But I don't see any of those parents here!
As for us, we are haves now. Dh was a have-not growing up due to an irresponsible father, and I was a have, tho my parents were stretched to the limit, so I didn't always have what I wanted, but I always had what I needed. Now we have a roof over our heads, we have clothes on our backs, we have food on our table, we have heat in the winter and (for the most part) air conditioning in the summer, we have gas in our vehicles, dh has a good job, and all our bills are paid on time every month with some left over to play with. We haven't had a car payment in 8 years. Dh is a mechanic, so you can imagine how that saves on the cost of labor! I believe that as long as all of one's needs are being met, one can consider oneself middle class. I think we got it pretty good.
Just a couple of other small points that Mommmie brought up in her OP:
There are little things like "free checking and checks/ATM card" if you keep a certain balance in your checking account...
Most banks offer free checking with direct deposit.
wealthy folks are not charged for bounced checks
I find that hard to believe. Anyone who is in good standing with their bank can ask to have any overdraft fees waived. Someone said that on the general board ("Bank workers or lawyers help") All it takes is someone who is responsible and takes balancing their checkbook and handling their finances seriously to be in good standing with their financial institution. Then you wouldn't have to use a check cashing business either.
And on the poor side, it also seems to domino. First you can't afford health insurance which means a minor medical issue can be financially devastating.
I agree that the cost of going to the doctor is hard to handle without insurance. However, I do believe that we all owe it to ourselves to take better care of our health so that we won't need a doctor. The obesity rate in this country has skyrocketed, resulting in more health issues such as hypertension, diabetes, orthopaedic problems, etc. What if we all just lived a more healthy lifestyle? What if no one smoked? What if no one abused alcohol or drugs? Can you imagine how easy it would be to get healthcare then? I think in the past 50 years, collectively we as a nation have been killing ourselves with our lifestyle choices and the burden has fallen on the healthcare system to pick up our mess and keep us alive.
I would also like to add that my MIL lives on $700/month social security and is getting along just fine. the Medicare reform has helped her tremendously, cutting her monthly prescription bill by $100.
Hol mentioned Because they don't have money to maintain a minimum balance in the bank (as you mentioned), they buy money orders (at 85 cents or more a piece) to pay bills. My DH works in the Post Office and says that some folks will buy eight to ten money orders at a time. Many will ask him to make them out for them because they are marginally illiterate.
As I mentioned above, if you have a job, chances are you can get your paycheck direct deposited into your checking account which will eliminate any fees or minimum balance requirements. However, you would not expect someone who is marginally illiterate to be able to handle the responsibility of maintaining a checking account, keeping track of all of their checks and deposits, and balancing the thing (which to me was a major chore until I got a computer ) Those folks probably use cash because it's visual- they can see, feel, and count the money easier than they can add and subtract in a checkbook. Let's not assume that just because someone doesn't have a checking account that they are poor or can't afford it- it is either by their choice or by their inability.
Okay, I gotta get off this computer now.
Kim, as someone who knows you personally, and is familiar with your struggles and efforts, I want everyone to know I applaud your efforts and your STRENGTH. I can honestly say that Kim makes the absolute most of what she has, and can do, and it IS all about the kids. In other words, when Kim says something, it's not just *lip service* - you can be assured she does exactly what she says she is doing - and that is working hard so her kids will have what they need and can get a good education.
I also know Kim and her struggles and her strength, and how hard it has been for her - and know that her only mistake was marrying a man whom she trusted who turned out to be a total jerk, which was not her "fault".
As to whether the rich are getting richer, it depends on how you look at it. I don't consider $29,019 rich, even if people paying taxes on that amount are in the top 50% of earners. I do consider people making $295,000 plus to be wealthy or rich.
In 1962, the ratio of rich (the top 1%) to the rest of us was 125 to 1 - the top 1% had 125 times as much wealth/dollars as the remaining population. In 2004 the ratio was 190 to 1. In 2004, the top 1% had wealth of $14.8 million; people in the middle fifth had wealth of an average of $82,000. Ratio
As for taxes, in 1944, the top "marginal" income tax rate was 94%. The "marginal" tax rate is the rate paid on the top dollar - remember, we have a graduated tax system. In 2003 it was 35% - a big difference. marginal tax
Here is a site to find the tax rates, year by year, from 1944 to now. For instance, in 1944, people with taxable income of $2000 or less paid 23%; people earning $200,000 or more paid 91% on the top, marginal dollars. In 2003, people with taxable of income of $7,000 or less paid 10%; people with taxable income of $311,950 or more paid 35% on the top, marginal dollars. This information is from the IRS: tax rates and another, on "effective" tax rates - that is, what you and I and Mr. Big Bucks actually pay effective rates That means that in 2002, if your total taxable income was $938,000 in 2002, you paid an effective federal income tax rate of 23.8% on all income; if your total taxable income was $75,000, you paid an effective tax rate of 18.7%, and if it was $14,400, you paid 4.6%.
Since the beginning of the income tax, this country has had a graduated tax system, where people who have more income pay more taxes. I have no problem with that. People get wealthy by living in a system that makes it possible for entrepeneurs to build businesses and become wealthy, but no one does it on his/her own. They are able to do it because our system supports them and provides all kinds of things that make it possible - and when you get wealthy, you pay back by paying higher taxes on the higher level dollars.
As to why there are fewer welfare recipients - that's simple. "Welfare Reform", which says 5 years maximum and out, and if you want to receive welfare, get a job - minimum wage fast food worker or whatever, get a job. It's easy to make the welfare rolls go down if you change the eligibility rules and people are not getting cash welfare, which is what happened with "Welfare Reform".
But the percentage of people in poverty level, using the U.S. guidelines for what is poverty level and the Census Bureau reports, has remained between 10% and 15% since 1959. poverty level and has increased slightly in the past couple of years.
As for what is "poverty level", poverty level guidelines - this is the Dept. of Health & Human Services information. In 1982, the income level that decided whether a family of 4 lived in poverty was $9,300; in 2006 it is $20,000. That is $20,000 in earned income for a family of 4. This is all income before taxes from whatever source (earned, welfare,SS, SSI, pension, disability insurance, etc.) with the exception of capital gains. Here is an explanation of how the calculations are made to determine if a family is below or above the poverty level calculation
While some medical issue are life-style choices, most are not. If you don't have health insurance for your children, how do you afford inoculations to prevent measles, mumps, whooping cough, or even tetanus? If you fall and break your arm and have no health insurance, you go to the emergency room and are treated - but because you don't have health insurance you may not go to a doctor for a follow up visit and will almost certainly not get physical therapy after the cast is removed. That's not a life-style choice.
In Alabama, Wal-Mart employees had to pay $164 a month for family plan health care, and 4,700 children of Wal-Mart employees were on Medicaid because their working parent could not afford the plan. The rate of uninsured workers in companies with 500 or more employees has risen from 7% in 1987 to 11% in 2001, and 15+% in 2004 (45.8 million people) uninsured. You can bet that the management of Walmart and those other companies with 500 or more employees are not without health care insurance.
It would be nice if the government were using the money "saved" by welfare reform to fund programs that help to reduce poverty, but it's not. Federal support for child-care for low income earners has been cut. Federal support for medical assistance for low income earners has been cut and proposals have been made to cut that even more. The present administration proposes cutting support for the Commodity Supplemental Food Program, which would, for example, terminate service to over 420,000 low income seniors. This is not food stamps - this is packages of nutritious food delivered every month. food packages In the administration's proposals, many, many cuts would be made. Education, including K-12, would be cut 15%; WIC cuts would remove 670 pregnant women, infants and children from the program. And a lot of other programs that assist low-income families (including families with working family members). cuts
Honestly, Lisa, it is hard to believe that your MIL lives on $700 a month from all sources. What about rent or real estate taxes, utilities, transportation, groceries, clothing, medical copays, and all the rest. Does she get no assistance from any source? No rent-supported housing? At $700 a month, is she having the premium for Medicare deducted from her SS check or does the Medicaid program pick that up? Is she not receiving assistance of any kind from any source, government or family?
We are a nation of haves and have-nots, in my opinion, and in my opinion and based on my reading, there has always been a perspective that poverty is self-induced - that people cause their own poverty. And if you apply yourself, you can get out of poverty. Tell that to the 35,000 plus people who will lose their jobs in the Ford job cuts (not to mention the thousands of jobs in auto parts manufacturers down the pipe stream); the up to 30,000 jobs planned to be cut by GM; or the 110,000+ people laid off in June 2005 job cuts.
Fact is, most working families are 2-3 months away from welfare if the wage-earner's job(s) are cut. Which includes losing health insurance. The airlines that have gone into bankruptcy have successfully moved their pension liability into the federal pension insurance program, which means drastic cuts in the amount of pension income paid to the retired workers, and auto companies are trying to do the same. Companies that promised free health care insurance for life to retirees are now being allowed by the courts to cut that benefit. The age at which you can collect Social Security is increasing from the traditional 65 to, I think 68, which is fine if your job involves sitting at a desk all day, like me, but not so good if your job is hard physical labor and your 65 year old body just can't do it any more. But taxes on the wealthy have been cut, and corporations get tax benefits when they outsource jobs - which means that if your job is moved out of the country, you may suffer but your former employer doesn't.
Unhappily, in my opinion, our system is currently strongly in favor of the haves - the really big haves. The biggest tax cuts, in dollars and percentage, went to the wealthiest 5%. The cuts in capital gains tax don't affect most of us, but do significantly increase after-tax income for the top 5%. And to me, it doesn't make sense that people are going without health care or health care insurance, or sound housing, or access to a nutritionally sound diet, in the wealthiest nation in the world.
If it weren't for medical bills I think we would be pretty well off. Right now we have around 9K to pay off. Dh's insurance is awful and covers only like 15% of bills. We have 2 mortgages on our house but the total is under-normal for a house like we have. We have 1 personal loan, and a car loan. Our CC debt is under 1K. I am really trying hard to pay everything off a little at a time it just seems never ending. I get a CC to $0 and have to use it cause we are short that week. Usually on groceries or household needs.
I say it 2 yrs without any issues we could be doing great. We do not have savings right now but Dh does have 401K at work so he has some money in there.
I always laugh and say if I could just win 15K I would be all set!!
My grandmother gets 1200 a month from ss.
let's do her math...
house, paid for, insurance and taxes run about 300 a month.
electric bill, runs about 150 a month, higher in the summer (temps have been over 95 and no rain for 60 days now)
water bill about 50 a month...she does not water her grass
car insurance, just the legal minimum, about 100 a month, car is paid for.
phone bill, 50 a month (just a land line and long distance)
cable bill, basic package 50 a month
So for just bills that is 700 a month. 5 left...her medications run about 300 a month. That gives her 200 for groceries, gas (she doesn't drive much)and anything else. Her house is OLD, and weekly something breaks. She can't really afford that. One month she had to choose meds or ac. She picked AC. She babysits a little boy for a little extra cash. But literally she has no money for things like new clothes, or a haircut. What about dental work?
What ultimately happens is my aunt pays her way, we give her things she needs for gifts. I come and visit, clean the house, paint a room or two, mow the lawn.
Kaye, a lot of the elderly around here are selling off their houses and moving into subsidized housing because they can not afford to pay to live and do daily up keep/ expenses in their homes. They just built three new apartment complexes just for the elderly and we already have five that I can think of off the top of my head. These aren't nursing homes, they are apartments that you pay based off of your gross income.
My MIL lives with us because there is NO WAY she could live on her own with out moving into one of those places. Prior to moving in here she was left with $150 a month for groceries and gas.. Who can live off of $150 a month???
Haven't had much time to get back to this til today. Sorry.
Ginny, I browsed over your figures once, and wasn't awake enough to follow them. I don't understand ratios as well as I understand percentages. But I have to wonder, as the population of the country grows, doesn't the number of people in the top 1% of wage earners grow as well? Is it not so much that the rich are getting richer as it is that there are more people getting rich? And if so, would that be a bad thing?
I understand what you are saying about the change in eligibility for welfare which requires that recipients be effectively kicked off the rolls after a certain amount of time. However, I would be hesitant to declare welfare reform a success if it were not for the undeniably low unemployment rate in this country today. With a current rate of 4.8%, we are, statistically speaking I believe, a fully employed nation. Not to mention that average hourly earnings rose by 7 cents in July. http://www.bls.gov/
I studied the info on the poverty level using the link that you gave, and I found that the poverty rate has actually averaged 10.4% for the past 7 years. Going back to 1996 when welfare reform took place, the poverty rate began a steady decline and it reached its lowest level ever in 2000 at 9.6%. In 2001 it went up by .03 % when we entered a recession. It's still low at 10.8% for 2005. (And actually, in 1959, the poverty rate was at 20.8%.) So, those poverty figures as well as the current unemployment rate appear to support the welfare reform.
I am hesitant to believe that 45 million Americans are without health insurance and none of them by choice. As I understand it, when one leaves one job and goes to another, there is a period of 1-3 months when they are without health insurance, but they are counted as being without it for the whole year. There are many people who refuse health benefits although they are made available to them. There are some younger Americans who choose not to carry health insurance on themselves because they are young and healthy and do not feel they need it. There are also policies that allow employees to insure their children and not themselves. So the 45 million number is bloated, in my opinion.
When Medicare was reformed, it was partly in response to seniors who asked, "Do I buy food, or do I buy meds?" Now that their meds have been made more affordable to them through Medicare, they have more money to buy food. So I can see why the government would cut the Commodity Supplemental Food Program. Why should my tax dollars continue to buy their food?
I thought you would find it hard to believe that my MIL only lives on 700/month. A lot of people do. She does live in an apartment complex in a tiny one-bedroom apartment (approx. 500 sq. ft.) that is subsidized by the Michigan State Housing Development Authority. MSHDA's loans and operating expenses are financed through the sale of tax-exempt and taxable bonds and notes to private investors, not from state tax revenues. Proceeds of the bonds and notes are loaned at below-market interest rates to developers of rental housing, and also fund home mortgages and home improvement loans. That is the only other form of assistance she receives.
She pays about $200 a month for rent. I don't go through all of her bills with her, so these numbers are rough estimates. Her light bill is around $15 and her phone is around $30. Water and heat are included in the rent. Her car insurance is around $600/six months, her food bill is around $125-$150/mo (she says she doesn't eat much because she isn't as active as she was when she was working.) She lives in town, so she doesn't go through much gas. She fills it up when it gets down to 1/2 tank, but I really don't know how often that would be. She has also some money in the bank for emergencies.
She turned 65 last October and enrolled in Medicare Part D. As I said, she only pays $12/mo for 3 prescriptions. (That number I know b/c she was so excited she had to tell me!) She doesn't need to go to the doctor except for checkups every few months. As far as her Medicare premium, I know she has that deducted from her SS, but I don't know how much it is.
She has her SS $ direct deposited into her savings and she gets enough cash out every month to pay for her utilities and car insurance. She knows her limitations, and knows she isn't good enough at math to maintain a checking account, so she uses the envelope system to save for her monthly bills when they come due and then she pays them with postal money orders. When she has enough left over, she treats herself. Last year she saved up $500 to buy a new TV, and last month she saved another $500 to buy a brand new recliner.
Her goal is to live on her own for as long as she possibly can. She enjoys being alone, she loves her apartment, and she is very proud of herself that she has remained self-sufficient for most of her life. It is that pride in herself that keeps her going.
The 35,000 plus people who will lose their jobs in the Ford job cuts will find work again, as has been the case in the past. We are a nation full of resourceful people, and I believe in the will of the people to do what it takes to survive and to make it through adversity and even to thrive. That is why this is the land of opportunity. People will either take employment somewhere else, or they will employ themselves using their talents and skills. The mistake some people make is to place their fate in the hands of their employer or in anyone other than themselves. Sometimes, we hold the keys to our own prison.
When jobs are cut, that is what the welfare system is for. It is to catch you when you fall on hard times, but it is only supposed to be temporary. That's the whole idea behind the reform.
my husband and i are most definately in the "have" category... especially compared to my childhood.
when i was growing up my grandmother lived with us to help financially. mom was single until i was 8 1/2 years old. they supported a family of 4 on grandma's income from Zayre's (older version of k-mart/wal-mart), mom's disability income, and mom babysitting... still below the poverty line. our clothes were second hand, and the cabinets weren't overflowing, but we were neat, fed, and well-mannered. when mom remarried, dad was in the military and we did better for a bit. then they got caught up in buying "stuff" and credit, and dad was discharged. the financial problems snowballed from that point.... poverty again (i can remember times that the only food we had to eat was the free leftovers/extras dad brought home from the fastfood places he worked at). let's just say i learned a LOT about handling finances from my parents' mistakes.... and unfortunately they STILL haven't learned their lesson, about living beyong their means *eye roll* my dad works off-shore and makes more money that my husband, but they still barely make "end's meet".
my husband's family was a little better. his dad made really good money, but kept his mom on an "allowance". he bought and worked on cars, and tucked away money here and there. although the "allowance" was barely enough to pay the bills and buy groceries, they didn't really suffer because his dad would throw in a little extra here and there for school clothes, christmas, vacations, etc., and they had good medical insurance. they divorced once the kids were both out of school. hubby learned good lessons on being frugal and saving.
when we first got married we had to live with m-i-l for a while because we both lost good jobs right before the wedding, and had to go to minimum wage. we were caught in the middle for a looooooong time where we made to much for public assistance, but couldn't totally make it on our own either. hubby started his own business building and servicing computers, and things got a little better... we were able to rent an apartment.
just over 5 years ago, a client of his told him about a job opening on the navy base for a computer tech. he checked it out, and the pay was just as much as he was making on his own with benefits.... needless to say, he quit his business. we ALL had good health insurance for the first time! things have steadily increased from there.... 2 years ago we bought our first home (only 2yrs old w/ half acre lot!), and we now have 2 good reliable (paid for) vehicles, medical/dental/vision insurance on all 5 family members, the bills are paid on time, the kids have new clothes/shoes when needed, the pantry/fridge/freezer are full (most of the time, lol), we have retirement savings, 3 computers, and we even get to eat out once a week! (no cable, but that's by choice) he may get bumped to the network administrator position soon which will be another significant pay increase. once that happens we will be able to start saving for annual family vacations!
every day that i get up and look around my home, the vehicles we drive, and the clothes the kids wear i am SO thankful for the many blessings God has bestowed on my family!
*sorry for the book*
Lisa, the numbers for uninsured are for an entire 12 month period. Here's an article from MarketWatch on the 2005 census report which just came out: MarketWatch
Here are some quotes:
"Because of population growth, both the number of people without health insurance and the number of those with coverage grew between 2004 and 2005.
The number of Americans without health insurance for those full 12 months rose by 1.3 million to 46.6 million, according to the survey of 100,000 households. The percentage of people without it increased to 15.9% last year from 15.6% in 2004.
At the same time, the number who had coverage for the entire year increased by 1.4 million to 247.3 million in 2005. But the rise wasn't enough to keep the percentage with insurance from falling to 84.1% from 84.4% during that period. The nation's population expanded to 293.8 million last year from 291.2 million in 2004, according to Census estimates."
"Separately, the number of uninsured children increased to 8.3 million from 7.9 million, or to 11.2% from 10.8%. "
"The number of uninsured has risen every year but one since 2001, according to Census data.
Beginning in 1987 when the uninsured rate was 12.9%, the rate had a 12-year run of either increasing or not registering a statistically significant change. It peaked at 16.3% in 1998 before falling for two years in a row to 14.2% in 2000, when the job market was booming. The uninsured rate then rose until 2003-2004, where it remained at 15.6% before rising to 15.9% last year. Generally, the uninsured were more likely to be non-white and immigrants. About 72% of the uninsured age 18 to 64 worked either full or part time, according to the survey. "
Also writing about the 2005 census, in the NY Times, NYTimes
"The nation’s median household income rose slightly faster than inflation last year for the first time in six years, the Census Bureau reported yesterday.
The rise, however, had little to do with bigger paychecks — in fact, both men and women earned less in 2005 than 2004. Rather, census officials said, more family members were taking jobs to make ends meet, and some people made more money from investments and other sources beyond wages."
"Nationally, the small uptick in median household income reported yesterday, 1.1 percent, was not enough to offset a longer-term drop in median household income — the annual income at which half of the country’s households make more and half make less.
That figure fell 5.9 percent between the 2000 census and 2005, to $46,242 from $49,133, according to an analysis of the data conducted for The New York Times by the sociology department of Queens College. The difference was so sharp, in part, because the 2000 census measured 1999 income, which was at the height of the dot-com bubble. "
"David Johnson, chief of the housing and household economic statistics division, also noted some persistent signs that Americans from different income groups were not sharing equally in the country’s recent economic good fortune. He pointed out that slightly more than half of the nation’s income was going to the top 20 percent of wage earners at the same time that the number living in poverty remained essentially unchanged, at about 37 million people."
On the insurance issue....I live in the south where NO ONE offers insurance. Almost everyone I know has no insurance, the jobs here do not offer it and cannot afford to. And for the ones who do a person can usually only afford them and not their family. There are no unions here to ensure those things either.
The south isn't like the north on this issue. In IL everyone I knew had insurance.
Several years ago I was paying $600 a MONTH for my kids' health insurance. Thank God my employer covered the cost of mine. Now it's not offered at all at my job. We pay $550 a month to have me covered on DH's. It's a lot, but to pay all of our medical and Rx costs in full each month would literally break us. Our Rx copays are around $400 a month.
I am mostly working to pay for insurance and medical bills at this point.
It's like that for teachers here Karen. I was fortunate that my husband has excellent insurance and we would have been on his as a family anyway, but 2 teacher couples with kids here pay $185 PER dependent PER pay (2 pays/mth.) Several teachers I know have weekend jobs to pay for the insurance. My dear friend's last child graduated from college and she was so excited to be getting a "raise"...no more ins. premiums for the last child! We had fun planning what she could do with the extra money!
We are very blessed that DH works for a large company with excellent benefits. It's so sad that people have to go broke just to stay healthy! Very unfair.
Lorissa (Acjmom), that is an absolutely WONDERFUL story. I was so moved that you and your dh (especially you) have come so far in your life. You must feel that you have so much to be thankful for. (((HUGS))) to you!
Ginny, I won't debate that the poverty rate had increased slightly in 2005. That is a natural occurrence in a time when the growth of the economy slows.
The point I was trying to make was that welfare reform has in fact been successful in lowering the poverty rate since 1996, as illustrated in the link you provided.
However, I totally do not understand (and this is me genuinely admitting my stupidity ) how the Census Bureau and the Bureau of Labor Statistics can take a sample of a measly 100,000 people and somehow reason that those results represent the condition of the entire population of the country. As many times as I have watched the show Numbers on CBS I still don't get it. I never took a statistics class, although it was offered, and I am now regretting it!
All I can say is that my gut tells me that things are not as bad as they are made out to be. We as a nation have seen worse times, and every time we have made it through. We are a nation of creative and innovative thinkers and doers. That's why it is important to remember that it is the PEOPLE which make this country work, NOT the government or its programs. PEOPLE- driven by the will to survive and by the desire for a better life for themselves as well as for others- gave birth to this country 230 years ago. There is no reason to believe that this country today lacks the same passion and ability that has existed throughout our history.
Despite the stories of unfortunate loss and strife, our country takes better care of our poor than any other nation on the planet. I found this essay on the 4th of July, and I thought it would be appropriate for this post:
What's so great about America?
..a friend of mine from Bombay who has been trying unsuccessfully to move to the United States for nearly a decade. I asked him, “Why are you so eager to come to America?” He replied, “Because I really want to live in a country where the poor people are fat.”
In America your destiny is not prescribed; it is constructed. Your life is like a blank sheet of paper and you are the artist. This notion of being the architect of your own destiny is the incredibly powerful idea that is behind the worldwide appeal of America.
To further support my assertion that this nation is helping more people become "haves", the NY Times yesterday reported that the economy is growing faster than the government thought it would. Revision Lifts Pace of Growth
This report came 3 days after the NY Times published a significantly negative piece on how Real Wages Fail to Match a Rise in Productivity. It seems that the reporters have had to change their negative tune. They went from tolling the death knell of real wage growth to reporting a 7-percent wage jump over last year (after inflation.) At first they had even said that wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947. But the new data released on August 30 pushed them to admit the death of wage growth reported earlier was greatly exaggerated.
So it appears that the effort to put negative spin on the condition of our economy and our standard of living is being combatted with positive facts.
Perhaps the biggest surprise in yesterday’s report was new evidence of a surge in wage-and-salary income in the first half of this year. Between the fourth quarter of last year and the second quarter of 2006, pay grew at an annual pace around 7 percent after adjusting for inflation, up from an earlier estimate of 4 percent, according to an economic consulting firm, MFR.
As a result, wages and salaries no longer make up the smallest share of the gross domestic product since World War II. They accounted for 46.1 percent of all economic output in the second quarter, down from a high of 53.6 percent in 1970 but up from 45.4 percent in the spring of 2005.
True there are fewer people on welfare, but those that got off of it didn't jump into the middle class. They are still poor.
If people who got off welfare are still poor, then the poverty rate would have remained the same or increased since 1996 when the reform took place. But it didn't- it went DOWN steadily from 1996 to 2000, and hasn't regained the 1996 level since.
history of poverty rates since 1959
Compound this with the good news from the NY Times yesterday that between the fall of 2005 and the summer of 2006 pay grew at a rate of 7%, then it stands to reason that more families are on their way out of poverty.
Compare that to recent news from our city newspaper published two days ago:
"Figures released Tuesday from the U.S. Census Bureau show that from 1999 to 2005, the median household income in the Dallas-Fort Worth area fell 10 percent when adjusted for inflation.
The trend was the same in Texas and nationwide, but incomes fell harder in the Dallas-Fort Worth area."
One reason for that might be that the immigrant population is pulling down the median household income.
Imagine you have a American compensation pool of 3x 4x 5x 6x 7x 8x 9x, with x being some amount of dollars.
Both the median and the mean average is 6x. (Median is the number at which half of the population is making less and half the population is making more. Mean is average income.)
Imagine that ten years later you have absolutely no improvement in compensation for those same people and thus they are 3x 4x 5x 6x 7x 8x 9x. But due to low skill immigration from Mexico you also have two new people, and they both make 3x. Now the pool looks like 3x 3x 3x 4x 5x 6x 7x 8x 9x.
The median income has now fallen to 5x from 6x! The mean income is a bit better than the median at 5 1/3, but it is still significantly worse than it was ten years ago. Yikes, the NY Times reports. Inequality is increasing *and* the overall wage is going down as well. Looking at the change in mean and median it also become "clear" that the rich are getting a bigger share of the national income. Those darn CEO's and sports stars, there oughta be a law!
But the simple reality in this example is that all the original Americans had neither worse incomes nor better incomes, they were exactly the same. What changed was that we added workers to the bottom of the pool, and they pulled down the averages without harming anyone. Indeed, it turns out in this hypothetical example that these immigrants used to earn 0.75x back in Mexico and their incomes thus rose 4-fold. Thus, the horrible picture outlined in the hypothetical NY Times lead story is actually a success story for the actual people on the bottom of the ladder (well, for two of them). But the NY Times says it is bad for the little guy and great for those darn rich people.
To make a long story short, if we have had scads more low skill/ low wage immigrants than we used to 30 years ago (and we do), then where born-in-the-USA Americans had stagnant wages it would look like a large fall in median wages and also mean wages, along with an increase in inequality skewed towards the rich.
But if the measured median looks stagnant during a time of heavy low skill immigration, then in reality those born-in-the-USA Americans are by definition doing significantly better even though you'd never know it just by looking at the mean and median stats.
I just don't buy that incomes are down due to the immigrants from 1999 to 2005. We had plenty-o-immigrants in 1999, too. If they are getting paid cash then they aren't in the survey. If they are getting paid legally they are making the same as the gringos standing next to them at the counter.
At my last job (held 1996-1998) we employed mostly illegals and they were paid the exact same as the legals. They all got the same raises.
And not all the immigration is low wage illegals. We seek out foreigners to be nurses, doctors, teachers, researchers, engineers, etc.
To me the lower income is from the tech bust, from companies hiring cheaper people rather than experienced ones, tiny raises, manufacturing jobs going away and outsourcing. Also it doesn't help that the top executives get a bigger piece of the pie than they used to.
I'd like to do more research, but within the last 1/2 hour, my son has had 4 friends come over to play, and we are expecting another one soon.
Gotta go!
In the midst of doing various household chores and kicking the boys all outside to get rid of their energy, I have been thinking and have come to the conclusion that no matter what positive information is published in the media, the only news that gets attention and is believable is negative news. I have used documentation that proves that nationally poverty rates have gone down and pay rates have gone up to illustrate that more people are taking advantage of the opportunities this country has to offer, and are taking care of themselves and not relying on the government. But people always believe the most negative news.
That would explain why there are so many books written on how to think positively in a negative world.
From someone that lives in a have and have not type of state I find it hard to believe the statistics you are quoting aren't cushioned by the government to try to increase the presidential/governmental popularity. I agree media likes to focus on the negatives but the have not neighborhoods around here are bigger than the haves... The good paying jobs are limited and the low wage jobs are plentiful. And then there is the 5 year limit of receiving welfare with out employment that would push the unemployment rate down also.
I really think that it is hard to understand being down when you have never had to be down. Being born poor means you wore hand me downs and ate a lot of hot dogs.. You as a child were not paying the bills or budgeting for food vrs paying a bill or for that matter you weren't budgeting school supplies vrs buying food.. You just knew you wanted stuff like everyone else had and you didn't have it..
And implying that poverty is chosen is false in many cases.. Life happens and people don't know how to fix the situations. And welfare doesn't help you learn how to do anything but pray and beg... It is a life vest filled with lead for many people...
The NY Times???
Oh no. No no no no no. The NY Times is hardly the good news messenger for the White House. In fact, they've taken every opportunity to discredit the Bush Administration by putting negative spin on anything that happens while he's president in the hopes of putting a democrat in office in 08. Any good news while Bush is president is bad news for the democrats. That's probably why he hasn't gotten any credit for the growth of the economy. (Remember how Clinton got all the credit for the good times in the 90's?)
Thank-you, Bobbie. That was a great analogy- a life vest filled with lead. That is precisely why welfare was reformed 10 years ago. Many on welfare at the time were capable of finding work and being self-sufficient- they just needed motivation, direction, and training.
I read this article today and thought about this thread.
Median Income Rising, Forbes.com
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